EKIP– Expert Club for Economics and Politics A Different Opinion
While the focus of public attention is concentrated on the occupations in universities, the socialist government – quite expectedly – is bent on implementing anti-market reforms. The amendments to the law on medicinal products in human medicine adopted at first reading create conditions for limiting competition in the supply of medicines, and the government's actions and future results are excellent examples of the negative effects of rent-seeking behavior and lobbying.
The scandalous thing about the amendment to the law is that the monopoly right of the Bulgarian Drug Agency (BDA) to issue permits for the opening of new retail outlets is being restored. The commission is composed of members of the faculties of universities, teaching medicine, representatives of the BDA and ... members of the Bulgarian Pharmaceutical Union. The latter is the professional organization uniting pharmacists, owners of one pharmacy each. In practice, the permit to open a new retail outlet will be issued by the competitors of the same one. This puts them in a conflict of interest - pharmacists who are members of the BDA have no motive to allow competition from new pharmacies. The restoration of the privilege to decide which pharmacies will open their doors and when puts owners with one pharmacy in the extremely privileged position of acting as a market regulator.
In the free market, the creation and existence of cartels and monopolies is unfeasible. But through lobbying and through the legislative power of another monopolist – the state – the owners of one pharmacy successfully won the right to limit their competitors and form an entity similar to a cartel. Historically, cartels created by the legislator are nothing new. On a very similar principle, craft guilds existed in the Middle Ages. They had the right, granted by law, to determine the prices, quantity and quality of production and to punish producers who were not members of the guild. This privilege of theirs to limit the free market has led to a decrease in quality, but an increase in the price for consumers[1]. This will also be the result of the renewed powers of the BDA. The negative effects of the power of the executive agency and the professional organization of pharmacists have already been experienced in Bulgaria. As Capital points out, “(during) the time of the triple coalition, even if you were ready and prepared with a whole bunch of documents, the permit to open a pharmacy could be obtained after a year of waiting.” With the introduction of the amendments to the law, this will happen again. Fortunately for us as consumers, the state has not yet obliged all market participants to participate in the quasi-cartel structure that the administration is creating.
It is not difficult to guess what the effect of yet another restriction on private initiative will be. Even if they do not completely stop the opening of new pharmacies, the BDA has the opportunity to delay it as much as possible. In this way, the cost to the entrepreneur increases - the lost profits from the unfulfilled trade increase. While this negative effect can be relatively easier to bear by large chains that already have operating sites and are operating, it can completely discourage entrepreneurs who have no other source of income.
Not only investors who decided to trade in medicines are harmed; consumers are also harmed. In order to open a pharmacy in a completely free market, the entrepreneur must assess the demand in the area of his site and determine that he will be able to operate at a profit. He has no motive to open a block from his competitor or to sell at a huge markup, because he will lose his customers, and with them - his business. That is, the investor will have to take care of satisfying the needs of his consumers.
Through the BDA, the members of the Bulgarian Pharmaceutical Union will have the power to unilaterally nullify the effectiveness of this process and remove consumer demand from the equation. Regardless of whether the pharmacist has found an opportunity to satisfy people's needs for medicines, he will not be able to do so if he does not find a way to get through the sieve of his future competitors. It is clear that the chains will experience the greatest difficulties with opening new locations - the "class" struggle between the owners of a pharmacy and the chains has been going on for years. Artificial obstacles to the opening of a new pharmacy will limit the supply of medicines, which is a prerequisite for maintaining inflated prices. The quality of service will also not improve.
The only ones who benefit from this are the owners of non-competitive pharmacies, while all consumers lose out. The legal measure will also lead to hidden prices for drug buyers. If the BDA delays the opening of a new pharmacy that is close to its customers, the price for them increases due to the time it will take them to go to and from the pharmacy, as well as the time they will have to wait in line.
No less important is the question of whether there is any need for an institution that regulates pharmacies and determines whether and when they can open their doors. Competition in the market is a sufficiently effective mechanism for providing good product quality and a good price for consumers. Advocates of state regulation in pharmacy argue that medicines are too important and that pharmacists can abuse them by selling harmful medicines.
This is absolutely incredible and impossible in the free market for at least two reasons. Pharmacies compete with each other, so in order to attract customers, their reputation must be impeccable. Therefore, it is unlikely that any pharmacy will try to undercut prices by offering harmful medications. The risk is enormous, because when the harmful effects of the drugs are established, the seller will lose his entire business, as well as his freedom. Even if a trader has the desire to act in this suicidal way, it is extremely difficult for him to obtain poisonous drugs - pharmaceutical companies are also under pressure from the market to offer quality products. Otherwise, they risk incurring huge losses.
So far, the market has always been extremely successful in providing quality products of absolutely any kind – from food and essential goods to spacecraft. Medicines are no exception. Therefore, it is good to ask ourselves whether we need an agency supported by taxpayers, whose functions are reduced to: 1. expert assessment and supervision of the quality, safety and efficacy of medicinal products; 2. expert assessment, registration and supervision of the medical device market; 3. control over the transfusion system under the Law on Blood, Blood Donation and Blood Transfusion.
The BSP and its coalition partners are once again restricting the freedom of entrepreneurs, in this case by granting them the unique right to have their activities regulated by their competitors. To this end, they are increasing the powers of an agency that the market does not need at all and which is used solely to restrict free trade. By returning its authority to control the opening of new pharmacies, the commission will officially act as a protector of the private interests of a small group of traders, harming absolutely everyone else.
