Pharmacy owners attack new graduate legislation

"The pharmacists decided to secure their position now, before the big capital enters the market."
By : Robert Wylot

   Owners of new pharmacies must have a degree in pharmacology, even if they employ licensed and fully qualified pharmacists to fill prescriptions and handle drug orders, according to a law passed by the Sejm last week.

   The law has angered pharmacy owners across the nation, who claim that in the long run the regulation will give university-educated pharmacists an unfair monopoly and lead to the extinction of what has been primarily a mom-and-pop industry in Poland.

   “It’s an action by one interest group (pharmacists holding degrees) that is in a privileged position and wants to keep it,” said Leszek Jargan, chairman of the Pharmacy Owners Association (http://www.nia.org.pl), a representation of pharmacy owners who don’t hold graduate degrees in pharmacology.

   According to Andrzej Szymański, pharmaceutical analyst at DM BIG-BG brokerage house, the law is an attempt to keep pharmacies independent and comes at a time when pharmaceutical distributors are nearing the end of a consolidation process that could lead them to set up pharmacy networks.

   “The pharmacists decided to secure their position now, before the big capital enters the market,” Szymański said.

   The largest network on the market is that of the six state-owned companies, Cefarm, with some 180 pharmacies. The largest private network is owned by Poland’s largest drug distributor Polska Grupa Farmaceutyczna (PGF) with 70 stores. However, the overwhelming majority of the nation’s 9,000 pharmacies are family owned businesses.

   “The lobby of graduate pharmacists pushed their interest through,” Szymański said. “Pharmacies are very profitable and the pharmacists are trying to lock other players out of the business.” Annual revenue for the nation’s pharmacies is estimated at zł. 1.1 billion ($260 million).

   Leokadia Danek, vice-chairman of the Supreme Pharmacists Chamber, which represents graduate pharmacists, admitted that the law, which goes into effect Jan. 1, 2002, is aimed against private capital entering into pharmacy networks.

   “The law prevents development of big networks, as it provides that a pharmacist may only own one pharmacy,” she said.

   Critics of the law, however, argue that it not only affects new pharmacy owners but existing ones as well.

   According to Artur Djagarov, president of the Apteki Polskie pharmacies network, the six Cefarm companies that are slated to be privatized will lose much of their value when the law enters into effect, as potential investors will be less interested in firms that have limited growth prospects.

   “The Cefarms value is estimated at a total of zł. 400-500 million ($95-120 million). Their value will drop by approximately a half,” he said.

   Supporters of the new law argue that it’s the customer and the health of the population, not economics that’s at issue.

   According to Danek, a pharmacy should only be owned and run by a graduate pharmacist, as it requires pharmaceutical expertise from the person selling a drug. “This person is responsible for the customers’ health and life,” she said.

   But Elżbieta Modzelewska-Wšchal, vice-chairman of the Office for Competition and Consumer Protection (UOKiK), the government’s anti-monopoly and consumer protection body, disagreed. “Until now, the legislation has obliged the owner to employ a graduate pharmacist to run the pharmacy anyway, so there is no justification for forbidding non-experts to own a pharmacy,” she said.