Bonuses, rebates, coupons and similar customer fidelity systems, which are offered by pharmacies to customers in exchange for the redemption of their prescriptions (so-called “Rx-bonuses”), violate German medicines pricing provisions. Until now, however, pharmacies offering certain customer fidelity systems such as bonus point systems, were shielded by a legislative loophole from unfair competition claims by competing pharmacies or customer watchdog organisations, if the bonus point granted for each prescription was not worth more than EUR 1.
New legislation contained in part of the German Act on Advertising in the Health Care System (Heilmittelwerbegesetz, “HWG”), which has just come into effect, will close this loophole and likely clear the way for unfair competition proceedings against pharmacies offering such bonus point systems.
The current situation can be described as follows:
- A direct rebate on a prescription drug is impermissible under the HWG in conjunction with the pricing provisions of the German Medicinal Product Act (Arzneimittelgesetz, “AMG”).
- Some customer fidelity systems, such as bonus point systems did and still do not comply with the provisions of the pricing regulations of the AMG, because they are considered to factually alter the pharmacy retail price, which is regulated by the AMG.
- Under current case law, competitors could not successfully challenge such infringements of the medicines pricing regulations in unfair competition proceedings unless these advantages exceed a certain triviality threshold. Courts held that such incentives are not able to affect the objectivity of the customer, because the HWG explicitly allows gifts below the triviality threshold. According to case law, the triviality threshold was set at EUR 1 worth for each prescription. Therefore, regardless of pricing rules, under HWG and unfair competition law pharmacists were allowed to implement a bonus point system granting bonus points worth EUR 1 for each prescription being filled at the pharmacy and allowing the patient to get a rebate of EUR 10 on a non-prescription drug when he has accumulated 10 bonus points.
Therefore, because of the incongruence between the medicines pricing regulations on the one hand and the provisions of the HWG and unfair competition law on the other hand, pharmacists were able to successfully defend such bonus point systems in unfair competition proceedings, but could nonetheless be punished by professional disciplinary tribunals for implementing the very same bonus point system. However, the jurisprudence of the professional disciplinary tribunals has not been uniform in these cases.
The HWG provides that pharmacists may offer, announce or grant advantages or other advertising gifts if these are of trivial value. The inew amendment will add a proviso that that any such trivial value advantages must nonetheless comply with the medicines pricing provisions of the AMG. Because such Rx-bonus point systems do not comply with medicines pricing provisions, they will no longer be permissible under HWG or unfair competition law. Pharmacies are likely to be able to challenge such bonus point systems, if run by their competitors, by means of unfair competition law.
It should be noted that this new proviso only excludes bonuses granted in exchange for filling in prescriptions. Other low value advertising gifts, such as a pack of paper handkerchiefs, are considered to be in compliance with the provisions of the medicines pricing rules and therefore still permissible. The same applies to advantages granted in exchange for inconveniencies suffered by the customers, e.g. if a medicine is not in stock and the customer has to return to the pharmacy. Such advantages will not be affected by the amendments to the HWG