Pharmacies for pharmacists—but what about patients?
The amendment to the Pharmaceutical Law adopted under the slogan “pharmacies for pharmacists” entered into force on 25 June 2017. What are the strict regulations supposed to protect pharmacists against: a shortage of customers, or excessive expansion of their own business? How will this amendment function, and is there another one ahead under the slogan “pharmacies for patients”?
Ensuring pharmacies aren’t too nearby
Under Polish law, opening a pharmacy requires a permit from the province pharmaceutical inspector. So far, the siting of pharmacies has been subject to numerous conditions, e.g. involving the appropriate location of the pharmacy within the building or access to transportation routes, which has contributed to siting of pharmacies in shopping centres and generally prevented them from being opened within department stores. On top of these existing restrictions on pharmacy premises set forth in a regulation issued by the Minister of Health on 30 September 2002, new demographic and geographical restrictions entered into force on 25 June 2017.
Now a permit to operate a new pharmacy may be issued only if the pharmacy will serve at least 3,000 citizens and will be located no more than 500 metres (as the crow flies) from the entrance to an existing pharmacy. Considering that pharmacies are currently thick on the ground in Poland’s larger cities, the new rules will practically bar the issuance of new permits in such areas, except for newly built housing estates—where no doubt there will be a fierce race to be the first to find a free location and file an application with the inspector.
Otherwise, pharmacists seeking to open a new pharmacy will generally have to wait until an existing pharmacy goes out of business, or open in a smaller town or rural area poorly covered by existing pharmacies. It remains to be seen whether the new rules will equalise patients’ access to pharmacies or it will still be necessary to develop some special system of incentives to encourage pharmacists to open pharmacies in less-profitable locations.
Chains yes, but only on a micro scale
Now a pharmacy may be opened only by a pharmacist licensed to practise the profession, operating as a sole trader or in the form of a registered partnership or professional partnership whose only business is operating pharmacies and whose partners are exclusively pharmacists. Moreover, under the new regulations a permit to operate a pharmacy will not be issued if the individual applicant or a partner in the partnership applying for the permit:
- Is a partner or shareholder in one or more partnerships or companies jointly operating four or more publicly accessible pharmacies
- Operates four or more publicly accessible pharmacies, or an entity or entities directly or indirectly controlled by them, including subsidiaries within the meaning of competition and consumer protection regulations, operates four or more publicly accessible pharmacies
- Is a member of a capital group within the meaning of competition and consumer protection regulations whose members operate four or more publicly accessible pharmacies, or
- Is a member of the authorities of a company or partnership holding a licence to operate a pharmaceutical warehouse or involved in intermediation in trading in medicinal products.
Under the guise of limiting the influx onto the Polish market of foreign pharmacy chains (whose market share is estimated at 4%), pharmacists’ ability to expand the scale of their operations beyond four locations is blocked, except through family ties (as the regulations do not exclude issuance of a permit for example to a child or spouse of a pharmacist already operating four or more pharmacies), and the only track for obtaining a permit to operate a pharmacy by legal succession is inheritance.
Another open question is the operation of online pharmacies. It appears that considering the nature of e-commerce, the new demographic and geographical criteria will not be relevant to this type of activity. In terms of numerical restrictions on the number of pharmacies that can be operated by a pharmacist, an online pharmacy should be treated as one location. In that case, it would be possible for a single pharmacist to operate, for example, three brick-and-mortar pharmacies and one online pharmacy.
Protecting the status quo
The amendment affects only newly opened pharmacies. It does not apply to applications for permits to operate pharmacies filed before 25 June 2017 and still pending on that date.
It should be borne in mind, however, that in the event of a merger or reorganisation of corporate form of a company or partnership holding a permit to operate a pharmacy, the permit will not pass to the merged, reorganised or newly established entity, because the amendment expressly excludes application of the succession provisions of the Commercial Companies Code (Art. 494 §2, 531 §2 and 553 §2) in such situations.
This reflects a strong trend toward limiting the transferability of administrative decisions expressed in the Supreme Administrative Court judgment of 25 January 2017 (Case II GSK 1502/15). Under that ruling, administrative decisions are tied to the specific addressee, which justifies a ban on complete administrative succession (as opposed to civil succession), and succession to administrative rights and obligations requires an express provision of law. In the case of a permit to operate a pharmacy, that provision is Art. 104(1a) of the Pharmaceutical Law, involving inheritance.
Joanna Krakowiak, Life Science and Regulatory practice, Wardyński & Partners