17 December 2003

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Protection logic - GRTU and Chamber defend pharmacy threshold

By Matthew Vella
The champions of the free market are up in arms following the proposed lowering of thresholds in the distribution of pharmacies per number of inhabitants, proposed to be lowered from 3,000 inhabitants per pharmacy to 1,600. Leading the anti-liberalisation front have been none other than the standard bearers of the free market: the GRTU, the Chamber of Commerce and the Chamber of Pharmacists.
One of the few ‘protected’ sectors in the country, the GRTU suspended industrial action that would have led to the closure of all pharmacies for one day in the first week, two days in the second, three days in the third and so on, after government offered to start talks on the regulations.
But the organisations have been accused of applying double standards when it comes to commercial liberalisation. Reginald Fava, president of the Chamber of Commerce, is the owner of one of the Islands’ foremost pharmaceutical chains, Chemimart.
Unavailable for comment, the chamber’s healthcare sector representative Alfred Gera de Petri, managing director at Drugsales, said the provision of medicine was a professional service which had to maintain a general level of service and quality to ensure viability:
"This is guaranteed by the limit on pharmacies per population. As is the case in European countries, where there is a pharmacy for every 3,000 persons, we cannot just reinvent the wheel in Malta. To ensure a good service we have to have economic viability."
There is little doubt that pharmacies do not enjoy sustained economic viability with the limit on the number of operators. Critics have argued that medicine retailers do not suffer from lulls in demand since there is always constant need for medicines. Asked why a different economic logic was being applied to pharmacists, Gera de Petri told the Malta Financial and Business Times:
"We are not saying competition is not important. But where there is no need, a pharmacy should not be opened. When it comes to the provision of an essential service such as medicine, there is no question of offering an inferior service. If more open there will be an inferior service."
GRTU director-general Vince Farrugia said the medical service and pharmacies were not a matter of free trade: "By law, the primary obligation of the health minister is to see an optimum level of pharmaceutical services. In other words, either opting for a public service of pharmaceutical dispensaries as in Sweden or a system like Malta’s where a pharmacy has to serve the community as best as possible whilst remaining a private venture. And that means sticking to a 20 per cent profit margin as dictated by law, not to lower prices, and be ready to offer after-hours services to people. The question has to do with economic viability."
Farrugia said the GRTU had reported on the commercial viability of the pharmacies back in 1998 when it obtained written agreement with the then Labour government and Nationalist Opposition on the agreed threshold of pharmacies. Farrugia said lowering the threshold would be detrimental to pharmacy owners.
Asked whether the association would be showing the public the 1998 economic report which has informed the GRTU’s opinion on the commercial viability of the pharmacy sector, Farrugia said the report was a confidential service which would require permission from those who contributed to it.
There are currently 209 pharmacies in Malta, one for every 1,866 residents, employing 560 people. The health division has over 300 applications for new pharmacies, some dating back to 1998. The European average is a pharmacy per 3,000 people.
The Consumers’ Association has reacted by saying government should issue pharmacy licences to all those who were ready to abide by the regulations, saying limiting the number of pharmacies would make existing ones complacent as they would not have any competition: "This situation would not look after the interests of either the consumer or of those who wish to open a pharmacy," the association said.
GRTU director-general Vince Farrugia disagrees with the Consumers’ Association: "These people have never had a good word for the retailer," he said. "Pharmacy licences are allocated according to demographic and geographical criteria. These are the same criteria within the EU. There is no crisis in this sector, and the GRTU and the Chamber of Pharmacists want to see the community being served better. There should have been no upheaval on this matter. Now we are awaiting discussions and negotiations so our country can have an optimal pharmaceutical service."

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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