Asda tackles health price fixing, but at what cost?

LEEDS-based supermarket giant Asda is taking a leading role in a ground-breaking legal challenge to the cost of over-the-counter-medicines which could see the prices of everything from vitamin tablets to cough remedies slashed.

If successful, it could see 'substantial reductions' in the over-the-counter cost of such medicines at local supermarkets.

Good news for the consumer, yes? Well, maybe: though as with everything else in life, it would come at a price.

Asda is challenging what is known as Retail Price Maintenance, what Asda spokesperson Colette Blanchfield described today as the 'last bastion of price fixing'.

The move is an attempt to curb the rise in prices of over-the-counter medicines, which industry sources claim have escalated in price by up to 12 per cent over the past year alone.

The hearing into RPM, scheduled to take place in October, is set to be a landmark case which could lead to shoppers saving up to £300 million a year.

Asda, which has led a campaign against the price rises, is one of the witnesses to be called to give evidence at the request of the Office of Fair Trading.

Asda health and beauty director Penny Coates said: "October can't come soon enough for those who are fed up with paying through the nose for the healthcare items they need."

If the action is successful it could lead to real reductions in the price of over-the-counter medicines - but at a price.

It could mean many local pharmacies - which pharmacists say provide a vital community healthcare service - going the same way as rural post-offices. And that, they say, would be a tragedy.

Pharmacist Elliot Goran, who runs pharmacies in York's Badger Hill and Dunnington, said if the action was successful, local pharmacies would find their profit margins being eaten into. Some, he said, would simply not be able to survive.

Asda, he said, was simply trying to increase its business at the expense of small community pharmacies.

"My opinion is that it is not appropriate for medicine to be sold on the basis of three for the price of two, or buy two, get one free," Mr Goran said.

"The advantage of local pharmacies is that you get expert advice from a local health care professional."

If community pharmacies were to close down, he added, that would be a tragedy for many consumers, such as the elderly, who may find it difficult to travel to a supermarket to buy medicines.

"If you ask you average elderly person in Badger Hill if they find it convenient to be able to come to a local pharmacy I think I know what they would say. A lot of elderly people simply cannot go any further."

Multinational pharmaceutical companies too are expected vigorously to defend their profits and price rises at October's hearing. The Restrictive Practices Court has already determined that there has been a material change in the market for over-the-counter pharmaceuticals since 1970, when it last considered the issue and decided that retail price maintenance was lawful.

The court will now undertake a substantive evaluation as to whether RPM on medicines continues to be in the public interest.

Price-fixing of this kind was made illegal under the Resale Prices Act in 1964.

Over-the-counter healthcare is the only remaining product area which has enjoyed an exemption under the Act.

Research by Asda showed that over-the-counter prices have risen ahead of inflation over the past year.

While Asda's own label prices for healthcare items have remained flat, a basket of leading equivalent branded items had risen by up to 12 per cent, the company said.

An Asda spokesman said: "Under the current system, drug manufacturers are free to suit themselves and single out products for price-fixing without rhyme or reason.

"A comparison between price-fixed brands and supermarket own label products outside of RPM shows the extent of the 'health tax' that shoppers are currently charged."

The hearing in the Restrictive Practices Court is expected to last for 30 days, with the judgement expected later this year.