Economist Warns Against "Euro" Regulation of US Pharmacies

The solution to rising prescription drug prices in the United States doesnot involve adopting the kind of anti-competitive regulations imposed onretail pharmacies in other countries, American Enterprise Institute economistJohn E. Calfee told Congress. He cited research that suggests thatheavy-handed "regulation of retail pharmacy further constrains competitionin France, Germany, and Italy."

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

Europe is not alone in fostering anticompetitive restrictions on communitypharmacies, Calfee added. "Australian authorities recently refusedto reconsider regulations that restrict competition so as to increasepharmacy prices by 15%," he said.