CZECH PHARMACIES REJECT PROFIT MARGIN CUT

Czech pharmacists are fighting government attempts to reduce retail profit margins. A complaint against the Ministry of Health alleges that officials have given a false account of pharmacy profits. Retail sources say these reported actions constitute criminal libel, although no litigation has been threatened.

The government recently announced that pharmacy margins will be reduced from 32% to 29%, as part of wide-ranging cost-cutting measures. The health ministry has stated that this means that pharmacists will receive CZK29 (US$1.19) for a medicine costing CZK100 (US$4.11) instead of CZK32 (US$1.32) at present.

However, pharmacists have claimed that the underlying calculations are incorrect, and that when all expenses are totalled, pharmacists will only receive CZK20 (US$0.82) for a CK100 (US$4.11) medicine. It is now feared that the new law will bankrupt many Czech pharmacies.

Meanwhile, the Czech Pharmacists' Chamber has pointed out that their members' profit margins are among the lowest in Europe, and are calling for levels to be calculated according to the product price. This could ensure the survival of smaller pharmacies in rural areas, which often only supply inexpensive medicines.

The maximum profit margin for pharmacies in the Czech Republic was 38% in 1993. The government claims the new 3% reduction will save CZK1.5bn (US$61.62mn) per year.