Competition Within The Dutch OTC Market

When drawing up the Netherlands' controversial new drug law, the WetGeneesmiddelen Prijzen, in November 1995, permitting the government to fix the maximum price for reimbursable drugs, Health Minister Els Borst had agreed that, for the first year, the law would not apply to reimbursable over-the-counter drugs. This would give this market a chance to prove that sufficient levels of "marktwerking" (competition) existed within it for it to be exempt from such regulation.

It is clear, says a position paper published by Neprofarm, the Dutch OTC industry association, that active competition does exist within the market. The total freedom within it is evidenced by characteristics such as varied supply, wide distribution, easy entry by new players, price competition, etc, it says.

OTCs' Costs To Sickfunds Neprofarm points out that the Dutch OTC market is very different from the prescription market, in that the decision-maker, the user and the payer are one individual, the consumer. Also, it says, the distribution of OTCs is much wider than that of prescription-bound drugs. The government and the pharmacists' association agree that in 1995, the cost of reimbursable OTCs averaged 7.6%-7.7% of total costs per insured patient, and that the cost per prescribed OTC was much lower than that for prescription drugs. The pharmacists' association estimates that in 1995, 18.5% of all prescriptions involved OTCs. And, says IMS/Nielsen, in 1994 reimbursable OTCs accounted for 28% of total OTC market sales, and that nearly 20% of reimbursable OTCs sales are very rarely on prescription.