Court Outlaws OTC Drug Price-Fixing

16 May 2001

British consumers are expected to save hundreds of millions of pounds annually following yesterday’s decision by the UK Restricted Practices Court to outlaw manufacturers' fixing of retail prices for non-prescription drugs.

This was the moment the UK’s aggressive top four supermarket chains had awaited for three decades. Tesco, Sainsbury, Asda (owned by Wal-Mart) and Safeway moved as one and slashed their prices across a range of branded vitamins, cold and flu medicaments and painkillers.

Prices are set to shrink by between 40%-50%, one supermarketeer predicting that the lifting of the restrictions – designed to protect independent pharmacists from predatory pricing by the big supermarkets – would trim shoppers’ bills by £300 million ($426m) yearly.

Retail pharmacists, who have enjoyed the government-imposed protection for thirty years, are less than euphoric at the outcome. Their case was thrown out of the High Court after the judge ruled there was insufficient proof to back their argument that price predation would severely reduce the numbers of indpendents serving the community.

Said National Pharmaceutical Association chief executive John D'Arcy: “Supermarkets will be able to use this to cherry pick where they want to offer price cuts. That will push independents out of business and as they offer a wider range of drugs than supermarkets, the medicine range will contract.”

The Office of Fair Trading, which instigated the case, saw it differently: “We felt that like every other product, there ought to be competition. We thought it was bad news for consumers that they couldn't shop around. This is the end for legal price fixing.”

The OFT spoke added ominously: “But we would love to hear about anyone who is illegally trying to fix prices.”

News source: Financial Times