No break in sight for pharmaceutical monopoly

Chemists’ lock on sale of prescription drugs could doom Matas sale

January 15th, 2013 10:28 am| by admin

Following an intense lobbying effort by the nation’s chemists, it appears likely that parliament will allow them to retain their centuries-old monopoly on selling prescription medicines.

Although no formal decision has been reached, the mood among MPs seems to indicate they will side with chemists’ union Danmarks Apotekerforening, which argues that only a tightly controlled network of pharmacies can ensure sufficient levels of drug safety. 

"We are talking about a modernisation and not a liberalisation of the industry,” Sophie Hæstorp Andersen, health spokesperson for the PM’s Socialdemokraterne party, told Berlingske newspaper. “We must remember that the distribution of medications works very well and is very safe under the current model."

Camilla Hersom, a spokesperson for coalition member Radikale, agreed that there were elements of the current system she wanted to see preserved.

“We have focused on ensuring a safe system that continues to allow us to have control over prices with good availability, and the current system meets those criteria,” Hersom told Politiken newspaper.

Under current laws, pharmacies must be owned by chemists, and there are limits on the number of pharmacies a single chemist may operate. Earlier this year, Konkurrencerådet, a consumer watchdog, said it could find no good argument for maintaining the current structure.

Calls for loosening chemists’ grip on dispensing drugs have been ongoing for several years. In 2010, a growth forum sponsored by the then Venstre-led government recommended liberalising the sale of prescription drugs. In June of last year, Konkurrencerådet sent a letter to the health and business ministers arguing that chemists’ state-sanctioned monopoly on the sale of pharmaceuticals should come to an end, adding that consumers stood to save upwards of 250 million kroner annually through liberalisation of the industry.

Chemists have campaigned ferociously against the idea.

One of the companies that stands ready to gain from liberalised pharmacy regulations is the high-street retailer Matas. Already the nation’s leading seller of over-the-counter medications and other health products, over the past year the chain has exploited a loophole that allows it to sell prescription drugs by allowing a chemist to set up a drug dispensary inside its stores.

The company has already established 50 dispensaries, all served by a single chemist.

Meanwhile, Matas says it is ready to open full-service pharmacies as soon as the industry is deregulated.

The prospect of chemists retaining their monopoly is the latest setback for the private equity firm CVC Capital Partners in its efforts to sell the Matas chain. Throughout 2012, CVC tried to find a buyer for its 258 Matas outlets in Denmark and Sweden, but found no takers at the estimated six billion kroner price tag. Only being allowed to operate as full on chemists would justify the asking price to a potential buyer.

CVC purchased Matas in 2007 for 5.2 billion kroner with an eye toward the government relaxing the prescription stranglehold. Breaking the chemist’s monopoly is seen a key growth engine for the company, otherwise CVC will have a tough time selling Matas. Even though the company has increased its earnings significantly through improved efficiency, sales have remained stagnant at about three billion kroner annually.

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