A Study of Regulation in Pharmacy Market in Cambodia ( Apply OECD Checklist)

KDI School of Public Policy and Management

LY Sievleang

2014Accessing Regulation and Competition Policies

An Overview of Pharmacy Market in Cambodia

349

547

2591

The Proportion of Number of Pharmacy in Cambodia, 2001

Legal Pharmacies Sub-Pharmacy Illegal Pharmacies

Accessing Regulation and Competition Policies

• In 2012, people in Cambodia spent $236 million on pharmaceuticals,

compared with $217 million in 2011. Of these, 20 per cent sought pharmacies

in urban areas in 2010, and 8 per cent in rural areas.

• The private expenditure on health in Cambodia gains the 3rd rank followed by

DR Congo and Guinea among the low and middle-income countries that have

the highest in private expenditure on health.

• Regulations then focuses on the private pharmacy by address concerns on

the license, requirements for the license, staff, ownership, and other

restrictions.

An Overview of Pharmacy Market in Cambodia


Content of Regulations

Ownership/ Practice Legislation Pharmacy Registration

Law on the management of pharmaceutical

1996

Ministry of Health

Law on the Amendment of Law on

management of Pharmaceuticals

Ministry of Health

Prakas (Announcement) on the Modification to

Prakas No.155 on the Formalities and

Conditions for Opening or Closure or

Relocation of a Pharmaceutical Selling

Establishment in 2009.

Ministry of Health


Restriction Regulation

Pharmacy

Who Can Own Ownership

Restriction

Qualification Others

Pharmacist only.

Pharmacist without

sufficient funds may

own with another

non-pharmacist.

Must be Khmer.

Maximum one

pharmacy per

pharmacist

license. Locations

based on

commune needs.

Diploma

recognized by

MOH. If pharmacist

absence, someone

who has attained

suitable

qualifications

approved by

Ministry of Health.

Hold

Membership

from

Cambodian

Pharmacist

Councils.



Sub-Pharmacy

Who Can Own Ownership

Restriction

Qualification Others

For sub-pharmacy

“A” must be

secondary

pharmacist

For sub-pharmacy

“B” must be retired

health officials with

their technical

specification as the

state’s nurse or

midwife.

Open only one

sub-pharmacy and

may not work with

in other medical

professions.

Secondary

Pharmacist

Diploma

accredited by

Ministry of Health (

sub-pharmacy A)

Retired health

officials with their

technical

specification as

the state’s nurse or

midwife. (sub-

pharmacy B)

Hold

Membership

from

Cambodian

Pharmacist

Councils.



Advertisements in all forms on pharmacy

or sub-pharmacy

Not Permitted.

Relocation of pharmacy or sub-

pharmacy from one place to another

Possible only if that relocation is in

the same district

The number of pharmacies shall be

determined according to the number of

people in the commune/quarter in

proportion to the number of at least

2,000 people per pharmacy.

The Ministry of Heath will declare

the division of the number of

pharmacies in each

commune/quarter on an animal

basis.


Relevant Market

• Directly Affected • Clinic or hospital,

• Pharmaceutical manufacturing

• The academic institution for pharmacist specialist.

• Indirectly Affected :

• Health insurance

• The cosmetic, personal hygiene, dietary product, medical and dental

material and equipment, and reagent materials and pharmaceutical

laboratories market.


Justification of Regulations


Justification and Restriction of Regulations


Justification Restrictions

(OECD Checklist)

Regulation for the qualification

requirements create trust and

minimize the risky for consumers and

users ( Public interest)

Limits the number or range of

suppliers (Checklist A)

Regulation on location requirement

impacts to the pharmacy’s benefit to

the existing pharmacy supplier to

ensure the financial viability and

responsibility in the available market

size. New Entry does not have to be

bothered by existing one. ( Private

Interest)

Creates a geographical barrier to

the ability of companies to supply

goods or services or labor, or

invest capital

Justification and Restriction of Regulations


Justification Restrictions

(OECD Checklist)Avoid clustering pharmacy in the

urban areas which create excess of

demand. The regulation also avoid the

takeover and the formation of

pharmacy chain otherwise it will be

difficult to be controlled by government.

( Public interest)

Creates a geographical barrier to

the ability of companies to

supply goods or services or

labor, or invest capital

Prohibition on advertising is to prevent

the asymmetric information and

degrade the ethical of pharmacists.

