Konkurransemessige problemstillinger i apotek og legemiddelsektoren

Abstract

Preface In consultation among the competition authorities of Denmark, Finland, Iceland, Norway and Sweden in autumn 2007, it was decided that the theme of the next Nordic cooperation project should be the competition challenges in the pharmacy/pharmaceutical sector. The following report is the result of this project.

The objective of the report is to draw together the experience of various approaches to the regulation of structure and price, and various competition- related issues and experience in the pharmacy and pharmaceutical sector in the Nordic countries. This will provide a better knowledge base for the respective competition authorities in their assessments of proposed changes in framework conditions for the sector, as well as a better basis for choosing where to direct their own initiatives. The report shall also provide a better basis for handling cases related to the sector, including with respect to the assessment of mergers.

The report aims at presenting, in a systematic way, approaches from a competition perspective and experiences in the Nordic counties. In this connection, it is important to point out that the Swedish pharmacy market will be radically changed during 2009 with the expected abolishment of the state pharmacy monopoly. This means that many of the descriptions, assessments and experiences that are presented in the report that relate to the Swedish market, will be of limited relevance to the situation after the pharmacy monopoly has been abolished.

The report is primarily aimed at describing retail and wholesale trade on the respective Nordic markets, thus information about and descriptions of the pharmaceutical producers are limited.

Characteristics of the pharmacy/pharmaceutical market There are some fundamental characteristics of the pharmaceutical market that also hold true for most European countries. For the most part, doctors make the choices regarding the use of pharmaceuticals, and the authorities insure the citizenry against large drug expenses due to illness by paying the costs of drugs prescribed by doctors. A large part of the individual consumer’s costs for pharmaceuticals is financed by the public sector. The state pays most of the cost of pharmaceuticals, either directly via hospitals or indirectly via patients who receive reimbursement. De Laat, et al., (2002) contains the following saying:

”Who consumes, neither chooses nor pays; who pays, neither consumes nor chooses; who chooses, neither pays nor consumes”

The demand for prescription pharmaceuticals is, in other words, very price inelastic. This means that the price for individual pharmaceuticals, for example, a life-prolonging drug, can be greatly increased without any substantial effect on quantity demanded. That the demand is very price inelastic is a consequence of there being no direct relationship between consumption and the person who decides what shall be consumed (the doctor) and the person who shall finance the consumption (generally, this is the state).

That the authorities in most countries, including each of the Nordic countries, impose a maximum on the price that pharmacies may charge consumers for pharmaceuticals that are reimbursed, should be seen against that background. Further, it is usual for the authorities to regulate the price that pharmacies may pay to producers or wholesalers. The reason for this is to ensure that the pharmacy makes a certain profit margin from the activity. Further, under the health policy in most countries, the authorities consider it important that all of the country’s inhabitants have good access to pharmaceuticals, regardless of where they live or their physical condition. Drug production and pharmacies play an important role in healthcare. In most countries, therefore, an explicitly expressed political objective is tied to the pharmacy and pharmaceutical sector.

There are further strict limits on marketing and trading of prescription drugs. In addition, various and comprehensive safety requirements apply to the various actors in the sector. That implies, again, that a large variety of government bodies are involved in various ways.

From the point of view of health authorities, pharmacies have a central role to play for rational pharmaceutical use. WHO defines this as, “The rational use of drugs requires that patients receive medicines appropriate to their clinical needs, in doses that meet their own individual requirements, for an adequate period of time, and at the lowest cost to them and the community,” Rational pharmaceutical use comprises, according to the WHO definition: 1. Safe and proper dispensing of drugs 2. Correct use of drugs 3. Cost effective use of drugs

Retail trade in pharmaceuticals is not harmonized in EC law. Member States are thus free to legislate in the area, provided that they follow the European Union primary, secondary and supplementary law. In Directive 2006/123/EC on services in the internal market, healthcare and pharmaceu tical services provided by health professionals to patients to assess, maintain or restore their state of health, are excluded from coverage of the Directive where those activities are reserved to a regulated health profession in the Member State in which the services are provided. The area of pharmaceuticals, as a whole, is subject to a high degree of harmonisation, with considerable community legislation, for example through Directive 2001/83/EC on the Community Code relating to medicinal products for human use, as well as Directive 2001/82/EC on the Community Code relating to veterinary medicinal products.

It is well known from economic theory that various forms of market failure can justify various forms of market regulation. Examples of market failures would be externalities, collective goods, natural monopolies and imperfect competition. And as we have seen in the preface, the pharmaceutical market has several characteristics that can lead to market failure. This is also a sector subject to price and structural regulation of a wide variety of types and of various levels of the distribution chain. It appears that this market structure is susceptible to price competition to only a limited degree. It is also a sector that is subject to a comprehensive degree of price regulation applied to various links in the value chain. Nevertheless, competition has played an important role in the sector, for example in facilitating • competition among generics, • competition among non-prescription pharmaceuticals, • competition on the basis of quality and availability among retailers and • competition among wholesalers.

The aim, within the framework established for the sector, is for competition to contribute to a more effective use of resources, services of higher quality and a broader choice of as well as cheaper pharmaceuticals. Main features concerning the regulation of market behaviour as well as a summary description of market actors

As a consequence of the distinctive elements of the pharmacy/pharmaceutical market as described above, the pharmacy and pharmaceutical sector in the Nordic countries, as in most other countries, is heavily regulated. This is the case both with respect to the structure of the market, not least ownership and establishment, and how the actors can operate in the market. The table below provides an overview description of the main features of the law on the regulation of the structure and market behaviour in the respective Nordic countries. The table also provides a general description of the market actors in the different levels in the pharmacy and pharmaceutical arena.