Battle over medicine prices begins

Community pharmacies say their future is at stake

Local chemists are warning they will go out of business if the High Court decides to change drug pricing regulations.

The Restrictive Practices Court is to decide whether a 30-year-old exemption from laws banning manufacturers from setting a minimum price for their products should be lifted.

As the law stands manufacturers of painkillers, cold remedies, vitamins and similar products can fix a minimum price that must be charged to the public.

But the Office of Fair Trading (OFT) believes it is time for the courts to review whether the rules are still in the public interest.

Community pharmacies argue that the exemption protects their profit margins and allows them to remain viable.

Community pharmacies simply can't compete with the bulk buying power of the supermarket

Community Pharmacy Action Group

The Community Pharmacy Action Group, an umbrella body, defending the interests of the pharmacies, insists that if the exemption is lifted it will drive many out of business.

"Community pharmacies simply can't compete with the bulk buying power of the supermarket and unless they have this protection many of them will go by the wayside," a spokesperson said.

"Pharmacies are a valuable asset to local communities and if they disappear people will be forced to go back to their GPs for advice about minor health problems which will be much more expensive," she told BBC News Online.

But director of hypermarkets for the Asda supermarket chain, Justin King, claimed this was "scaremongering by a business-motivated pressure group".

"We stock both brands and our own label products and we wish to see both in fair competition," he pointed out.

Resale price maintenance currently applies to around 2,300 products, 800 of them for sale in pharmacies only.

They include food supplements, anti-smoking remedies, antiseptics and indigestion remedies as well as cough and cold treatments and painkillers.

Numbers stable

When suppliers were given special permission to set a minimum price in 1970 the number of chemists was falling, but the OFT says that in recent years the number has been stable or rising.

In addition, the majority of a pharmacy's income now is from prescriptions, with less importance put on the sale of other products.

In asking the court to consider the exemption Director General of Fair Trading, John Bridgeman said: "I continue to be of the view that removing resale price maintenance from a wide range of branded medicaments will not threaten consumers' access to pharmacies."

The court is expect to take evidence for up to 10 weeks.

If it rules the exemption should be lifted the minimum prices on OTC medicine would be protected for five years.