( Public and Private Interest)

Limits freedom of suppliers to

advertise or market their goods

or services

In-Depth Analysis

Restriction on qualification requirement

The opportunity and social cost are high due to

the time to study ( 5 years), is longer than other

skills in diploma degree, and some universities

limit the number of students and required

successful entrance exam.


In-Depth Analysis

Restriction on Ownership:

Inadequate of supply Increase illegal

pharmacies Asymmetric Information

Takeover cost


In-Depth Analysis

Restriction on the limit number of

pharmacies based on the number of

inhabitants and location requirement Creates the barrier to entry

Establishes the local monopoly

Dilutes the competitive opportunities of pharmacy

owners and in the long run

Discourages the innovation from pharmaceutical

manufacturing.


In-Depth Analysis

Restriction on advertising:

Limit the choice to consumer

Asymmetric information Adversely

Selection

Lose consumer surplus


Alternatives

• Option 1 : No Action

The existing pharmacies do not brother much from

the new entry and enjoy benefit in the long run.

Consumers would still be accessible in the trust

market without under pressure for choices.

Possible Roadblock: Problem not solved, less

competition affects consumer’s price and distort the

price and production in the market. The perfective

market does not meet in this condition.


Alternatives

• Option 2 : Remove the barrier of freedom of

establishment

More potential entry join the market.

Possible Roadblock: Qualification is important for

health sector especially in developing country, by

removing it, problem of counterfeit drug and health

issue would be occurred.


Alternatives

• Option 3: Add price regulation to the

extra pharmacyEnlarge the market size and encourage the

pharmacist to have more than one pharmacy.

Vertical Integration

Possible Roadblock: Problem of take over and

the rising of monopoly through vertical integration.


Alternatives

• Option 4: Control on advertising

content, rather than advertising bans to

prevent harmful advertising

Given that knowledge of medicine is poor in

Cambodian society, it is crucial to allow the

trustworthy advertising to inform the opening hours,

service, and other incentives would benefit to

consumers.

Possible Roadblock: Degrade ethnical and

professional of pharmacists.

Alternatives

• Option 5: No Regulation

Since there is no over-regulation for the barrier of

nature supply and demand, the market will be

absolutely ensure the large size of competitive

market. Suppliers could benefit from market more

than before and consumer could enjoy the price

competitiveness.

Possible Roadblock: By having no regulation, the

market will be bloody, the higher rent seeking and

hamper consumers by all means.

Conclusion

Option 3 could ensure more praetor efficiency market

and would do away on anti-competitive in the market

because it responds to the current problem in lack of

legal supplier in rural areas and create incentive for the

professional credit.

However, to be more effective, the option 4 should also

be implemented to minimize the possible problem raised

in option 3 plus the minor government intervention for

any unanticipated problem.

References • Prakas on The Modification of Procedures and Technical Conditions of the Request

to Open or Close Transform or Relocate Medical, Paramedical and Medical Aid

Services,

http://www.moh.gov.kh/files/Legal%20Document/Prakas/Prakas%20on%20Modification%2

0of%20Procedure%20and%20Technical%20Conditions%20to%20Open%20Medical%20P

aramedical%20Services%202011%20Eng.pdf

• Law of June 17, 1996 on the Management of Pharmaceuticals

http://www.wipo.int/wipolex/en/text.jsp?file_id=223121

• Royal Kram Promulgating the Law on Amendment of Law on Management of

Pharmaceuticals

http://www.moh.gov.kh/files/Legal%20Document/Law/Law%20on%20Amendment%20of%

20Law%20on%20Pharmaceutical%20Management_Eng.pdf

• Case management of malaria fever in Cambodia: results from national anti-malarial

outlet and household surveys

http://link.springer.com/article/10.1186%2F1475-2875-10-328

http://www.moh.gov.kh/files/Legal Document/Prakas/Prakas on Modification of Procedure and Technical Conditions to Open Medical Paramedical Services 2011 Eng.pdf

http://www.wipo.int/wipolex/en/text.jsp?file_id=223121

http://www.moh.gov.kh/files/Legal Document/Law/Law on Amendment of Law on Pharmaceutical Management_Eng.pdf

http://link.springer.com/article/10.1186/1475-2875-10-328

A Study of Regulation in Pharmacy Market in Cambodia ( Apply OECD Checklist)

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