Pharmacies

18 August 2004

The Government today announced the implementation of its package of measures in response to the OFT market study on retail pharmacies.

See Department for Business, Enterprise and Regulatory Reform website.

See OFT's response to this announcement.

17 July 2003

The Government response to the pharmacy study did not view deregulation as the best course of action and decided to modify the entry control regulations rather than abolish them.

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

17 January 2003

The report of the OFT investigation into the control of entry regulations and retail pharmacy services in the UK was published on 17 January 2003.

The report recommends that the control of entry regulations for community pharmacies (which limit the number and location of community pharmacies) in the UK should be ended. This would mean that all registered pharmacies with qualified staff would be able to dispense NHS prescriptions. The report also recommends that the distinction between controlled and non-controlled areas in England and Wales be ended.

Download The control of entry regulations and retail pharmacy services in the UK (revised edition March 2003) (pdf file 414 kb)
[This report was revised in March 2003 to take into account a number of small corrections and amendments. These in no way affect the OFT's final analysis in the report or conclusions.]

Download the executive summary in Welsh (pdf file 42 kb).

oft609b:

• Annexe A (168kb) The control of entry regulations in England, Wales and Scotland
• Annexe B (100 kb) The cost of administering the control of entry regulations
• Annexe C (383kb) The regulation of pharmacies abroad
• Annexe D (493kb) Consumers use of prescription pharmacies in the UK
• Annexe E (168 kb) Independent pharmacy questionnaire
• Annexe F (96 kb) The Essential Small Pharmacies Scheme 
• Annexe G (125 kb) Report to the Office of Fair Trading
• Annexe H (297 kb) Pharmacists in Great Britain: a snap shot
• Annexe I (49 kb) List of organisations consulted
  

oft609c:

• Annexe J (951 kb) Creating an electronic map of GB pharmacy locations
• Annexe K - part 1 (2,250 kb) The relationship between price and local concentration measures 
• Annexe K - part 2 (629 kb) Analysis of entry-exit data
• Annexe K - part 3 (461 kb) The impact of pharmacy entry: three case studies
• Annexe L (784 kb) The access implications of entry and exit pharmacies
• Annexe M (558 kb) The relationship between quality and local concentration
• Annexe N (361 kb) Welfare implications of potential leapfrogging
• Annexe O (368 kb) Areas of local concentration

The investigation has concluded that removing restrictions on entry to the community pharmacy market would give consumers greater choice, benefits from greater competition, and better access to pharmacy services. There would also be large regulatory cost savings for business and government.

There are currently some 12,250 community pharmacies in the UK, providing NHS prescriptions and selling over-the-counter (OTC) medicines worth annually a combined total of £8.6bn. The two categories of OTC medicines are:
i) 'P' medicines, which can only be sold through pharmacies by or in the presence of a qualified pharmacist
ii) General Sales List or 'GSL' medicines which can be sold by any type of outlet.

The OFT found that the regulations that currently control entry to the industry:

• restrict consumer choice and convenience in terms of location of pharmacies and opening hours
• restrict price competition on OTC medicines
• blunt incentives for pharmacies to compete on additional customer services
• result in consumers paying £25m - £30m per year more for OTC medicines than if competition were freer
• cost businesses an estimated £16m in compliance costs every year
• cost the NHS approximately £10m a year in administration costs
• hold back innovation and responsiveness to changing and growing consumer needs.

Under the current regulations, pharmacists can dispense NHS prescriptions only if local health authorities are satisfied that this is 'necessary or desirable' for the adequate provision of pharmaceutical services in the local community. Almost all pharmacies in the UK have an NHS dispensing contract, as NHS dispensing accounts for 80 per cent of a typical community pharmacy's turnover.

For purposes of the control of entry regulations England and Wales are currently divided into controlled areas (which are predominantly rural) and non-controlled areas. Dispensing doctors have rights to provide NHS dispensing services in controlled areas.

If you have any queries about the pharmacy investigation, please contact OFT Enquiries on 08457 22 44 99.

Back to: Completed market studies