REGULATION OF PHARMACIES (Advisory opinion)
PRESS RELEASE
The regulations governing pharmacies are anti-competitive
The Antitrust Authority has submitted a report to parliament and the government on the way in which current legislation and regulations governing pharmacies distorts competition and the proper operation of the market.
The present regulatory system gives pharmacies wide-ranging exclusive rights to sell medicines, establishes the permitted number of pharmacies, places stringent restrictions on access to the profession, imposes unjustifiable constraints on advertising and on the opening hours and on the holiday and night opening rota system. The Authority believes that attention should be drawn to these restrictions in view of the current debate on the reform of retail trading, and in particular on the fact that pharmacies are excluded from this debate.
a) Exclusive rights to sell over-the-counter drugs
The law gives pharmacists exclusive rights to sell drugs to the public, including non-prescription drugs. But the professional skills specific to the pharmacist in the case of non-prescription drugs are of secondary importance, while their main work is that of a commercial intermediary. Accordingly, giving pharmacists exclusive rights to sell non-prescription drugs rests on a totally different basis from their exclusive right to sell other drugs.
As for the the possibility that liberalising the prices of these drugs might lead to increased consumption, it should be noted that in countries where consumers are able to acquire them in outlets other than pharmacies (for example in the Netherlands) consumption has not increased.
By removing the pharmacists' monopoly over the sale of non-prescription drugs the consumer would benefit from easier and probably less costly access to them.
b) Regulating the number of pharmacies
The territorial distribution of pharmacies is currently regulated by law, using a statutory system of restricting the number of pharmacies authorised to operate in each municipality in terms of population, geography and distance.
In 1995 there was one pharmacy for every 3,500 inhabitants. According to the criteria by which the number and the siting of pharmacies are established, municipalities with fewer than 7,500 inhabitants may not have more than one pharmacy. According to ISTAT data taken from the 1991 census, Italy has 6,636 municipalities with a population of up to 7,500 making a total of 15,466,606 people, out of a total of 8,101 municipalities in Italy as a whole, with an overall population of 57,332,996. This means that about 80% of Italy's municipalities, accounting for 27% of the total national population, are served by only one pharmacy. It is therefore quite likely that there are too few pharmacies in most Italian municipalities to cater fully for the demand.
c) Procedures for obtaining a licence to open a pharmacy
It would seem that the main reason for setting quotas for the number of pharmacies in the country is to guarantee pharmacists a high income rather than to distribute pharmacies in a rational and satisfactory manner throughout the whole country.
Barriers to opening a pharmacy can only be justified if they are designed to ensure that applicants to open a pharmacy are in possession of the necessary qualifications to do so. In this particular case, however, this is assured by the fact that those who have passed the State pharmacists' examination already possess the professional skills and qualifications required by law. Any additional barriers to the exercise of the pharmacist's profession would therefore seems to be redundant and without any justification as far as giving assurances to consumers regarding the professional skills of the pharmacists to whom they resort.
d) Restrictions on opening times
As far as the practice of the profession is concerned, it should be pointed out that current legislation governing opening hours and the holiday and night opening hours rota considerably hamper competition by imposing uniform opening hours, obliging pharmacies to remain closed on certain days, and drawing up night, holiday and Sunday opening rotas. While it is wholly appropriate to regulate pharmacies in order to ensure that consumers are provided with a pharmaceutical service for a minimum number of hours each day, with a minimum number of pharmacies open on holidays and during the night, there should not be aby restriction on pharmacies wishing to remain open for longer hours than the minimum, and outside the rota system.
e) Constraints on advertising
The law only permits pharmacies to advertise in telephone directories with permission from the mayor. This means that the consumers are not able to "shop around" between the various pharmacies, even though they sell many products and services whose prices are not regulated.
On a market in which regulation already imposes many constraints on the laws of free competition, it would be very useful for many pharmacies to be able to advertise in order to differentiate themselves from their competitors in the eyes of consumers.
Rome, 1 July 1998