Liberalization put on stand-by; The Ministry of Health strictly regulates the authorization of pharmacies

The tightening of the limits provided by the geographical criterion and the demographic criterion regarding the establishment of pharmacies, a measure provided for in the draft government ordinance initiated by the Ministry of Health, a normative act in decisional transparency, has sparked controversy between public authorities and representatives of the political class, patients and pharmacists.

They argue that the draft normative act does not solve all the problems in the market, although it represents a first step regarding the accessibility of medicines for rural patients, and that perhaps a viable solution would be the liberalization of the market and the creation of a real competitive environment.

From the patients' point of view, the legislative initiative of the Ministry of Health is a beneficial one, but in order to facilitate the accessibility of medicines, other provisions would have been needed, which unfortunately contradict the constitutional norms.

Vasile Barbu, president of the National Association for Patient Protection, told BURSA Newspaper: "After the approval and implementation of this normative act, pharmaceutical chains will no longer expand or concentrate only in urban agglomerations and commercial fords, but will have to in the expansion process to take into account the opening of pharmacies in rural areas. The solution that is now in decision-making transparency has been in discussion for the last 15 years, when it was tried to regulate the problem of the lack of community pharmacies in the countryside. Until now, the owners of pharmacies, the pharmaceutical chains, who preferred to concentrate in urban agglomerations, sometimes even in the center of some cities, while the suburbs and the countryside lacked the necessary number of pharmacies, and people had to covered long distances, in the conditions in which they were sick, they moved with difficulty. If we refer to the distance introduced in the draft government ordinance, currently compared to that provision, the distances between rural pharmacies are very large. We have localities where the nearest pharmacy is 17 kilometers, 23 kilometers and even 33 kilometers away - for example in Ialomiţa county, but also in areas of Vaslui, Zalău and Alba counties. All pharmacies are concentrated in a certain locality, while whole localities have no pharmacy. The distance proposed in the draft normative act (ed. - of 250 meters between urban pharmacies and 500 meters between rural pharmacies) is based on reality, and pharmaceutical chains will have to resort to reducing the number of pharmacies they they want to establish them in urban areas and go to another locality. Now there are many municipalities located within a radius of 20 kilometers that do not have any pharmacy".

His Lordship specified that the measure desired by the Ministry of Health does not completely solve the existing problems, but ensures the existence of at least one pharmacy in every locality in the country and showed that, as regards the existing pharmacies in cities, side by side, they will remain as they were authorized, the draft normative act regarding only the establishment of new pharmacies.

• College of Pharmacists, in agreement with the draft ordinance of the Ministry of Health

The College of Pharmacists in Romania agrees with the provisions of the draft government ordinance in decisional transparency on the website of the Ministry of Health, it is stated in a response formulated by the respective institution to the request of the BURSA Newspaper.

The quoted document states: "On the one hand, we have the regulation regarding the demographic criteria for establishing a pharmaceutical unit in rural areas (one pharmacy per 4,000 inhabitants, Pharmacy Law 266/2008 in the current version does not provide any criteria for the rural environment!), and on the other on the other hand, the regulation regarding the introduction of the obligation to comply and the geographical criterion, respectively in urban areas, a distance of at least 250 meters between pharmacies, and in rural areas, at least 500 meters between pharmacies. At the same time, the project proposes another provision that refers to the fact that, in the situation where, in the rural environment, there is no authorized pharmaceutical unit at a distance of 5 kilometers, a single community pharmacy can be established, without complying with the criterion demographic of one pharmacy per 4000 inhabitants. In our opinion, the new provisions are able to create the legislative framework that can ensure both the accessibility of the pharmacy for the rural population (the authorization of pharmacies in the rural environment has not been regulated so far, the consequence being a heterogeneous arrangement of pharmacies in this environment: agglomeration and unfair competition in the center of large rural towns, while 1/3 of the communes in Romania do not have a pharmacy!), as well as the sustainability of the community pharmacy (for the College of Pharmacists in Romania, which aims for pharmacists to benefit from adequate conditions for practicing the profession, is it is essential that pharmacists benefit from regulations that allow them to carry out their activity in the spirit of the profession's code of ethics, for the benefit of the patient, without having to resort to practices that encourage the consumption of medicines in order to ensure the economic potential of the pharmacy, which which is in total disagreement with an ethical behavior towards the patient)".

Regarding the possible impact of the future provisions on the turnover of the currently existing pharmacies, the College of Pharmacists claims that in the short term there can be no such impact, and in the long term it is expected that the discussed regulations will bring the establishment authorization of a new community pharmacy on a path of normality, which would eliminate crowding, unfair competition, ensuring as much as possible the access of the rural population to the medicines they need.

