The Pharmaceutical Journal Vol 266 No 7151 p782
June 9, 2001

Comment

RPM defence was destined to failure

By Stuart Anderson

So at last resale price maintenance on over-the-counter medicines has gone. Its demise has been accompanied by many responses, from disappointment to despair from some quarters, to triumph and celebration from others. Yet one response that has been virtually absent is that of surprise at the outcome. The only surprise is that RPM was defended at all.

If most people expected the defence of RPM to fail, was it a sound decision to mount it in the first place? Although the aims of the proprietary medicines industry in defending their profits were clear enough, there must be serious doubt about the Royal Pharmaceutical Society’s role as a major bank-roller of the campaign. For according to the annual review for 2000 some £775,000 of the Society’s income was devoted to RPM funding, following a sum of £100,000 donated in the previous year. Further funding during 2001 will have taken the total to well over £1m.

Was the Society right to commit such a large sum of its members’ money to the support of RPM? Only a minority of the Society’s 42,000 members are independent community pharmacy proprietors. If all members had been asked if they wanted a large part of their money to be spent in this way I suspect the answer would have been a resounding “no”. Yet the Society’s close association with this campaign will have far-reaching implications for the profession of pharmacy as a whole.

To anyone outside of pharmacy, the inference is obvious. How can an organisation which commits so much of its members’ money to the defence of price fixing be anything other than a trade organisation? Community pharmacy has spent many years demonstrating that it is a caring profession as well as a business: in one move the Society appears to have demonstrated to the outside world that it is no more than an association of shopkeepers anxious to defend its members’ profits.

Yet the defence of RPM was a policy destined for failure, despite the expensive advice of specialist lawyers. It depended on demonstrating that substantial numbers of community pharmacies would close following the loss of RPM. But community pharmacy was the last bastion of RPM, a concept that has long since been discredited. Not so long ago the booksellers used the same argument, and yet the number of closures of small bookshops has been minimal.

During the campaign, this threat of mass closures was linked to the depriving of vulnerable people, particularly the elderly, the disabled and young mothers, of essential amenities and services provided by local pharmacists in rural areas. But this is a social policy argument, and RPM is an economic tool ill-suited to the achievement of a social objective. RPM amounted to a tax on all in order to maintain a service to the few while lining the pockets of the many. Social policy ends require social policy means, which might include direct subsidies to carefully targeted areas.

The argument that large numbers of pharmacies, particularly in rural areas, would close was hardly defensible on other grounds. Despite other significant changes in the remuneration of community pharmacists the number of registered pharmacies has remained static over recent years at just over 12,000 in Great Britain. This is against a background in which government bodies such as the Audit Commission have indicated that the optimum number is nearer 8,000 than 12,000. The need to staff such a large number of individual pharmacies creates chronic staffing difficulties and the insatiable requirement for locums that we have today.

The Society’s generosity with its members’ money in supporting the defence of RPM is also surprising in the light of its history. The Jenkin case in 1920 was specifically concerned with its role in the defence of trade and the fixing of prices. Indeed the judge ruled that the Society could neither undertake for its members, nor spend any part of its funds on, any of a number of activities which included the regulation of prices at which members sold their goods. It is difficult to see how the defence of RPM is anything other than such an activity.

The end of RPM closes what has been a long chapter in the history of pharmacy in Britain. Indeed, even before the foundation of the Pharmaceutical Society in 1841, chemists and druggists sought to preserve their profit margins by local agreements on retail prices. Numerous reports of failure of price-fixing agreements referred to the “troublesome minority” and to the fact that “one cutter makes many”.

Jacob Bell himself identified the two trade questions that could be guaranteed to split chemists and druggists into hostile camps: the fixing of prices and the regulation of opening times.

In the Jenkin case, the Society claimed the right to protect the interests of those who carried on the business of chemist and druggist, despite the fact that this group was not the entire membership of the Society. That right was denied, and the Byelaws were changed in 1953 so that the Society’s aim became “to maintain the honour and safeguard and promote the interests of the members in the exercise of the profession of pharmacy”.

RPM legalised price fixing. For many years RPM was the right policy at the right time. It served pharmacy well. But by the 1990s it was the wrong policy at the wrong time. Large sums of money have been expended in its defence, mostly in legal costs. The costs to pharmacy as a whole have yet to be counted. Taking the issue to court has put back the profession many years. History will surely judge harshly those who led the profession down this particular path.

The profession now needs to do everything in its power to cushion the blow for those affected by the loss of RPM. It can do this both by negotiating compensation packages, and individually through the Benevolent Fund. To have allocated the money committed to the defence of RPM to a support fund for those affected would have been a good start.

The withdrawal from the case has parallels in the public mind with other high profile events this year. The withdrawal of the consortium of 39 drug companies from their case against the South African government in defence of the compulsory licensing of AIDS drugs has presented the pharmaceutical industry in an extremely unfavourable light. To much of the public, community pharmacy is part of that industry. For the Society to have supported the industry in the fixing of prices so publicly has done the profession considerable damage.

There have been several other recent high profile examples of non-pharmacy organisations having to reverse long-held policy stances at the eleventh hour. It seems that large organisations that have invested heavily in a particular policy over many years find it extremely difficult to reverse their position. The distinguished management strategist Rosabeth Moss Kanter has concluded that the most difficult challenge facing large organisations is how to use their scale and strength effectively while remaining sufficiently nimble and flexible to adapt to rapidly changing circumstances. She asks: “How do you teach the giant to dance?” For pharmacy, perhaps the time has come for some dancing lessons.