I have no words for how simple a person wrote this article!!!!!!!!!!!!!! Not only am I shocked, I am also amazed to the point of fainting! This person understands nothing about lawmaking, regulations, pharmacy, or even journalism!
You make incredible arguments. 😀
It is good for the author to first familiarize himself with reality and then write fictional works. The Bulgarian Federation of Pharmacists is not "the class organization uniting pharmacists who own one pharmacy each", but an organization in which all pharmacists are members, regardless of whether they have one or how many pharmacies they have.
The BFU is not an organization in which "all masters" are members. Their statutes state that all masters are eligible to be members, but membership itself is voluntary. Show data that the organization also represents large pharmacy chains, not just small ones.
Dear Mr. Vassilev,
First, membership in the BFU is not voluntary, according to the law on the professional organization of master pharmacists: Art. 3. (1) Master pharmacists who practice their profession are members of the BFU. , and it is voluntary only if they do not practice their profession.
You present data that someone in this union is interested in who works where.
Third, not only are pharmacists from large chains members of the union, they are even in leadership positions.
Fourth, how can someone write that medicines should be treated as ordinary goods? Did you know that 90% of over-the-counter medicines and 80% of dietary supplements, dispensed without consulting a pharmacist, can lead to serious complications for the patient - hospitalization, permanent disability, and even death. For reference, the mother who recently gave her child blackthorn tea.
I could go on and on, but...is there any point?
You really made me laugh 🙂 ......
First of all - a pharmacy is not a store, but a healthcare facility!
The Bulgarian Pharmacy Federation is a professional organization of all masters in pharmacy, not just "sole" pharmacists.
The profession of pharmacist is regulated according to a European Directive, not some random invention.
The article is full of factual errors, so many that any pharmacy student could point them out, let alone the people in the system.
Membership in the BDA - there is no such thing, complete absurdity, returning the powers to the BDA - who was issuing them until now?!
.... and other such nonsense.
The journalist deserves to have his diploma torn up.
Maybe gun shops aren't shops, but "equipment stores"? A pharmacy, like any other place where goods are sold, is a shop. The fact that it sells medicines doesn't change its essence.
As I wrote above, so far I have not found any evidence that anyone other than the owners of one or two properties is represented there.
"The profession of pharmacist is regulated according to a European Directive, not some random invention." I don't see what this has to do with the argument. EU directives are not the fruit of some angelic benevolence - like any central regulation, they can also be harmful results of lobbying activity.
I couldn't read the whole article :( I was just disgusted by the nonsense written in the first paragraph. I will only comment on what was written in it and the comments after the article.
1. The Bulgarian Pharmaceutical Association is the body that issues licenses for retail trade in medicines and now (for 5 years, to be more precise). I don't understand what is changing in the draft regulation? Previously, they were issued by the Ministry of Health (Ministry of Health). In other words, there has always been 1 (one single) state body that regulated the issuance of pharmacy licenses. And this is not only in Bulgaria, it is the same in Greece, England, France, Germany and many other countries in the world. Opening a pharmacy is regulated so that you, Daniel Vassilev, cannot open such an entity without it meeting certain requirements - the premises must be in the "pharmacy" category according to the National Pharmacy Code, you must have a manager with a master's degree in pharmacy in the company and many other requirements.
2. The pharmacy is legally a health facility - it was like that 10 years ago, and 30 years ago. That's how it should be. The pharmacy sells goods (medicines, cosmetics, food supplements, etc.), which in most cases are dangerous to your health. The doctor who prescribes the medicine to you in 90% of cases does not explain to you how to take it and in 100% of cases does not explain to you what side effects you can expect. The pharmacist is obliged to give you these explanations. This is why he competes with his colleagues. For this he receives a salary. He is obliged to stop you from using something that can harm yourself. For this he does not give you medicines that are prescribed with a prescription without presenting one to him...
3. The BFU is a legally established organization based on the EU model. Its least goal is to protect the profession from the entry of non-professionals (i.e. without the necessary educational qualifications, i.e. with fake diplomas). According to your logic, there should be no BLS, BZS and other professional organizations. For example, in order for an architect to be able to put his signature on a given project (we are not talking about a wardrobe project, but a project for glazing a terrace, for example, or pushing a wall), he must attach a document certifying his membership in the Chamber of Architects!!!
4. Your example with the gun store is very good. I congratulate you :) Go buy yourself a gun with live ammunition. There they will tell you to give yourself a gun possession permit (by analogy, give yourself a prescription). Where will you get your gun from - from the Internet where you will read instructions, from the cheapest gun store, where the shop assistant will hand it to you and say "Read the instructions for me", or from the store where they will show you how to handle it so that you don't shoot yourself or your child? Well, the price in the latter will most likely be 5-10% higher, but is your life equal to these 5-10%?
I can't imagine how much I would have written if I had read the whole article :))))
PS Gentlemen from the TEAM, it is right that you sanction your member Daniel Vassilev, because this article of his does not correspond to the E in your name. I am not commenting on his opinion, but rather on the accurate and offensive information (to put it mildly) that he uses.
Yeah, the author of the article is making him make general pub-like arguments.
Are the media and the journalist in question familiar with the Code of Ethics of the Bulgarian Media?
http://www.mediaethics-bg.org/index.php?do=17&lang=bg