Instead, the Association of Pharmacists and Pharmacists from Romania prefers to have a neutral position, towards the draft normative act, waiting for the legislative text formula that will emerge after the public debate. In a response sent following a request made by Ziarul BURSA, the Board of Directors of the Association of Pharmacies and Pharmacists in Romania states: "Pharmacy has an essential role in ensuring the health of the community and contributes significantly to the well-being of the state by providing access to medicines, medical advice and pharmaceutical services regulated by specific laws. It represents a vital element for the community and the state through a well-defined activity that combines the correct distribution of medicines with appropriate counseling under the supervision of health regulatory authorities. This contributes directly to the management of public health, having a positive impact on the quality of life of the population by providing the necessary medicines and by ensuring their responsible and informed use. At the moment the Ministry of Health has put into public debate the Ordinance for the amendment of Law no. 95/2006 regarding the reform in the health field, as well as some normative acts with an impact in the field of health. The emergency ordinance aims to amend several normative acts, such as Pharmacy Law no. 266/2008, Law no. 339/2005, Law no. 134/2019 and Law no. 95/2006. The complexity of the normative act should be accompanied by the organization of a broad debate in which professionals in the field can participate. During this public debate, suggestions and proposals for changes can be made, which can later be evaluated by the Ministry of Health".

• Florin Buicu: "The next government ordinance will reduce the number of pharmacies in shopping malls"

Florin Buicu, vice-president of the Health Commission of the Chamber of Deputies supports the normative act initiated by the Ministry of Health and states that the exceptions provided by the current law on the basis of which many pharmacies were established in shopping malls will no longer be valid.

Deputy Florin Buicu told us: "The main destination of pharmaceutical services is to be as close as possible to the citizen's home. If in the past we had 6,000 pharmacies, now their number has reached 10,000 nationwide. In the past, there were also demographic and geographic restrictions on the establishment of pharmacies, but because the law provided for some exceptions - such as the establishment of pharmacies in commercial premises with an area of more than 1000 square meters - more pharmacies appeared in cities than malls. Currently we have 10,000 pharmacies, of which 6000 in the urban environment and 4000 in the rural environment, but unfortunately between 10% and 20% of them are always with suspended activity and with requests to change premises. These 1000 or 2000 pharmacies do not provide the pharmaceutical services needed by the population. And there is something else: at the time when we had 6,000 pharmacies, the budget allocated by CNAS was between 3.5 billion and 4 billion lei for the compensation of medicines. Now, for 10,000 pharmacies, the budget allocated by CNAS is four times larger. I know that there is a current regarding the liberalization of the opening of pharmacies, without demographic and geographical criteria or even without any criteria. There is the possibility of opening new pharmacies, but the budget used will remain the same and there is a risk that they will be divided to a larger number of pharmacies, which would represent a decrease in income, if we take into account that the profitability margin of pharmacies is between 1% and a maximum of 3%. If the number of pharmacies increases and they have lower sales than now, there is a risk of closure and the number of those closed will be much higher than the current 20%. Practically, through the future draft of the normative act, we will no longer have the pharmacies in the mall, but a greater number of pharmacies in the countryside, at a minimum distance of 500 meters, which was also specified in a draft law that had been initiated in the Senate ".

• Laszlo Attila: "We should think about a new pharmacy law or implement liberalization"

Instead, Senator Laszlo Attila harshly criticizes the draft law and claims that the pharmaceutical market must be liberalized.

Laszlo Attila, the secretary of the Senate Health Committee, told us: "The draft law is nonsense because we have a commitment with the European Commission, which we signed and through which we committed to liberalize the market in this domain. The deadline for liberalization was long overdue, but it kept being extended, and this was the main reason why independent pharmacists sold their businesses to pharmaceutical chains and opened small drugstores in the hope that liberalization would come and they would be able to resume their business in real competitive conditions. Unfortunately, we are still trying to regulate a dysfunctional market, instead of liberalizing it and allowing fair competition to bring order to the pharmaceutical field. In the absence of liberalization, I do not see how the future government ordinance will solve the situation of pharmacies, which are already having a very hard time. Last year the profitability rate was below 1% and it did not come from the sale of drugs, but from the sale of supplements, cosmetics, dermato-cosmetics or other products in the same category. The current drug pricing policy system does not lead to profitability for pharmacies. At the moment, if we analyze a little bit, because of the pricing policy there is no interest in having a cheap product on the shelf. That is why, until we revise the price policy with incentive measures for cheap profusals, but with a higher commercial addition, we try in vain to regulate the area of pharmacies by government ordinance. We are currently missing over 4000 products. Everything that costs less than 10 or 15 lei has disappeared from pharmacies because it is not profitable, it does not cover the expenses incurred by the pharmacy".

