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Estonian pharmacy market heading towards controversial reform.

On 1 April 2020, the Medicinal Products Act will impose the requirement of pharmacist owners for all pharmacies.

Estonian society and the media are discussing pharmacy reform, as implemented already in 2015, due to be finalized by April 2020.

The essence of the reform lies in two main aspects: pharmacy service providers should be separated from pharma manufacturers and wholesalers (prohibition of vertical integration), and ownership of pharmacies should be transferred to professional pharmacists only. These conditions were believed to guarantee the quality of pharmacy services and to enhance free competition between pharmacies. The reform is based on the assumption that without the influence of wholesale chains pharmacists are free for professional development and free of the commercial interests of pharma companies.

Although enhancing competition is one of the objectives of the reform, the Competition Authority has referred to probable impediments to free competition through the reform.

Essential questions remain to be answered: Are pharmacists even interested in business ownership and management with all the extra responsibility and potential liability on top of their professional duties? Are they willing to take the financial risks and commitments of an independent enterprise? Interest by pharmacists in acquiring existing pharmacies has indeed been very modest.

Professional pharmacists have expressed indignation towards suggestions that if they are not the owner of a pharmacy their level of service would be less professional or not in patients’ best interests.

According to data from the State Agency of Medicines, currently about 68% of Estonian pharmacies are not in compliance with the new requirements. The majority of pharmacies in Estonia belong to four large chains linked to wholesalers.

Without major and rapid progress, the risk is that after 1 April 2020 up to 50% of pharmacies would need to be closed down due to non-compliance with legal requirements. The impact on public services would obviously be severe.