Pills + Politics

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In Italy, one of the first things Romano Prodi's new government has done is to allow grocery chains like Coop Italia to sell nonprescription drugs, a move welcomed by consumers. In June, the E.U. launched proceedings against Italy, Spain and Austria contending that their pharmacy protections violate E.U. law. "In Europe, half the countries are liberalized and the other half are still overly regulated," Däinghaus of DocMorris told Time. "In Germany, there are just too many pharmacies and the system is totally inefficient. There is a huge potential to cut costs through competition. The pharmacy lobby is fighting a losing battle," he argues.

Even though DocMorris appears to violate German laws barring corporations from owning a pharmacy, Saarland Health Minister Josef Hecken says those laws breach the E.U's guarantee entitling any European citizen to set up business anywhere in the union. The German pharmacy federation is trying to shut down DocMorris in the courts, but Hecken believes he's standing on political and moral high ground. "In Germany, we basically have three alternatives: raise taxes, cut services or make the system more efficient by introducing competition.

I chose the latter," he told Time.

A draft bill under discussion in Berlin would establish a price cap on prescription drugs, allowing pharmacies to set prices lower but not higher. That, says Hecken, could create more competition. Retail chains like DocMorris would gain clout and be able to undercut individual pharmacies. "This is all about money," says Hecken. "We could save around €2 billion just by allowing prices to be freely negotiated."

The evidence from other European countries shows that savings are there for the taking. After Italy allowed grocery cooperatives to sell nonprescription drugs such as aspirin and antibiotic ointment in August, Coop Italia started offering them at 20-30% below list price. Davide Romano, 37, a lawyer in Bari, loves the change and says the service is just as good as in a small pharmacy. "I wanted to know about the product and what it would do, and the pharmacist answered my questions completely," he says.

In the U.K., large retail chains have been gaining on independent pharmacies for years. As of March of this year, 57% of English pharmacies operating outside public hospitals and doctors' clinics were part of a retail chain, up from 39% in 1997. In July, Boots Group, the Nottingham-based pharmacy giant, completed a $13 billion merger with Alliance UniChem to create Europe's leading drugstore company, with almost 2,700 retail outlets. Because of new rules, English supermarkets are stepping up the fight with Boots for market share; the Wal-Mart-owned grocery chain ASDA plans to expand its current empire of 97 in-store pharmacies by three each week until the end of the year, says John Evans, the retailer's chief pharmacist.

Getting big is Däinghaus' goal, too. He has already opened a 4,000-sq-m distribution center in Saarbrücken. "A company like Boots is the role model for us," Däinghaus tells Time. "The German pharmacy market is worth around €35 billion. Our strategy is to make the most of this market."