ECJ – German fixed prices for medicinal products infringe EU law

The ECJ has in its judgment on 19 October 2016 (Case C-148/15 – Deutsche Parkinson Vereinigung; ECLI:EU:C:2016:776) decided that the fixed prices set in Germany for prescription-only medicinal products are illegal under EU law with respect to foreign mail-order pharmacies.

Background

It seemed that the legal situation had been clarified by the German Federal Court of Justice (Bundesgerichtshof – BGH) because with a decision handed down on 22 August 2012 the Joint Senate of the Supreme Courts of the Federation had decided that the fixed prices regulations also applied for pharmacies based in other EU Member States if they supplied prescription-only medicinal products to end consumers in Germany by mail-order. The Joint Senate had also emphasised, inter alia, that the German Medicinal Products Act (Arzneimittelgesetz – AMG) provided an adequate legal basis for this and that the application of the price regulations to foreign mail-order pharmacies as well was compatible with EU law (GmS-OGB, decision of 22.8.2012 = NJW 2013, 1425 – “EU-mail-order pharmacies”).

The ECJ sees this differently. It has now held that the German fixed pharmacy prices constituted an unjustified restriction of the free movement of goods principle.

The ECJ decision

The ECJ case concerns a bonus system which a Parkinson’s disease self-help organisation agreed with the mail-order pharmacy DocMorris. The members of the self-help organisation received a discount if they purchased from DocMorris prescription-only medicinal products for treating Parkinson’s disease, i.e. products only available from pharmacies. The German Association for Protection against Unfair Competition (Wettbewerbszentrale), which considered this practice illegal on the basis of the German legal and case law situation, took legal action against this and was actually successful in the trial court instance, the Düsseldorf Regional Court (Landgericht). The Court of Appeal, the Düsseldorf Higher Regional Court (Oberlandesgericht), however, referred the matter to the ECJ to ascertain whether setting fixed prices for sale by pharmacies of prescription-only medicinal products for human use was compatible with the free movement of goods.

The ECJ now states the following in the grounds of its judgment:

The setting of fixed prices has a greater impact on pharmacies established in other Member States than on German pharmacies. Access to the German market could therefore be impeded for products from other Member States more than for German products because sale by mail order constitutes a more important – if not the only – means of accessing the German market directly. Besides, price competition could be a more significant factor of competition for mail-order pharmacies than for traditional pharmacies, the latter being better placed to offer patients individually-tailored advice provided by dispensary staff and to ensure the supply of medicinal products in cases of emergency.

The ECJ further states that it has not been demonstrated how setting fixed prices should ensure a better geographical distribution of traditional pharmacies in Germany. In fact, price competition could even be capable of benefitting patients in so far as it would, where relevant, allow for prescription-only medicinal products to be offered in Germany at more attractive prices than those currently charged.

Conclusion

The ECJ judgment (of 19.10.2016 - Case C-148/15 – Deutsche Parkinson Vereinigung) is not only significant for cross-border (intra-European) mail order with prescription-only medicinal products: if the ECJ principles were only applied to foreign mail-order pharmacies, German mail order pharmacies would have a serious competitive disadvantage because, unlike their European competitors, they would not be able to engage in price competition. It therefore appears that due to the ECJ judgment German courts as well will very soon have to deal with the issue of fixed prices for prescription-only medicinal products.

The German Federal Association of Mail-Order Pharmacies (Bundesverband Deutscher Versandapotheken – BVDVA) has already issued a press release on this, pointing out that according to the ECH judgment the “principle of equal treatment” must apply. It says that it is not acceptable that the ECJ judgment will result in discrimination against German mail-order pharmacies, in that these will not be allowed to do what mail-order pharmacies from other European countries are.

Links:

Press Release on the ECJ judgment

Full text of the ECJ judgment

Press Release of the BVDVA