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The Danish Competition Council suggests deregulation of the pharmacy sector

27. juni 2012

The Danish pharmacy sector is heavily regulated. The regulation is, among other things, based on entry-control, ownership restrictions, equalization scheme between pharmacies, control of the profit of pharmacies and retail prices. The regulation aims at protecting public safety, providing quality within medicine distribution and ensuring easy access to drugs nationwide. Regulation also helps to control public expenditures on health care.

Control of entry is regulated through a concession scheme. One must have a concession to set up and run a pharmacy in Denmark. The number of concessions is limited and earmarked for a specific location. Thus, the number of pharmacies and their location is determined by the state. Only qualified pharmacists can apply for a concession. A pharmacist may hold four concessions as a maximum. Since a concession is personal, a pharmacy can only be run as a one-man business. The equalization scheme implies that pharmacies with relatively large turnovers pay a part of their turnovers to pharmacies with low turnovers. Control of profit and prices implies a fixed gross profit for the pharmacies as a whole and fixed retail prices on prescription and pharmacy only drugs.

The regulation causes a high number of inhabitants per pharmacy compared to other European countries and significantly less competition among pharmacies leading to, inter alia, longer waiting times and a lower overall efficiency in the sector.

The Danish Competition Council has therefore decided to deliver a reasoned opinion to the Minister for Health and the Minister for Business and Growth cf. Section 2 (5) in the Danish Competition Act.

It follows from Section 2 (5) in the Competition Act that if the Competition Council finds an aid scheme or public regulation likely to restrain competition or otherwise likely to impede efficient allocation of society’s resources, the Council may deliver a reasoned opinion to the relevant minister and to the Minister for Business and Growth pointing out its potentially adverse effects on competition and presenting recommendations for promoting competition in the area concerned. The relevant minister, who shall consult with the Minister for Business and Growth, is obliged to respond to the Competition Council’s opinion not later than four months after the relevant ministers receipt of the opinion submitted.

The Competition Council recommends the following in order to deregulate the pharmacy sector and thereby enhance competition and efficiency in the sector:

  • Ownership of pharmacies should be possible for non-pharmacists and for corporations.
  • No limit on the total number of pharmacies.
  • Substantial raise in the number of pharmacies that can be owned by the same owner.
  • Maximum prices instead of fixed prices on prescription and pharmacy only drugs.
  • Removal of the equalization scheme.
  • Ensuring pharmacies in less populated areas through the use of tenders.
  • More liberal rules for the assortment and the opening hours in pharmacies.
  • Establishing an internet pharmacy should not be conditional upon ownership of a physical pharmacy and (internet) pharmacies should be allowed to send drugs free of delivery fees.

The Competition Council finds that deregulation of the pharmacy sector following the above mentioned recommendations, will realize significant benefits for society.