Tags: Medicine | Prices | Headed | for | Free | Fall

UK Medicine Prices Headed for Free Fall

Tuesday, 15 May 2001 12:00 AM

The Restrictive Practices Court passed the judgment after the Office of Fair Trading, which monitors enforcement of consumer-protection regulations, challenged the law, arguing that it allowed pharmaceutical companies to keep drug prices high.

Industry sources said the decision could slash medicine prices by up to 40 percent, saving Britons hundreds of millions of pounds, but it would also hurt pharmaceutical companies' profits and could drive many pharmacies or drugstores out of business.

A lobby group defending the pharmacies had fought against lifting of the so-called Resale Price Maintenance (RPM) mechanism, saying the measure put at risk the livelihoods of thousands of people operating 12,000 outlets that sell medicines, some round-the-clock.

The court said it found insufficient evidence to support the lobbyists' view and ruled the price mechanism was against the public interest.

"This is excellent news for consumers," said John Vickers, director general of the Office of Fair Trading, adding that the decision opened the way for more competitive pricing of medicines.

The British medicine market is estimated to be worth about $2.4 billion a year. Analysts said a price war was inevitable, with immediate benefits for the consumer.

The wider implications of the decision are yet to be assessed, but industry experts said both pharmaceutical companies and pharmacies are set to lose millions. Boots, the high street chain that sells drugs as well as cosmetics and toiletries, estimates that it will lose at least $22.5 million during this year as a result of the court decision.

The pharmaceutical industry is already under pressure due to the popularity of alternative medicines and public discontent over prices, which found expression during South Africa's campaign to replace brand names with generic medicines in the treatment of acquired immune deficiency syndrome.

David Sharpe, head of the pharmacists' action group, condemned the court decision as a "devastating blow," adding that it would benefit the supermarkets.

Analysts said the resale price maintenance mechanism, a 38-year law, gave manufacturers unreasonable powers to set the minimum prices at which drugs, as well as vitamins and supplements, were sold. A common drug sold to relieve symptoms of influenza costs more than $4 under the RPM's schedule at pharmacies, but about $1.50 at supermarkets. The pharmaceutical industry had fought for keeping the mechanism in place, but when the court began its hearing, the industry withdrew its objections.

Industry experts said the British move, seen in the context of events in the developing world, was a potentially serious setback for the pharmaceutical industry, which has seen several reversals in recent months over the marketing of generic and brand-name AIDS drugs. Brazilian President Fernando Henrique Cardoso has led a campaign ignoring patents on anti-AIDS drugs. In March, Ivory Coast announced that it had obtained massive price cuts from international pharmaceutical firms for drugs to treat AIDS and HIV patients, an estimated 10 percent of the population.

Copyright 2001 by United Press International. All rights reserved.

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The Restrictive Practices Court passed the judgment after the Office of Fair Trading, which monitors enforcement of consumer-protection regulations, challenged the law, arguing that it allowed pharmaceutical companies to keep drug prices high. Industry sources said the...
Medicine,Prices,Headed,for,Free,Fall
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2001-00-15
Tuesday, 15 May 2001 12:00 AM
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