His Highness stated, regarding rural pharmacies, that usually where there are 4000 inhabitants in a commune, there are 4-5 pharmacies in that locality, problems being only in the small towns of the commune, where there are a few hundred citizens. That is why Laszlo Attila proposes the liberalization of the market, a measure that would lead to increased access to medicines through online pharmacies, with pharmaceutical products being delivered directly to the citizen's home.

The secretary of the Health Committee in the Senate also referred to the role of the pharmacist, which in his opinion has been minimized and should increase, including in the shareholding of pharmaceutical companies.

Laszlo Attila also told us: "If we continue the current policies, pharmaceutical chains will dominate and independent pharmacies will not have the slightest chance of survival. That is why I believe that mechanisms that force or endanger the operation of independent pharmacies by large pharmaceutical chains that also have distribution companies through which they manipulate the distribution of certain drugs in order to gain customer loyalty should be banned or severely penalized.

I don't really understand why we need this government order to regulate an abnormal market, instead of thinking about a new pharmacy law or implementing liberalization."

• Authorities should create conditions for a greater number of pharmacies in rural areas

Civil society partners believe that the draft normative act is necessary in the light of European legislation on the matter, but they draw attention to the fact that the authorities should create the necessary conditions for the establishment of a greater number of pharmacies in rural areas

Teodora Koletsis, Partner at Gruia Dufaut & Asociaţii, told us: "The draft Emergency Ordinance put into public debate by the Ministry of Health comes in the context of European rules and regulations, which emphasize the sovereign right of the member states to establish the conditions for the establishment of pharmacies and drug distribution. Analyzing the regulations at the level of EU member countries and outside the community space, we observe a combination of demographic, geographic and anti-monopoly criteria, which aim to ensure the fair and adapted distribution of pharmaceutical services, but also the promotion of competition. The draft Emergency Ordinance therefore follows the general regulatory trend in this field, introduction in addition to the demographic criterion that already exists in our law (Law no. 266/2008), and the geographic criterion. A reference in this regard is a decision of the Court of Justice of the European Union from 2010 (joint case C-570/07 and C-571/07 Jose Manuel Blanco Perez and Maria del Pilar Chao Gomez vs. Consejería de Salud y Servicios Sanitarios, Principality of Asturias, Spain) in which the referral concerned a decree of this principality, which conditioned the establishment of pharmacies on the fulfillment of certain demographic and geographical criteria. The CJEU concluded that these conditions do not oppose the freedom of establishment, as long as the basic rules of the respective regulation do not prevent, in any geographical area with specific demographic characteristics, the creation of a sufficient number of pharmacies capable of ensuring an adequate pharmaceutical service, obviously, in compliance with the non-discrimination criteria. But even so, we believe that the current design can be improved. One suggestion would be to introduce an anti-monopoly criterion. For example, in reports presented by the WHO itself, it is shown that there are countries that have expressly provided that in a commune or a small locality the minimum number of pharmacies that can receive a license must not be less than two. Another regulation could also be considered stating, for example, that a community pharmacy must not be less than 100 meters from a hospital or health care facility, except in localities with less than 4,000 inhabitants, in order to avoid a monopoly situation. At the same time, considering the situation in Romania, especially in rural areas, the authorities should create premises to facilitate the establishment of a greater number of pharmaceutical points, also considering the difficulties of traveling in these areas due to the lack of infrastructure and the level low standard of living of the population. Another suggestion would be to adjust the demographic criterion, considering that it does not always reflect the needs of pharmacies for passengers in transit (eg in airports). For example, French regulation has established specific rules for determining the number of community pharmacies that can be authorized in an airport, depending on the annual number of passengers".

We mention that on January 9, 2024, on the website of the Ministry of Health, in the Decision-making Transparency section, the draft government ordinance regarding some measures in the field of health reform was published.

The legislative initiative shows that the authorization of the establishment of pharmacies will be done in compliance with the following conditions:

- the demographic criterion - according to the number of inhabitants, proven by a certificate issued by the local public administration authority, respectively the Local Community Public Service for the Registration of Persons: in Bucharest - one pharmacy per 3,000 inhabitants, in the county seat cities - one pharmacy per 3,500 inhabitants, and in the other localities in the urban and rural areas - one pharmacy per 4,000 inhabitants;

- the geographical criterion - the minimum distance between pharmacies/community offices, proven by a document issued by an authorized surveyor certifying this situation: in the urban environment at a distance of at least 250 meters, and in the rural environment at a distance of at least 500 meters .

The draft normative act also provides that, in the situation where, in the rural environment, there is no authorized pharmaceutical unit within a distance of five kilometers, a single community pharmacy can be established, without respecting the demographic criterion.