Deregulating the pharmacy market: the case of Iceland and Norway.
The pharmacy market in many European countries is characterised by individually owned pharmacies that operate under tight government control regarding barriers to entry, scope of activities and profit margins. Many countries are, however, in the process of introducing pro-competitive policies, including possibilities to own several pharmacies and competition based on price. In Iceland and Norway, restrictions to ownership and competition were relaxed in 1996 and 2001, respectively. In both countries, the new policies quickly led to horizontal integration and concentration of the market, and in Norway the merging pharmacy groups integrated vertically with wholesalers. By 2004, two pharmacy groups in Iceland and three pharmacy groups in Norway controlled 85 and 97% of the markets, respectively. In combination with remaining barriers to entry, this market concentration may call for additional pro-competitive interventions to prevent unfavourable developments. Such policies will simultaneously make it more difficult to uphold traditional social objectives related to pharmacy services. Experiences in both Iceland and Norway highlight the complexity of managing reforms that fundamentally influence competitive behaviour.
Anell
Anders
A
The Swedish Institute for Health Economics, IHE, P.O. Box 2127, S-22002, Lund, Sweden. aa@ihe.se
D004465:Economic Competition; D033161:Government Regulation; D006801:Humans; D007055:Iceland; D009664:Norway; D010593:Pharmaceutical Services / Q000331:legislation & jurisprudence / Q000458:organization & administration*; D013222:State Medicine