Pharmacies

Launched: December 2001

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Purpose of the study

To address competition concerns and concerns regarding levels of consumer protection in the market. To see if control of entry regulations are impeding the market to the ultimate detriment of the public.

(Study followed in-house work.)

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Findings

The findings of the study showed that the regulations that control entry to the industry:

1. restricted consumer choice and convenience in terms of location of pharmacies and opening hours

2. restricted price competition on over the counter (OTC)  medicines

3. reduced incentives for pharmacies to compete on additional customer services

4. resulted in consumers paying £25 -£30 million per year more for OTC medicines than if competition were freer

5. cost businesses an estimated £16 million in compliance costs every year

6. cost the NHS approximately £10 million a year in administrative costs, and hold back innovation responsiveness to changing and growing consumer needs.

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Recommendations

The recommendations of the study were:

1. for the Government to remove entry restrictions that limit the number and location of community pharmacies.  This would mean that all registered pharmacies with qualified staff would be able to dispense NHS prescriptions.

2. to end the distinction between controlled and non-controlled areas in England and Wales.

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Action following market study

In August 2004, the Government loosened entry barriers in certain areas only (large shopping developments, pharmacies open for more than 100 hours a week, those part of a consortium to establish new one-stop primary care centres, and to exempt wholly internet or mail-order based pharmacy services).

Scottish Executive rejected OFT's conclusions on the basis that implementing the recommendations could result in a lessening or loss of services in more remote and rural areas.

In August 2009, the Government announced the implementation of its package of measures in response to the OFT market study on retail pharmacies.

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Market study details and report

Download the OFT Report 'The control of entry regulations and retail pharmacy services in the UK' (revised edition March 2003) 17 January 2003 (pdf file 414 kb)

Download the executive summary in Welsh January 2003 (pdf 42 kb)

• Annexe A The control of entry regulations in England, Wales and Scotland (pdf 168kb)
• Annexe B  The cost of administering the control of entry regulations (pdf 100 kb)
• Annexe C The regulation of pharmacies abroad (pdf 383kb)
• Annexe D Consumers use of prescription pharmacies in the UK (pdf 493kb)
• Annexe E  Independent pharmacy questionnaire (pdf 168 kb)
• Annexe F  The Essential Small Pharmacies Scheme  (pdf 96 kb)
• Annexe G Report to the Office of Fair Trading (pdf 125 kb)
• Annexe H Pharmacists in Great Britain: a snap shot (pdf 297 kb)
• Annexe I  List of organisations consulted (pdf 49 kb)
• Annexe J Creating an electronic map of GB pharmacy locations (pdf 951 kb)
• Annexe K - part 1 The relationship between price and local concentration measures  (pdf 2,250 kb)
• Annexe K - part 2  Analysis of entry-exit data (pdf 629 kb)
• Annexe K - part 3 The impact of pharmacy entry: three case studies (pdf 461 kb)
• Annexe L The access implications of entry and exit pharmacies (pdf 784 kb)
• Annexe M The relationship between quality and local concentration (pdf 558 kb)
• Annexe N  Welfare implications of potential leapfrogging (pdf 361 kb)
• Annexe O  Areas of local concentration (pdf 368 kb)

See the Government's response to the study on the Department for Business, Enterprise and Regulatory Reform website 17 July 2003

See the Government response to the OFT market study on retail pharmacies.

See Department for Business, Enterprise and Regulatory Reform website 18 August 2004.

See OFT's response to Government announcement 'OFT pharmacy statement' 18 August 2004.

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