Protection logic - GRTU and Chamber
defend pharmacy threshold
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 chambers 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 Maltas 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 GRTUs 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
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."