The Pharmaceutical Journal Vol 266 No 7148 p665
May 19, 2001

So long, RPM

The demise of resale price maintenance (RPM) earlier this week happened so quickly that many pharmacists must still be reeling from the announcement and in a state of shock.

At one level the end of the scheme is no real surprise. Even if the ruling had been in favour of the Community Pharmacy Action Group (the umbrella organisation that has been tussling with the Office of Fair Trading), it would have only granted a stay of execution for RPM for a further five years.

What is shocking about the announcement from the Restrictive Practices Court is that it seemed to come out of the blue. Independent pharmacists will have had no chance to decide what action they should take to protect their business, and yet the big boys in the game, Messrs Asda, Tesco, Sainsburys and Boots, must have been planning their price reduction campaigns for weeks. Within hours of the announcement of the end of RPM, massive reductions in many products were announced, taking the price of some medicines well below the level of any margin an independent might hope to make out of the sale.

Whether or not these huge price cuts will endure for long remains to be seen. It is likely that, while a few products may be kept artificially low in price as loss leaders, in the next month the prices of most products reduced now will be seen to float upwards.

This will be of little consolation to those pharmacists worrying about the loss of business. More important for them is to ask whether CPAG and its supporter organisations were right to pursue the issue at all, bearing in mind that RPM would end eventually. Quite simply, pharmacists have enjoyed the protection of RPM for over five years since the action first began.

There will be few members of the profession who can doubt that CPAG was right to take the course of action that it did, that those involved in the action have worked extremely hard on behalf of the profession and, if the outcome is seen as a defeat, it is an honourable one.

So what does the future look like? Although it may be a bit bleak today, tomorrow there are challenges that can be surmounted. In next week's issue of The Journal, we will publish the Society's interpretation of what price promotion will be permissible, particularly in the light of the new Code of Ethics that, with the loss of RPM, will be driven by the Competition Act 1998. This interpretation will be published on the Society's website imminently.

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