Analytics, EU – Baltic States, Latvia, Legislation, Medicine
International Internet Magazine. Baltic States news & analytics
Tuesday, 19.03.2024, 02:11
Restrictions for pharmacies facilitate monopolies in Latvia and dramatically limit consumer rights
Some time
ago, the IMPACT 2040 NGO conducted a survey to learn about the views of patient
organisations. The organisation asked government institutions to deal
with problems in the system. During the past year, alas, government
institutions have failed to offer any explanation as to the Latvian laws which
set out territorial limitations in terms of the placement of pharmacies.
It is no surprise that this problem is not going to disappear on its own or
that it has become more distinct during the past year. Perhaps other
problems in the world of medicine have been more loudly discussed and heard,
but this problem is also acute and requires urgent solutions, because it
directly impacts the ability of local residents to afford medications that they
need. This was clearly seen in a Latvian Competition Council (KP) report
on November 25, 2019, to say that Latvia has the least favorable medication
pricing mechanism among all EU member states. We believe that the KP must
be objective in terms of not ignoring the fact that the market in Latvia is
dominated by a single dominant pharmacy network.
The sad
fact that this is due to Latvia's laws, which make medications more expensive
and also create a situation in which it is all but impossible for any new
players to enter the market.
We believe
that the placement of pharmacies in Latvia shows that a single network has
successfully made use of the rule that says that there must be at least 500
meters between one pharmacy and the next one. We understand that the
network is not really to blame, because after all, the law is what it is. The
bottom line, however, is that the government has purposefully or accidentally
established a situation in which the government accepts a system in which the
interests of a single pharmacy network are being lobbied. This
means a hypocritical situation in the retail sector because pharmacy networks
are part of that sector, and this has everything to do with competition.
Latvia and other EU member states make sure that the market for grocery stores
is not dominated by a single player so as to protect shoppers against excessive
food prices. Clearly, if another store is opened nearby, that allows
shoppers to choose the best and most affordable products.
In trying
to regulate the pharmacy business, the state has, to a certain extent, shot
itself in the foot. The pharmacy licensing system that is dictated by law
and the limitation on the number of pharmacies that is based on the 500-meter
limitation on new pharmacies cripple competition and severely limit consumer
choice. Medication prices in Latvia are higher than in Western Europe,
where the standard of living, we must note, is far higher than that which
exists in this country.
IMPACT 2040
is currently examining the situation in other EU member states when it comes to
the placement of pharmacies, the aim being to see how the availability of
medications for patients is regulated elsewhere in Europe. One
organisation which we have surveyed is the Swedish Association of Pharmacies,
and the bottom line here is that the Swedes (whose lifestyle and understanding
of policies have been seen in Latvia as an example to follow) are several steps
ahead of us. "There are no geographic or territorial
limitations on the placement of pharmacies in Sweden," says the
association's director, Johan Waller. "Business freedom has
created many new pharmacies, and that has increased the availability of
pharmaceutical services throughout the country. Sometimes this has created
excessive concentration, and some pharmacies have had to close. That is
not a problem, however, because at the end of the day, it is up to clients to
choose the pharmacy that they wish to visit. If pharmacies compete, it is
only logical that only those which best satisfy client needs will remain in the
market. Competition among pharmacies has also reduced the price of
over-the-counter drugs and, in general terms, expanded the availability of
medications."
Perhaps
Latvia really should see Sweden's more liberal approach as an example so as to
make already difficult lives for patients easier. The current approach is
reminiscent of the one that existed in Soviet times, when only one player
really was allowed to dominate in the market. Thousands of patients are
waiting for the new leadership at the Ministry of Health to address this issue
so that people can choose cheaper medications in their nearby neighborhoods.
IMPACT 2040
is calling for an urgent and in-depth audit of this situation in Latvia to understand
whether it serves the interests of a narrow group at the sacrifice of the
interests of patients throughout the country.