unregulated, comparable products are markedlycheaper.Richard Hyman, chairman of the Verdict retailresearch consultancy, said: 'This is a market made forsupermarkets. Medicines are small, they fit onshelves and supermarkets are going to make a lot ofnoise about the great prices that they will be offering.Soon medicines will become like any other productand be part of the weekly shop.'John Vickers, Director-General of Fair Trading, said:'This is excellent news for consumers, who will nowbenefit from lower and more competitive prices forQuestions1 What kind of market structure is involved for thesale of medicines and vitamins?2 What can be said about barriers to entry in thismarket?3 Might there be a change in market structure afterthe change in the law?4 Explain the disadvantages of the abolition of resaleprice maintenance (RPM) for this market.5 When RPM was abolished for book sales in 1995,the same concerns as those expressed in the abovecase were voiced. Since then, 10 per cent ofbookshops have gone out of business. Whatconclusions might this help you to draw regardingthe future of small pharmacies?common household medicines. Consumers will savemany millions of pounds a year.'The Proprietary Association of Great Britain, whichrepresents medicine and food supplementmanufacturers, said it was disappointed.6 How does the rise of the Internet affect thissituation? Case study 8.2: Price cuts for medicinesits opposition to a High Court action brought by theOffice of Fair Trading. The OFT had sought theabolition of resale price maintenance in the industry,exempted 30 years ago from general price-fixingrules to try to ensure the survival of small pharmacies.There are 13,500 pharmacies in Britain, of which9,000 are small shops serving local high streets andChemists at risk as prices are slashed12BY NIGEL HAWKES, HEALTH EDITORBig price cuts on a wide range of medicines andvitamins were promised by the supermarket chainsyesterday as 30 years of price-fixing were sweptaside.Many popular products, including painkillers,cough medicines, indigestion tablets and nutritionalsupplements are being halved in price from last night, Buckley said that he believed there was insufficientwith reductions of between 20 and 40 per cent onrural communities.The action group backed out after Mr Justicemany others.The Office of Fair Trading called it excellent newsfor consumers but the body representing smallpharmacies said that many would close, threateningcommunity services.The big supermarkets trumpeted 'millions ofpounds-worth of savings' as they competed to offerthe biggest reductions. At Asda, a packet of 16 regular elderly, disabled and young mothers who rely on theAnadin will be 87p, instead of £1.75, and Nurofentablets will cost £1.14 for 16, rather than £2.29.proof that a large number of independentpharmacies would close, or that the range ofproducts would be reduced. But the group'schairman, David Sharpe, said that the outcomewould be a devastating blow. 'Many pharmacists willsimply not be able to survive given the buying powerand aggressive pricing of the supermarkets' he said.'It's a sad day for Britain. The potential losers are thefree advice and range of services offered by the localpharmacist. We'll fight on and hoperemain loyal.'The changes will cover about 2,500 products soldwithout requiring a doctor's prescription, and willhave no effect on prescription drugs or on cosmeticssold by pharmacists.Prices are likely to fall even lower as competitiongrows. In the United States, where prices arepublic willReductions at Tesco included a 40 per cent cut inAnadin Extra, to £1.29 for 16, while Sainsbury'smatched the Asda price for Nurofen, and reducedSeven Seas Evening Primrose Oil from £5.59 for a60-pack to £2.79.The cuts came after the Community PharmacyAction Group, representing small retailers, withdrew

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1 What kind of market structure is involved for the sale of medicines and vitamins? 2 What can be said about barriers to entry in this market? 3 Might there be a change in market structure after the change in the law?