New Polish Restrictions on Pharmacy Ownership

A long history of restrictions

Operating and establishing pharmacies has long been subject to strict regulations in Poland, for example anti-concentration requirements and the ban on advertising pharmacies.

The beginnings of the "pharmacy for the pharmacist" concept date back to the 1990s. Surprisingly we are now witnessing the return of this concept.

The legislation bringing about the latest changes first entered the Sejm (the lower chamber of the Polish Parliament) on 7 December 2016. The legislative road of the project was very bumpy, and even included a proposal to reject the bill altogether (on 25 January 2017). Finally, however, the law introducing the changes was passed on 7 April 2017, and on 15 May 2017 the President signed the Act amending the Pharmaceutical Law. The changes came into effect on 25 June 2017.

Context and background

The precise wording of the first sentence of the Justification of the Act amending the Pharmaceutical Law (J.L. 2008 item 271 with later changes) reveals that the basis for introducing the changes was the need to establish rules for even distribution of pharmacies, along with the need to ensure equal access to pharmaceutical services.

The remaining part of the Justification includes a list of specific reasons for the introduced changes. The following are examples of the grounds for the amendments:

• The danger of complete monopolisation of the pharmaceutical market, and its takeover by large international players
• Difficulties in exercising proper supervision over the activities of pharmacies owned by capital companies
• Liquidation of small Polish entrepreneurs operating pharmacies
• The shortage of medicinal products on the Polish market mainly due to their export abroad
• Loss of tax revenues due to liquidation of tax payers' entities in Poland
• Degradation of the role and importance of the pharmacist profession
• Use of public pharmacies to generate illegal incomes
• Constant opening of new pharmacies by entities whose permit to run a pharmacy has been revoked
• Pharmacies are used as sources for acquiring substances for drug production (e.g. pseudoephedrine)
• Pharmacies run by non-pharmacists do not comply with the ban on advertising pharmacies and their activities
• The previous liberal regulation of the Pharmaceutical Law regarding the identification of entities authorised to operate pharmacies was inappropriate.

The legislator's rationale is that entrusting the running of pharmacies exclusively to pharmacists will prioritise health protection over maximising profits from the business activity conducted.

It should be noted that the concept of so-called a "pharmacy for the pharmacist" has previously been examined by the Constitutional Tribunal and in its ruling dated 20 August 1992, the Tribunal stated that this concept was unconstitutional.

In addition, according to the legal opinion of the Bureau of Research of the Chancellery of the Sejm (the lower chamber of Polish Parliament) dated 23 March 2017, submitted in the course of the legislative process, the current legislative changes stipulating the exclusivity of pharmacies for pharmacists may be in breach of Article 49 of the Treaty on the Functioning of the European Union and in contradiction to Article 22 of the Constitution of Poland (establishing the principle of economic freedom).

The new property restrictions

Under the law prior to 25 June 2017, any natural or legal person or legal entity that is a commercial law company was allowed to operate a pharmacy. Neither natural persons, nor shareholders of companies, had to be pharmacists with the right to practise. The only additional requirement was that the pharmacy's general manager had to be a pharmacist with the right to practise however he or she did not have to be the owner, shareholder or even a manager of the entity running the pharmacy.

The new law now restricts the right to open a pharmacy in Poland to professional pharmacists.

The new legislation stipulates that a permit to run a pharmacy will be granted only to authorized pharmacists (possessing the right to practise the profession of pharmacist) who are running a sole trader business, or who own particular kinds of partnerships (registered partnership or professional partnership) operating exclusively in the pharmacy sector.

The current amendments provide that the pharmacist running the sole trader business or registered partnership or professional partnership may run or control up to four pharmacies.

The debatable geographic-demographic criterion

The adopted regulation has also introduced demographic and geographic limits on new pharmacies. A permit to run a pharmacy will be granted only if, at the moment of application, the number of inhabitants in a given "voivodeship" (an administrative region) is at least 3,000 per pharmacy, and the distance from the nearest pharmacy to the location of the new pharmacy is at least 500 meters in a straight line, calculated from the entrance to the existing pharmacy. These criteria will not apply, however, if (at the moment of application) the new pharmacy would be located within at least 1 km of an existing one.

Non-transferable permit to run a pharmacy without the possibility of transfer

Radical changes have also affected the automatic transfer of the permit to run a pharmacy in case of the division, merger or transformation of companies holding such permits. In Article 99 section 2a of the Pharmaceutical Law, such general succession of a permit to run a pharmacy has been eliminated.

The coverage of legislative changes

The new, far-reaching legislative changes will cover only new pharmacies. This means that the new regulations will not apply to applications for permits to run pharmacies commenced and unfinished before the date of the respective changes entering into force.

Permits to run pharmacies issued before the date of entry into force of the changes will remain valid.

Feedback from the market

The analysed changes only came in force on 25 June 2017, and remain untested. Checking them in practice will take some time however, for the time being, stakeholders' feedback is very mixed.

Pharmacists welcomed the changes, indicating that the new regulations enable a return to the traditional role of a pharmacy, treated as a health care facility, not a drugstore. They argue that the changes are designed to address the many problems currently present on the market, including the perception of the patient that pharmacies are primarily a tool for making money.

However, according to organisations such as Business Centre Club, Polish Confederation Lewiatan, the Union of Entrepreneurs and Employers and PharmaNET Pharmacists Employers Association, the changes (and in particular the ownership, quantity, geography and demographic restrictions) have made the Polish market one of the tightest closed systems in Europe.

Only time will tell how the "pharmacy for the pharmacist" concept plays out and it is likely to give rise to much case law and commentary through publications in the field of pharmaceutical law.