Geographical distribution of pharmacies has solidarity consequences for rural and deprived areas, and patients with reduced mobility, for example, said John Chave, general secretary of the Pharmaceutical Group of the European Union, on 2 September 2014 at the 74th International Pharmaceutical Federation Congress in Bangkok.
Many governments in the developed and developing world promote “solidarity principles” in health — government intervention to promote or equalise access to healthcare, e.g., Medicare in the US and subsidies in Europe, said Chave.
Restricting the number of pharmacies and where they can be set up
Restrictions on community pharmacy establishment usually limit pharmacy licences by reference to population or distance criteria or both, Chave explained.
Restrictions aim to help push license holders into economically less attractive areas. He said these have been challenged in the European Court and found to be lawful on the basis that they meet the public interest objective of ensuring a wide distribution of pharmacies. Restrictions are sometimes supplemented by subsidies (e.g., Spain, Denmark).
The impact of regulated prices and margins
Basically all EU countries regulate medicines prices and pharmacy payments for prescription medicines and therefore price competition is effectively eliminated in these areas, Chave said. Price and payment regulation promotes solidarity principles (e.g. access to medicines does not depend on income level or geographical location). But regulating pharmacy payments means that payments and prices cannot adjust to new market entrants. So if payments are too high there may be too many entrants, if too low there will be insufficient market entrants (e.g. rural communities may not have a pharmacy because it is seen as unattractive for new entrants to enter the market).
In Europe, pharmacies mostly dispense the same prescription products at fixed prices and with regulated remuneration, Chave explained. Economy theory predicts that, where retailers sell homogenous products, they may have a tendency to cluster in order to maximise exposure to customers. Even if pharmacies do not establish in close proximity, there may be a concentration of pharmacies in population centres, Chave suggested.
He said that that a free market for pharmacy, which dispenses the same products, could lead to clustering (e.g. two pharmacies next to each other), insufficient market entry (quality and access issues) or excessive market entry (quality and efficiency issues).
Technology: a double-edged sword
Petty 2014 finds that in the UK, 43% of the population receive repeat prescriptions and that the number of repeat prescriptions issued has doubled in 20 years. The tendency is likely to continue as the population ages and the number of people with chronic disease rises. He said that, in Europe, an increasing number of countries use electronic prescription, which may help non-traditional pharmacies collect prescriptions (e.g. online pharmacies).
Chave thinks repeat prescriptions and electronic prescriptions open the door to innovative ways to deliver the supply service to patients, but over-reliance on logistical innovation may undermine the possibility for pharmacist intervention by marginalising both pharmacists and physical pharmacies. He suggested that forms of remote delivery contribute to medicine commoditisation. Chave concluded that the choice the profession faces is not between two versions of economic efficiency. It is a moral choice about the place of medicine in society. He said that pharmacy is the social fabric in communities.
Chave compared community pharmacies to the struggling publishing industry and to bank branches. He said that newspaper shops and banks may disappear, but the disappearance of health facilities, such as pharmacy, is different. He explained that healthcare is widely seen as having a different moral status from other forms of service, characterised by what economists call market failure. For example, the operation of the free market cannot always meet specific social objectives, he said.