If the complaints of the Private Pharmacy Retail Business Association (PPRBA) about a drug monopoly are valid, then Government policies are putting the health and lives of citizens at risk.
At a hearing held by the Public Administration and Appropriations Committee (PAAC) on Monday, PPRBA president Glenwayne Suchit said that “just a few major companies that are controlling everything in terms of private procurement for retail distribution and for the public”. Technically speaking, this is an oligopoly, not a monopoly since, according to Suchit, the sector has one dominant player that controls 74% of the private market, two that are awarded 59% of public procurement contracts, and three that have cornered 70% of the wholesale pharmaceutical market.
The father of economics, Adam Smith, warned about monopolies 249 years ago. “The monopolists, by keeping the market constantly understocked, by never fully supplying the effectual demand, sell their commodities much above the natural price,” he wrote in The Wealth of Nations. Modern economists hold that State monopolies, which grant one company exclusive rights or set up barriers to entry to politically unconnected players, always harm a country’s economy. By contrast, private monopolies (or market dominance) benefit consumers if that status is achieved through superior efficiency and innovation.
Suchit argued that an open market would reduce drug prices significantly. However, he also complained that group companies can sell medicine at prices even lower than the wholesale rate charged to independent pharmacies. If so, then the supposed monopoly benefits consumers, and Suchit’s real problem is the 500 or so independent pharmacies he represents not making profits as high as they would like.
The head of the Pharmacy Board, Ricardo Mohammed, revealed that between 2024 and the present, 38 pharmacies had closed due to what he called “market forces”, while the Board itself had shut down 15 more for legal breaches. A 7% business failure rate seems in line with a strained economy, while a 3% rate of legal breaches may be acceptable, assuming the regulations flouted did not put customers at risk.
Even so, this is an issue that needs to be thoroughly examined. However, as the committee heard, the Trinidad and Tobago Fair Trading Commission (TTFTC) is entirely unready to carry out any such investigation. The Commission has been without a board for the past seven months and, according to executive director Bevan Narinesingh, the TTFTC has “a lot of trepidation” about taking any action in this deficient state. He also noted that the Commission has never investigated monopolistic practices.
Given that Section 5 (1) (c) of the Fair Trading Act mandates the Commission to “investigate on its own initiative or at the request of any person adversely affected and take such action as it considers necessary with respect to the abuse of a monopoly power by any enterprise”, what has the Commission been doing since its establishment in 2006?
The Government should thus prioritise installing a TTFTC board, and begin auditing the regulations governing pharmaceutical imports to ensure optimum competition compatible with consumer protection.
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