Competition watchdog: Wholesalers do not control pharmacist-run drugstores

Pharmacy. Source: Aili Vahtla/ERR

While pharmaceutical wholesalers who offer pharmacies chain trademarks have no control over pharmacist-run drugstores, pharmacies are closely tied to wholesalers, a Competition Authority analysis reveals. Because management boards of pharmacies currently include lawyers and employees of franchisors, the Medicines Act should clearly state that pharmacists are both owners and board members, the watchdog finds.

The Competition Authority, following a proposal from the Ministry of Social Affairs, looked into the independence of pharmacy services and competition on the pharmaceuticals market as the market is still controlled by three major wholesalers after the April pharmacy reform, "Aktuaalne kaamera" reported.

Pharmacies are still contractually tied to wholesalers, even though there is no illegal control on the pharmaceuticals market. There wasn't a single case where the pharmacist owner was not found to have full control over their drugstore among the 100 pharmacies the watchdog checked.

The authority finds in its summary that it is legal from the point of view of competition when pharmacist-owned drugstores represent a well-known chain's brand, operate as the franchisor's undertenants and for pharmacy boards to have lawyers or employees of franchisors as members.

"While there is a franchise agreement that dictates a lot of the pharmacy's business practices, what matters on the strategic level is that the pharmacist can change their preferences overnight and decide to run their drugstore differently, replace board members and that is the most important thing we look a when it comes to controlling interest supervision," said Juhan Põldroos, head of the authority's control department.

While franchise agreements include limitations for pharmacist franchisees, they are not extraordinary in terms of economic activity.

"It is a rather widespread form of doing business and not prohibited in most fields and would not be deemed abnormal under most circumstances. The fact that it clashes with the goals of the pharmacy reform in a way is another matter," Põldroos added.

The Competition Authority looked at pharmacies from the point of view of competition law and failed to establish controlling interest based on the Medicines Act.

The authority nevertheless proposes amending the act to clearly stipulate that pharmacists must own a controlling stake in the pharmacy and hold the majority in the board.

Minister of Social Affairs Tanel Kiik said that the reform needs further analysis before amendments can be made.

"Six months have passed since the reform took effect. We know that pharmacy services were retained on the recent level in almost all settlements. There were individual closures in major centers that did not affect the availability of the service. We also know that the relative importance of pharmacists has grown and they have more say than before. I'm sure it also helps ensure transparency," the minister said.


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Editor: Marcus Turovski

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