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Medicine prices unchanged since end of monopoly

TT/Peter Vinthagen Simpson · 6 Apr 2010, 10:38

Published: 06 Apr 2010 10:38 GMT+02:00

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Three months after the first competitor to the former state monopoly Apoteket opened its doors price differences among the chains remain slight, despite international comparisons indicating significant differences in the costs of everyday medicines.

Paracetamol, which is the active ingredient in products such as Alvedon, is for example extremely cheap in Britain. A 500 milligramme pill costs from around 0.07 kronor ($0.01) in the UK, while in Sweden one of the cheaper alternatives costs from 1.70 kronor.

Eva Fernvall, brand manager at Apoteket, is aware that the prices of non-prescription drugs are often much lower abroad.

"As we have been a monopoly and were thus required to provide a full range of medicines, including non-prescription drugs, pharmaceutical companies knew that we had to buy in everything. We therefore did not have a strong bargaining position," she said.

The Swedish pharmaceutical monopoly was abolished on November 1st, although the first competitors to Apoteket did not open their doors for business until January 2010.

There are now four dominant market actors - Apoteket, Medstop, Apotek hjärtat and Kronans Droghandel.

A price check conducted by the Svenska Dagbladet (SvD) daily during the week March 22nd - 28th showed that prices for popular everyday non-prescription drugs remain high and show little or no difference among the chains.

Fernvall argues that prices will fall when supermarkets and other retailers begin selling non-prescription medicines.

"In six months I think that we will see completely different prices," Fernvall said, explaining that sales volumes had not yet reached levels that allow for price cuts.

"If (supermarket chain) Ica start selling their own brand of paracetamol then prices will fall quite fast," she added.

Story continues below…

Prices for prescription medicines are regulated in Sweden while non-prescription medicines are now subject to market prices.

Prior to the 2010 deregulation, Apoteket hiked its prices on thirty of its most popular non-prescription brands, claiming that the rises were in response to price increases by pharmaceutical companies. The higher price levels now remain at all four chains, according to the SvD review.

Since November, 5,000 new retail outlets for non-prescription medicines have been added to the market, according to the newspaper.

TT/Peter Vinthagen Simpson (news@thelocal.se)

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Your comments about this article

12:33 April 6, 2010 by foxpur
Since Swedes are used to the current prices, high though they are, they will pay for them. With the new competitive economy it makes sense the prices will remain high until a price war starts for gaining customers, and will slowly drop off as they have lots of room to lower the costs. The costs are not expected to go higher however without an uproar.
13:10 April 6, 2010 by Audrian
Monopoly prices in private sector might be fixed on a sliding scale with the objective to maximize profit, e.g., sale is to capture those who do not afford the initial price. In government monopoly prices aim at cross subsidization and this does not endanger the bottom line, profit. The researcher should have taken samples and compared prices if he should want to make conclusive remark.
00:43 April 7, 2010 by Jan M
Privatisation doesn't make things cheaper of itself. Private companies competing for consumers and consumers willing to switch between providers makes for competition and lower prices. Unfortunately if you privatise any public monopoly initially you simply create private monopoly. There are no downward price pressures in the short term. In fact you only get any by enforcing them legislatively. Otherwise the business model for a private company buying part of a public monopoly is simple and it is take a captive market and make at least the same amount out of it as the government was making. Think of UK privatisations. And the examples of lower prices and better service are where exactly?
08:58 April 7, 2010 by Renfeh Hguh
The law of supply and demand regulate prices in a free market. However due to the past government monopoly, prices were set at an artificial level. Because this artificial price is high and Swedes are used to paying it, the newcomers to the private sales market have no reason to drop prices as long as none of their competitors do it.

Prices will remain at the current level until some big player comes into the markert place and shakes it up.

We are all benefiting from the privatisation because of the more convinient locations and opening hours.
10:32 April 7, 2010 by StockholmSam
Odd that the author would expect to see large differences in prices between the different suppliers. If the market price is high due to any factor - in this case, that consumers are accustomed to such high prices after years of monopoly prices - then it is what it is and no supplier will slash prices unless there is a need to gain market share. So far, it seems there is plenty of market share to go around at current prices as evidenced by the statement that "since November, 5,000 new retail outlets for non-prescription medicines have been added to the market." No need for a price war, yet, so of course you won't see large price differences between pharmacies. And when you do, such differences won't last very long.

What would have been more interesting to see is whether there is a greater selection of products from which to choose now that we have private competitors. I have not been in a pharmacy in over a year, can anyone say that they have found a greater selection since the privatization? Increased options will put downward pressure on prices, too.
20:14 May 10, 2010 by jaan_arup

Can I get 5 minutes to hear your valued opinion regarding an important issue in Swedish healthcare? If yes, please express it boldly in this small survey.


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