Liberalisation and Health: an impossible compromise

Annarosa Racca Federfarma

Bruxelles, 15 April 2009

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The deregulation of 1888 (Crispi)

In 1888 all rules on pharmacy establishment have been deleted

• In 20 years, the number of pharmacies in the 12 biggest cities has doubled

• In 1907, 35% of all Italian pharmacies was clustered in these 12 cities

• Many rural areas have been deserted and left without any health service

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The re-regulation of 1913 (Giolitti)

Since 1913 there have been rules on pharmacy establishment in Italy

• In 1913, the legislator reintroduced rules on pharmacy establishment (geographic and demographic criteria)

• After almost one century these rules are still in force. Some changes were made in order to keep up with the evolution of the society

• In 2008, only 15% of all italian pharmacies is established in the 12 biggest cities

• Almost all rural areas have at least one pharmacy service.

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Aids for rural pharmacies

• National legislation •The discount that each pharmacy must grant to the NHS on reimbursed medicines is reduced for rural pharmacies

•Each Region must give an economic aid in order to guarantee the survival of rural pharmacies average yearly subsidy: 1.132 € for towns up to 3.000 inhabitants + 5.250 € for pharmacies with

turnover < 150.000 €

• Regional Legislation•Further subsidies for pharmacies serving few patients due to geographical locations (ie. Small islands)

• In 2006, FEDERFARMA decided to create a solidarity found for low turnover pharmacies

• All 17.000 Italian pharmacies, members of Federfarma, contributed to the found

• Proceeds are being distributed as an aid to the monthly income of pharmacies in need

• We are currently considering other ways to help these pharmacies

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ECJ: Hartlauer Judgement C-169/0710 March 2009

The demographic criteria is compatible with the EU Treaty

• Healthcare settings territory planning is an essential health need

• Establishment criteria for dentists is necessary in order to guarantee the same level of healthcare in all the territory without leaving rural areas uncovered

• The economic law of supply and demand cannot be applyed to health

• An increase in demand does not lead to lower prices but to a higher performance level

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The Bersani Decree: July 2006

Above: the number of parapharmacies and mass market corners and their market shares

• Supermarkets and parapharmacies can sell all non prescription medicines but with the mandatory presence of the pharmacist

• After 2 and a half years, these new channels represent 6 % of the market

• The chart on the right highlights the economic success of mass market corners: they are fewer than the parapharmacies, but they sell almost as much

• Are supermarkets boosting medicines consumption?????????

Numero

2.350

243

0

500

1.000

1.500

2.000

2.500

PARAFARMACIE CORNER

Valore di mercato

53,6577,05

0

10

20

30

40

50

60

70

80

90

PARAFARMACIE CORNER

Milo

ni €

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OTC market in 2008

• OTC: 1.494 millions €• SOP (no advertisement): 535 millions € • OTC-SOP outside pharmacies: 131 millions €

Value 2006/2007 2007/2008

OTC (in all channels)

+ 3,5 % + 0,7 %

OTC (outside pharmacies)

n.a. + 105 %

Supermarkets sell TWICE as many OTC medicines compared to pharmacies established on the

territory for a long time

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A parapharmacy

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The liberalisation of ownership

• In Italy pharmacy ownership is reserved to pharmacists – a partnership of pharmacists can own up to 4 pharmacies

• In case of partnerships of pharmacists with 4 pharmacies, 1 associated pharmacist can be responsible for just 1 pharmacy

• Some public pharmacies (around 200) are instead managed by big wholesalers (Alliance Boots, Celesio, Phoenix))

• The Government was pushed to liberalise the sector

• In 2004 Celesio made a complaint to the EU Commission that started an infringement procedure

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ECJ: Yves Bôt’s Opinion 16/12/09on cases C-531/06, C-171/07, C-172/07

If the ECJ will share Mr Bot’s Opinion, the ownership issue will be closed at EU level

• Ownership is a Member State competence

• Each Member State can decide on its healthcare level and the means through which this level can be achieved

• Pharmacists are indipendent only if the ownership and the professional indipendence coincide

• No to the economic pressure from joint stock companies

• No to the vertical integration

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Conclusions

• A positive ruling from ther ECJ will not stop liberalisation trends at national level: pressures are still strong and lobbyes still economically powerful

• However, if the ECJ will validate ownership and establishment criteria, this will represent an important result

• Pharmacies will be forced to give a true meaning to these principles by increasingly offering more social and health services to citizens

• It would be crucial if the European Parliament could confirm the importance of these principles in a political statement

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Annarosa Racca

box@federfarma.it

Thank you very much