Boots will not cut its prices here

Boots customers in the Republic are not to benefit from cheaper over-the-counter.(OTC) drugs prices as a result of the abolition of price-fixing in the UK. The quashing of State-imposed resale price maintenance (RPM) has lead to a price war in the UK, as supermarkets and pharmacies slash prices on products like Nicorette gum, Calpol and Nurofen painkillers in an effort to attract customers.

Prices on a wide range of products across the Boots chain network in the UK were cut last Wednesday but Republic of Ireland customers will not be able to avail of the lower prices. "The RPM doesn't apply to Republic of Ireland so we can't lower prices there. We are working with the relevant bodies in the Republic to look at this area. Already we introduced a number of special offers on health care ranges, but not on OTC medicines," she said.

However, the Competition Authority and Office for Consumer Affairs disputes this claim. Unlike the UK, there is no State-imposed price control on OTC medicines in Ireland according to the Competition Authority, and so no regulations to prevent companies like Boots offering the same lower prices and special promotions to Irish customers.

British supermarket groups and the Office of Fair Trading had long pressed for the lifting of the state-imposed RPM and a landmark court ruling last week ended drug manufacturers' ability to set prices for OTC medicines. It was held that prices had been kept artificially high. Supermarkets are now free to sell such drugs at competitive market prices.

In response to this, Boots chemist chain, with 1,400 stores across the UK, including 41 in Northern Ireland and 28 in the Republic, has initiated a price war to ensure it does not lose sales as a result. The abolition of price-fixing is expected to reduce profits by £15 million to £20 million sterling according to Steve Russell, Boots chief executive. Analysts forecast that Boots, a listed company, made pre-tax profits of about £550 to £590 million for the year to March 31.

A recent OECD report on regulatory reform in Ireland highlights the pharmacy sector as an area that needed to be urgently addressed. The report recommended less regulation and greater competition. For consumers to benefit from lower prices, there needs to be greater competition. A spokesperson for the Office of Consumer Affairs stressed that there were no price controls in the Republic that prevented competition and said: "Irish consumers are losing out. Only competition drives prices down."

The Competition Authority is pushing for the deregulation of the pharmacy industry, similar to the deregulation of the taxi industry. It is believed that there will also be a big shake-up of the licensed trade industry.