Analysis 20/2016: Pharmacies for pharmacists - contrary to the interests of patients and the Constitution
The new, restrictive regulations on new pharmacies proposed by PiS (Law and Order Party) deputies will limit growth and investment - pharmacies in more liberal countries invest more. The Polish economy needs less regulation and more investment, as declared, by the way, in the government strategy of Deputy Prime Minister Morawiecki. Therefore, the proposed changes are in contradiction to the development needs of Poland and the government's declaration.
Permits for running a new public pharmacy would not be issued in municipalities with the population less than 3,000 per pharmacy, locations less than 1 km from the nearest pharmacy and only to pharmacists with the right to practice. The first criterion would mean that in no voivodship city a new pharmacy could be established.
The tightening of pharmacy regulations goes against the European trend of liberalization. In recent years, 17 countries have liberalized the rules for setting up new pharmacies, while only 4 have tightened it.
Already now, pharmacies in Poland are over-regulated, which harms their patients. The rigid prices of reimbursed medicines make it impossible to compete on price. The ban on advertising restricts competition and also prevents the introduction of new services in the field of health promotion, prevention, and monitoring. The ban on internet sales limits the availability of medicines, including rural areas. The ban on issuing new permits to entities holding 1% of pharmacies in the voivodship limits competition instead of fostering it.
In the long run, proposed regulations will reduce the productivity of pharmacies. Pharmacy margins will increase. Investing and upgrading services standards are best promoted by competition rather than compulsory monopoly.
From patients’ perspective, in the long run, the proposed regulations will lead to higher prices and lower standards of service. The availability of medicines in rural areas will not increase although it could if network development and productivity growth reduced the operational costs of pharmacies.
From the perspective of those pharmacists who are employees rather than proprietors, limiting the growth of the network of pharmacies means a slower rise in wages. Inhibition of the increase in the number of pharmacies is, in turn, reducing the demand for pharmacists, which will negatively affect their wages and employment. Besides, the foreclosure of pharmacy market will make independent pharmacies and small networks never grow. Their value will drop as potential buyers will be limited to pharmacists with the right to practice. Individual pharmacies will also have a problem with relocation - any transfer of a pharmacy, even to adjacent premises, may prove impossible due to the lack of locations that meet population and geographic criteria.
The Constitutional Tribunal has questioned the "pharmacies for pharmacists" principle already in 1992, so the proposed amendment to the pharmaceutical law is unconstitutional. The judgment of the European Court of Justice, recognizing the principle of "pharmacies for pharmacists" as legal in Germany and Italy does not apply to Poland.
The state was selling pharmacies in the course of privatization. Those who acquired pharmacies (not being a licensed pharmacist) or bought four or more pharmacies, will suddenly find themselves in a new and unfavorable position - they will not be able to further develop their investments by opening more pharmacies. It undermines trust in the state, the very trust for the development of which the Morawiecki plan called.
Full analysis (in Polish) is aviliable here.
You are welcome to contact our experts:
Rafał Trzeciakowski
Economist
e-mail: rafal.trzeciakowski@for.org.pl
Karolina Wąsowska
Lawyer
e-mail: karolina.wasowska@for.org.pl
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