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Britain Ends Price-Fixing on Nonprescription DrugsBy: Marjorie Miller This was good news for Britons with the sniffles but a
headache for the more than 6,000 owners of independent pharmacies, who say
they will not be able to compete with drugstore and supermarket giants. "That was our profit," said Dipak Patel, the
pharmacist at Remedys in West London's Maida Vale neighborhood.
"That's what kept us going." Many drugstore customers welcomed lower prices, but others
worried that this is one more step toward turning a nation of shopkeepers
into a nation of supermarket shoppers. They feared losing the personalized
attention of a familiar neighborhood "chemist," who knows their
medical history and serves as a first-stop health care advisor. "We rely on these people for many, many things and
what chance have they got against the supermarkets?" said William
Millin, the chairman of a real estate company who was shopping at Remedys.
"You can't talk to anyone at a supermarket. Or, you can talk to them,
but you won't get an answer." "It's the way it is in this day and age, the wee guys find it hard to compete. Marks & Spencer sells flowers a lot cheaper than I can buy them. People are going to the supermarket and buying flowers, fish, groceries, beef. Eventually all these shops will be closed," Lowe said
with a matter-of-fact nod down High Street. "I don't think people
bother too much whether it's nice or not. It's convenient and cheap." Down the block from Remedys, one of the country's 1,300
Boots pharmacies had just dropped the price of a local brand of ibuprofen
by a third, in a three-for-two pack sale. The result: While Remedys' price
came to about 19 cents a pill, Boots offered the same product for 13.7
cents. Patel said he might be able to come down a bit but not 30% on
nonprescription drugs, which represent half his total sales. Retailer chains buy medicines in larger quantities and
therefore obtain better prices from suppliers. Pharmacists said they hoped
that manufacturers will give independent pharmacists a break to keep them
from going out of business. But even the chain pharmacies said they will suffer
initially. Shares of Boots stock fell by 4.5% after news of the end of
price-fixing. The company announced that it expected profits to drop
between $21 million and $28 million, although it believes that the loss
will eventually be recouped in increased market share. Pharmacists were critical of stores offering larger
quantities of drugs for lower prices to boost sales. They noted that one
supermarket had dropped the price on paracetamol--known in the U.S. as
acetaminophen--a painkiller that is dangerous when taken in large
quantities. And where, they said, do you find a pharmacist standing next
to the ibuprofen in a large supermarket warning that it can be bad for
asthmatics? "Many local pharmacies should still find that there
is a market for their services and that convenience will compensate for
prices," business columnist Patience Wheatcroft wrote in the Times of
London. But, she added, legalized price-fixing was "a relic of
rip-off Britain." Britain passed the Resale Prices Act in 1964 banning
price-fixing, but booksellers and pharmacists won exceptions in court on
the grounds that their businesses needed help or they would go bust. The booksellers lost theirs in late 1995, but pharmacists
fought the challenge by the government's Office of Fair Trading,
supermarkets and a consumer association. In the five years that
pharmacists have been in litigation, there has been a drop in the number
of independent bookstores, according to Sidney Davis of the Booksellers
Assn. But he could not cite any numbers and acknowledged that it was
impossible to determine whether discounted prices alone were the cause. "There have been a lot of changes in the market for
books in the last 10 years. Internet books, the arrival of superstores.
There has been a slight decline in the number of businesses, but there is
more square footage dedicated to books and more books sold," Davis
said. This week, the judge hearing the case on nonprescription
drugs warned pharmacists that he did not see a case for continued
price-fixing, so they gave up the fight Tuesday. On Wednesday, ibuprofen
was on sale at Sainsbury's supermarket for half the price it was the day
before. Asda supermarket cut the price of a leading cold remedy by half
and the price of daily vitamins by 25%. John D'Arcy, chief executive of the National
Pharmaceutical Assn., predicted that he will lose a large number of
independent pharmacists.
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