Pharmacy sector reforms should be instigated now


The Tánaiste has a lot of unfinished business in liberalising the pharmacy market, and some key moves could be made immediately, writes Declan Purcell.

The Minister for Health, Mary Harney, has announced details of a number of welcome reforms in the Irish pharmacy market. Predictably, the main pharmacy lobby group - the Irish Pharmaceutical Union - has reacted negatively.

It should come as no surprise that the Government should want to substantially reform this sector of the economy. Consumers in Ireland with no medical card pay a huge mark-up on prescription drugs (50 per cent); Irish pharmacists enjoy the highest margins in the EU (33 per cent); wholesale drug prices are pegged to expensive northern European countries; and Irish students who train abroad as pharmacists cannot open a new chemist shop in Ireland (the notorious regulation known as the "three-year rule").

Under the announced proposals the "three-year rule" is to be scrapped, and rightly so. But this won't happen for at least a year, until a bill that hasn't been drafted yet is enacted, and changes to regulations will only come after that.

The "three-year rule" has been law since 1987, and applies in the same way to Irish students who get their pharmacy degrees abroad. So if you are an Irish person who gets a pharmacy degree in another EU country, you cannot come back to Ireland and set up your own chemist shop. Simple as that.

Not just for some short period, mind - you may never open your own pharmacy business. You may work in a new shop as a pharmacist - you just can't manage it or own it.

How many Irish students have found themselves in this unfair predicament? Probably upwards of 2,000, given the numbers who have gone mainly to the UK for their pharmacy degree over the years because they couldn't qualify in Ireland. How many of these would actually want to open their own shop is irrelevant. Many of them will, however, feel aggrieved at having to wait a lot longer to achieve the same economic freedom as their luckier Irish-educated counterparts.

This is one of the most blatantly discriminatory and protectionist laws on our statute book, and independent observers have argued for many years that it should be done away with.

It could - and should - be scrapped overnight, rather than waiting for perhaps another year.

Pharmacy lobbyists argue that Ireland shouldn't act alone, and that the rule shouldn't be abolished until the other EU countries that have a similar rule abolish theirs.

The fear, apparently, is of a one-way flood of pharmacists from Newry, Naples or Norfolk. In the unlikely event of that happening, it's hard to see how it would harm consumers, since it would mean more pharmacies in Ireland.

The Tánaiste's second area of reform is to introduce "fitness to practise" rules for pharmacists, which is very sensible and way overdue.

She also proposes, in the short term, to reform the statutory overview body in this area - the Pharmaceutical Society of Ireland - by, among other things, requiring a number of non-pharmacists to sit on its governing council. Again, very sensible.

It is simply bizarre that a statutory regulatory body in this day and age should be governed exclusively by representatives of the profession it is supposed to be regulating.

Perhaps most welcome of all is the Government's rejection of a proposal to limit the number of chemist shops that can be owned by one entity. In doing this, the Government has rightly rejected the notion that new anti-consumer restrictions should be brought in simply to protect existing pharmacies from competition.

So is that it, then? Is there no more to be done to bring this market up to date, and on the same footing as other retail businesses?

Not by a long way. There's a lot of other unfinished pharmacy business which the Tánaiste must also grapple with sooner or later, and it is a pity the opportunity wasn't taken in the recent Government decision. These include:

Abolishing the automatic and unique 50 per cent mark-up on the cost of (non-medical card) prescription medicines which pharmacists enjoy and the State endorses

Renegotiating the agreement between the Government and the pharmaceutical industry on the wholesale price of medicines, so that both consumers and the taxpayer get a better deal

Making sure that consumers can become more price aware at the point of sale when they are buying medicines.

But for now, half a loaf is better than no bread.

Declan Purcell is a member of the Competition Authority and is its Director of Advocacy.