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Wanna Argument?
Drugs, Big Business and Community Service: Kicking the Chemists in the Margins
When is it OK for producers to deliberately over-charge consumers, with the blessing of the law? When it's the Resale Price Maintenance (RPM) law and it's designed to protect small pharmacy businesses.
At least it was. Up until May 2001, this 38 year old system allowed manufacturers of over-the-counter medicines to set the minimum price at which the drugs were sold.
The main protagonists argued for consumer welfare on the one side and for community service on the other. In support of lower prices for consumers were the Office of Fair Trading (OFT), the Consumers' Association, Asda and Superdrug. The pharmaceutical companies, Community Pharmacy Action Group and Boots the Chemists were fighting for the continuation of RPM.
This argument looks at both sides of the dispute, how it's been resolved, and the likely winners and losers out of the deal.
Tense, nervous headache for local chemists
Keep the RPM! |
The power to hit prices right where they hurt
Smash producer power! |
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I'm feeling terrible today - hay fever on top of everything else. |
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What's wrong with you now? |
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Just run down, you know, but now I've got this head cold and all. |
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What are taking for it then? |
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Some of those multi-vitamins, some paracetamol and I've just picked up some Lemsip for tonight. |
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Is that all? You ought to be rattling with every step. |
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Very funny. The bloke down the chemists gave me some bad news though. |
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Oh yeah? Got to clear your tab, eh?
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I'll ignore that. No, he reckons he's got 12 months left of trading. Then we'll all have to get to the superstore to buy our stuff. |
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So what? We get everything else there
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Exactly. Where's the community then, eh? |
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All down Asda, by the sound of it! |
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You're not taking this very seriously. |
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Well - what's it all about then? |
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What is RPM?
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Right. As far as I can see, the chemists were asking for a licence to rip the public off. |
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Small shops can't compete with the big boys, though. They need some support if we want them to stay. |
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And that means they can charge us more for our Anadin? |
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Pricing over-the-counter medicines
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The other side of the story is the service to the community provided by the small pharmacy. Old folks often can't get to the superstore. They rely on the chemists to get their drugs and other treatments. |
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I understand that. But isn't giving the drugs companies the right to set their own prices a bit like putting a pickpocket in charge of security? |
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Market Power: price takers and price setters
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Whew! Big business or what. This still doesn't make a difference to us does it? |
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Not if you don't count saving money as making a difference to you. |
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But what about our local chemists? How are they going to survive? |
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Sink or swim, innit? No point trying to compete with the supermarkets. |
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Competition and the small chemist
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All the big companies will be happy of course. |
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Maybe the supermarkets will be, but what about some of the large high street retailers? They might feel the pinch a bit. |
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Where now for the high street pharmacists?
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So there's no hope for Ken's Kosy Kemists then. |
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Unless he can think of better ways of serving his customers..... |
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Such as? |
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Well... what about a home delivery service for your monthly skipload of pills? |
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I'd hit you if I had the strength. |
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How it all fits in with UK competition policy
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