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Travel around much of Europe and one thing you notice is just how many pharmacies there seem to be.

It’s no illusion. Britain has 22 pharmacies for every 100,000 people, while France has 35 and Spain has 46. However, top of the table is Greece with an astonishing 97 – or, to put it another way, not much more than a thousand people per pharmacy.

Given what they’ve been through, one can hardly blame the Greeks for needing an aspirin or two, but the ludicrous over-supply of pharmacies pre-dates the country’s economic crisis – and, in a way, explains it.

Consider the following from Matt Phillips for Quartz:

“According to the OECD, Greece is one of the few EU countries that sets prices for over-the-counter drugs, such as aspirin, and restricts their distribution solely to licensed pharmacies. Regulations limit the ownership of pharmacies to actual pharmacists (and each pharmacist is allowed to own only one). They dictate where new pharmacies may open, based on population and distance requirements. They set opening hours; pharmacists who wish to work beyond those hours must inform their local pharmacists’ association and the local prefecture. Pharmacy owners must employ one actual pharmacist for every three assistants. The list goes on.”

It’s a reminder that over-regulation doesn’t always cripple an industry. Indeed, when the type of product in question is an essential one, then it isn’t the producer that loses out, but the consumer:

“The result of all these rules is a tidy little cushion of profits. The OECD reports that the retail margins for Greek pharmacists, as a share of final retail price, are more than four percentage points higher than those of pharmacists elsewhere in the EU.”

Of course, making any product unnecessarily expensive ultimately impacts on the economy as a whole. The extra money that Greeks are forced to spend on their medicines could have been spent elsewhere – or, at least, not borrowed.

As we know, Greece is now dependent on the European Commission, the International Monetary Fund and the European Central Bank – the ‘troika’ – for its lifeline of credit:

“Those loans came with strings attached. And the troika continues to pull them. In its current round of negotiations with Greek policymakers, the troika is pushing them to ease restrictions on over-the-counter drugs, including letting them be sold in other kinds of stores, such as supermarkets…

“…changes to the pharmacy sector are just a small part of the 329 reforms the OECD recommended to make the Greek economy more competitive. The organization estimates the combined benefit of all these measures at around €5.2 billion ($7.2 billion) or 2.5% of GDP. And it stresses that Greece must follow all of its recommendations to ensure it recoups the all benefits.”

It looks like the game’s up for Greece’s cosseted chemists – and they’re not happy about it. A representative of the pharmacists’ union is reported as saying that “medicines are not consumer products” and that “competition and healthcare are incongruous concepts.”

This gentleman better not visit Britain, where, on every high street, Boots and Superdrug battle it out for healthcare supremacy, while the rest of us cower in doorways, scraping together our last pennies for a Berocca tablet.

Clearly capitalism in this country has gone too far – we’ll be privatising the distribution and sale of food next!

10 comments for: How to bankrupt a country – or the parable of the Greek pharmacies

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