Implementing competition in the pharmacy sector: lessons from Iceland and Norway.
The pharmacy market in many European countries is characterised by individual, privately-owned pharmacies that operate under tight government control regarding barriers to entry, scope of activities and profit margins. In Iceland, many of these restrictions were relaxed in 1996 in the hope of stimulating competition. Similar changes were introduced in Norway in 2001. In both countries, the new structural conditions led to horizontal mergers and coalitions between pharmacies; and in Norway, the emerging pharmacy groups integrated vertically with wholesalers. The number of independent decision units decreased and the markets rapidly transformed into oligopolies with remaining institutional barriers to entry. The rapid change took both governments by surprise, and intervention was needed to prevent monopolies from emerging. Additional intervention to strengthen competition may be needed in the future to prevent unfavourable developments, and the tradition of maintaining equal access of services may prove more difficult to uphold. Experiences in both Iceland and Norway highlight the complexity of reforms that fundamentally influence competitive behaviour.
Anell
Anders
A
Swedish Institute for Health Economics, SE-220 02 Lund, Sweden. aa@ihe.se
Hjelmgren
Jonas
J
D019033:Delivery of Health Care, Integrated; D004345:Drug Industry; D004465:Economic Competition / Q000331:legislation & jurisprudence*; D018166:Health Care Reform / Q000191:economics / Q000331:legislation & jurisprudence*; D006801:Humans; D007055:Iceland; D007407:Interviews as Topic; D009664:Norway; D019982:Organizational Case Studies; D010594:Pharmacies / Q000191:economics / Q000331:legislation & jurisprudence / Q000458:organization & administration*; D011050:Policy Making; D011332:Privatization / Q000191:economics / Q000331:legislation & jurisprudence*