Legislation, regulation, and consolidation in the retail pharmacy sector in low-income countries

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Formal pharmaceutical retailing in most countries in the world is governed by regulations concerning ownership, staffing, medicines, prescriptions and prices. However, in most low and middle-income countries regulatory enforcement of these regulations is difficult or impossible constrained by limited government capacity, and complicated by the fragmented nature of pharmaceutical retail markets.

This paper documents the current status of private-sector retail pharmacy legislation and regulation in the low-income countries where private financing of healthcare is most important. We look at regulatory frameworks in 25 countries, what legislative and market forces are causing changes in the practice of retail pharmacies, and what the effects of these changes have been in recent years.

In most countries studied, pharmacy legislation and regulation is fragmented and there is sporadic and limited enforcement of regulations. Market consolidation through shared ownership, franchise arrangements, or formal collaboration, is usually impeded by ownership laws. Consolidation in South Africa has resulted from a recent legislative change, while in India it has been driven by refinement of existing legislation and changing market forces. In these two countries recent changes have permitted rapid expansion of pharmacy chains. The early effects of these chains appear to be lowered prices, greater competition, and an initial balance between newly opened stores in shopping centers and the closure of independent pharmacies.

Four main factors determine the extent to which consolidation is possible in the private pharmacy sector: 1. Legislation on ownership, 2. Regulation, licensing and registration of pharmacies, 3. Availability of qualified pharmacists, and 4. Access to finance to set up a pharmacy.