Economist Warns Against "Euro" Regulation of US Pharmacies

JULY 01, 2004
Ken Rankin

The solution to rising prescription drug prices in the United States does not involve adopting the kind of anti-competitive regulations imposed on retail pharmacies in other countries, American Enterprise Institute economist John E. Calfee told Congress. He cited research that suggests that heavy-handed "regulation of retail pharmacy further constrains competition in France, Germany, and Italy."

Calfee told a Senate Finance Subcommittee that these studies indicate that "anticompetitive regulations in European nations often increase retail prices on the order of 15% or more." He singled out Germany as a prime example, noting that pharmacy retail margins in that country are fixed by the government, prescription price discounts are prohibited, and restrictions are placed on the entry of competing pharmacies.

Europe is not alone in fostering anticompetitive restrictions on community pharmacies, Calfee added. "Australian authorities recently refused to reconsider regulations that restrict competition so as to increase pharmacy prices by 15%," he said.