Its warning followed the attempt by the supermarket chain Asda to cut the price of paracetamol, thus breaking the code of resale price maintenance (RPM) - the practice of manufacturers stipulating the price to be charged to customers.
This is a battle where both sides claim they are the champion of the consumer. While pharmacists say the destruction of RPM would spell the end for thousands of small pharmacists who provide valuable services to the community over and above the dispensation of medicine, Asda claims it is fighting for the customer who is paying well over the odds to hand back huge profits to manufacturers.
RPM has been unlawful in Britain since 1964 except for two areas - books and over-the-counter medicines which, besides paracetamol, include cough linctus, painkillers, cold remedies and indigestion aids.
Asda argues that the consumer is paying a "headache tax" of pounds 300m a year, of which only a fifth goes to the small pharmacist and the rest to manufacturers and large retail chains.
After a High Court injunction last week prevented it from selling Anadin at 86p (half its normal price of pounds 1.72), the retailer swept Anadin from its shelves and tomorrow starts selling its own brand at 24p for 24.
Asda estimates that there is an 80 per cent profit margin on Anadin and other such brands.
"The margins on Anadin paracetamol are among the highest available to any retailer in Britain," said Asda marketing director Gwyn Burr, justifying the group's actions. "They rank alongside high fashion and expensive perfume. Our commitment is to value and we can't sell this straightforward commodity product at this price with a straight face."
Last October, John Bridgeman, director general of the Office of Fair Trading, announced a review of pharmaceuticals, saying that "the interest of consumers is my paramount concern. In general, resale price maintenance gives them a bad deal and I will pursue it wherever I find it." The OFT says it expects to conclude its investigation in the next two months.
But a spokesman for the Community Pharmacists Action Group, which is co-ordinating opposition to any loosening of RPM, said that a "conservative estimate" was of one in four chemists closing if the free market was allowed in.
Richard Thomas, deputy editor of the Independent Community Pharmacist trade magazine, claimed that ending RPM would have "devastating consequences" and put the estimate at up to 30 per cent of Britain's 12,000 independent pharmacies going out of business.
"A pharmacist's job is not just dispensing prescriptions," he said. "It involves things like counselling patients, asking about their health and medication, and there're numerous other things like nursing-home visits, providing domicillary oxygen, health promotions, needle exchanges. If pharmacies were to close, the local population would lose that quality pharmaceutical service.
"Over-the-counter medicine is a vital part of pharmacies' profitability. The average pharmacy's turnover is 70 per cent dispensing medicines and 30 per cent over-the-counter medicine. That's still a very sensitive proportion."
For people such as Anivash Patel, who has run his pharmacy in Potters Bar for 20 years, if the OFT succeeds the future looks extremely grim.
He said: "It's not just a 9 to 5 job that you clock on and off. I'm here to give advice where necessary. I do a home delivery service so I don't usually get home until past 7.30pm. I also pick up prescriptions from the doctor for patients. I feel I do a service for the community because I've been here for such a long time. Everyone knows my name and I know local people."
At present Asda is alone in its attempt to break RPM. Sainsburys and Tesco say they are waiting for the OFT's decision and do not plan to change policy at the moment. Boots said it was fully supporting the retention of RPM.Reuse content