Every little helps: Medicine costs to tumble as Tesco enters market
Published 03/11/2011 | 05:00
THE first shots of a prescription medicines price war were fired last night, as customers are poised to benefit as supermarket chain opens outlets.
Global grocery chain Tesco opened its first pharmacy outlet here -- to sell significantly cheaper medicines than other pharmacy chains.
The retail giant is now expected to introduce up to 15 pharmacies around the country over the next year following the opening of one in Naas, Co Kildare, yesterday.
A second outlet is to open in Balbriggan, Co Dublin, today, while another will open in Portlaoise later this month as part of the chain's move into the Irish pharmacy market.
The retailer plans to undercut traditional chemists and other pharmacy chains by taking smaller mark-ups on the drugs they sell.
For example, a month's supply of cholesterol-lowering drug Lipitor will be priced at €48.12 in Tesco compared with €65.77 in Boots, while anti-hyperactivity drug Ritalin will cost €63.04 compared with €86.07 at Boots.
Tesco said it was charging a retail mark-up of 20pc and an inbuilt dispensing fee of €3.50 per item, as recommended by the HSE. The mark-ups are significantly less than those charged by other pharmacy chains.
An investigation by the Irish Independent found that pharmacists were imposing mark-ups of between 73pc and 354pc on the wholesale price of prescription drugs for private customers, resulting in medicine costing significantly more than in other EU countries.
The Consumers' Association of Ireland welcomed the injection of competition into the prescription drugs market.
"However, it's important that any new element of competition is not short-lived, and we will be monitoring Tesco prices to make sure they don't hike up their margins once they've got established," said its chief executive, Dermott Jewell.
National Consumer Agency chief executive Ann Fitzgerald said she had been concerned about the lack of transparency surrounding drug pricing.
But the Irish Pharmacy Union said the move would have serious implications for community pharmacists.
"It's going to be a real issue for independent pharmacists in towns near these new outlets as it will be incredibly difficult to compete," said its president, Darragh O'Loughlin.
Mr O'Loughlin claimed it was impossible to predict what would happen on prices in competing outlets, saying consumers tended to shop around for the price and service that suited their needs.
Until now there has been very little competition in the market, with only a small number of independent pharmacies setting themselves apart. These include Brassil's Pharmacy in Ballyheigue and Ahern's in Farranfore, both Co Kerry.
Pharmacist John Brassil said he had made the decision two years ago to peg drug prices at the lower HSE rates, and had seen a significant increase in business as a result.
"I felt it was only fair to charge customers the lower rates when times are difficult for everyone," he said.
It is understood that Tesco could roll out pharmacies at up to 15 large outlets over the next year to 18 months. The chain's superintendent pharmacist Mark Beddis said it would be helpful to consumers if pharmacies could advertise prices. However, they are currently precluded from doing so.
In the UK, where Tesco operates 340 pharmacies, independent pharmacists warned this week that thousands of outlets could be forced to close because of proposals to ease restrictions on where pharmacies can open. They warned it would see supermarkets hoover up even more trade.