Real added value for consumers with the over-the-counter medicine reform

Preparations for the liberalisation of the sale of over-the-counter medicines in accordance with the Government Programme are progressing. The Ministry of Social Affairs and Health has published a report of the working group on the liberalisation of the sale of over-the-counter medicines. The Finnish Commerce Federation is pleased to have received an invitation to the working group, but considers that the final report does not sufficiently take into account the benefits of the reform for consumers, and has therefore submitted a supplementary statement proposing clear improvements that bring added value to consumers.

“The Finnish Commerce Federation considers it of paramount importance that the over-the-counter medicine reform under way truly brings added value to customers. The reform would improve the accessibility of over-the-counter medicines since they would be available at significantly more sales outlets,” says Kari Luoto, Managing Director of the Finnish Commerce Federation, summarising the goals of the commerce sector.

Liberalising the sales of over-the-counter medicines into the geographically comprehensive network and extensive opening hours of commerce sector companies would expand and improve the accessibility of pharmaceuticals and streamline transactions in both cities and sparsely populated areas. With the reform, over-the-counter medicines would be available in grocery stores, village shops, kiosks and optics stores, for example, and more extensively than before in online stores.

“In addition to pharmacies, the extensive store networks and extensive opening hours of grocery stores enable quick access to medicine during evenings, weekends and public holidays, as well as holiday home locations, for example,” says Tuula Loikkanen, Managing Director of the Finnish Grocery Trade Federation.

Over-the-counter medicines have been sold in shops for a long time

For decades, a wide range of over-the-counter medicines, including commonly used painkillers such as paracetamol and ibuprofen, have been sold through the retail distribution channel. There are currently 118 medicine cabinets (pharmacy service points) in Finland, the majority of which are located in shops in sparsely populated areas, for example. Only pharmacists, who can be reached by phone if necessary, provide medical advice at these points.

“For several decades, the medicine cabinet model has served customers and provided commerce sector companies with a good experience of responsible sales of over-the-counter medicines. Now we can make use of the lessons learned by expanding our operations,” says Loikkanen.

Many consumers find medicines too expensive

Price competition in over-the-counter medicines and discounts granted to customers for over-the-counter medicines have been possible since 1 April 2022. According to Fimea, nearly three quarters of the pharmacists who responded to its survey reported that they had so far not granted discounts on over-the-counter medicines since the amendment to the regulation that came into force during the year in question.

Several surveys have shown that consumers feel that the prices of medicines are too high. Of the respondents to Fimea’s Medicines Barometer (2021), 26% felt that medicines cost too much in relation to their ability to pay.* 76% of the respondents to the consumer survey conducted by the Consumers’ Union of Finland agree or somewhat agree that medicines are expensive in Finland. In the last three years, 32% of the respondents had postponed the purchase of the medicines they needed or had not bought them at all due to the price of the medicines. **

In the autumn of 2023, Copenhagen Economics, a consulting company specialising in applied economics, was commissioned by the Finnish Commerce Federation to carry out a price comparison of pharmaceuticals between Finland and Sweden. According to the results, over-the-counter medicines are 37 per cent cheaper in Sweden than in Finland on average. ***

“The Finnish Competition and Consumer Authority has also stated in several reports**** that the profits generated by pharmacies for their owners have repeatedly been found to be relatively high, which is reflected in the costs of medicines for consumers and society. It is also important that the reform creates better conditions for price competition for medicines,” says Luoto.

Expansion of sales channels improves equal operating conditions

The Finnish Commerce Federation considers it important that customers are offered medical advice when they need it. The advice should be provided remotely, similar to the medication cabinets in pharmacies’ online stores and shops.

“It is important that the regulations concerning medical advice are updated so that advice could be provided from places other than the pharmacy’s physical facilities. The reform makes it possible to improve the availability of medical advice in areas where there are currently no pharmacy services or their opening hours are limited,” says Luoto.

Future licensing and supervision practices must also not prevent competition or restrict the participation of smaller companies in the sale of over-the-counter medicines. In particular, the importance of village shops and other sales outlets located in sparsely populated areas in the sale of over-the-counter medicines and as prescription medicine pick-up points should be safeguarded in the reform – as should, for example, the opportunities of the optical industry to serve its customers in a diverse manner under the same roof.

“The over-the-counter medicine reform is the right step towards equal operating conditions for pharmacies and other sectors. It would be important for opticians offering extensive optician services to have a sufficient range of over-the-counter medicines that benefit customers,” says Panu Tast, Managing Director of the Finnish Association of Vision and Eyecare that represents the optics industry.

Equal treatment of different operators and improving the accessibility of over-the-counter medicines also require enabling the online sale of over-the-counter medicines outside pharmacies. The Finnish Commerce Federation emphasises that, in Sweden and Norway, online pharmacies have had an important impact on the fall in the price level of over-the-counter medicines.

The reform can be implemented cost-neutrally for the state’s finances

The Finnish Commerce Federation considers the impacts of the over-the-counter medicine reform on the profitability of pharmacies to be moderate. Over-the-counter medicines currently account for 14 per cent of the turnover of pharmacies in Finland. In Sweden, where the liberalisation was granted in 2009, 83 per cent of over-the-counter medicines are still sold in pharmacies.

The Finnish Commerce Federation considers that, if the pharmacy tax is removed from the liberated over-the-counter medicines, the removal of the pharmacy tax would also apply to the over-the-counter medicine sale of similar products through pharmacies, and thus the removal of the pharmacy tax would have a positive economic impact on pharmacies. State tax revenues can be secured by looking at taxation as a whole.

The preservation of the current pharmacy network can be ensured by reforming the medicine tax and pharmacy tax to better support pharmacies in remote areas or through the pharmacy support mentioned in the Government Programme.

Liitteet:

Supplementary statement by the Finnish Commerce Federation to the report of the working group assessing the expansion of the sales channel for over-the-counter medicines (in Finnish)

Pharmacy service point analysis, Day 1 (in Finnish)

Further information:

Kari Luoto, Managing Director, Finnish Commerce Federation, tel. +358 (0) 400 688 708, kari.luoto@kauppa.fi

*Fimea’s 2022 financial statement analysis of pharmacies (N=475)
*Consumers’ Union of Finland, Aula Research, 9/2022
***Price comparison results and research methodology on the Finnish Commerce Federation’s website
****Pharmacy market development, Finnish Competition and Consumer Authority reports 5/2020 and press release 4 December 2023