No price difference in Swedish pharmacies despite deregulation aimed to improve competition


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Sunday, 17 July 2011
When the Swedish pharmacy monopoly, state owned Apotek was broken down in a government deregulation of the sector, it was expected that prices will fall as a result of competition. It turns out that this has not really been the case.

Basic summer components such as tick-pickers, plasters and sun cream have been found to have the same price, in the Swedish pharmacy chain, Apotek and the others which are private owned and which were expected to run the competition.

According to the Swedish daily, Dagens Nyehter, it is however still possible to find bargains as some prices stand out.
The paper reports that eight summer products selected such as tick-pickers, blister plasters, sunscreen, among others, with their prices compared between seven pharmacies in the country, many of the products have similar prices.


However, the investigation sample is reported to be too small to draw any general conclusions from the nature of the Swedish deregulated pharmacy market but other, more extensive comparisons have shown similar results. This is worrying to advocates of deregulation.

According to Jan Bertoft, Secretary General of the Swedish Consumers Association, who is disappointed with the results from the pharmacy deregulation, say that “So far we have not seen any great benefits for consumers. And it's not just about whether the goods have become cheaper or not, although many more pharmacies are open in the city, there have been poor pharmacy establishments in rural areas.”

Eva Fernvall, brand manager at Apoteket (the government owned pharmacy), is himself surprised that the prices are so similar.
“We're a little confused and it is difficult to say what it may be due to that. It may be that the market is still fairly new in the pharmacy industry. It has become a sort of ‘follow the leader’ effect.”

The state sets the prices of most of the prescription medicine. Eva Fernvall thinks it is strange that the price differences are greater for on-the-counter products.
“Previously, we (Apoteket) were the only sales outlet. Now there are about 7000, and yet it not much has happened on the price department. Perhaps it is because the volume is still too low.”
Even though there has been no pressure on prices, a number of pharmacy chains are showing looses.

The Swedish government, due to pressure from Europe decided to open up the sector for competition on the belief that prices will drops and value will be created for the consumers.  Since then hundreds of new pharmacies have been created with most of them concentrated in the big cities. With the market stalling on ‘doing the same thing as others’, the new pharmacies have been forced to make looses as consumers don’t see any reason to shift to a competitor who is not offering better deals.
By Team

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