The EU Court of Justice: German law on fixed prices for prescription-only medicinal products constitutes an infringement of EU law In its judgment of 19 October 2016, the EU Court of Justice concluded that the German law imposing fixed prices for prescription-only medicinal products constitutes a restriction on the free movement of goods between EU Member States and therefore infringes EU law.

Facts of the case

Deutsche Parkinson Vereinigung (DPV) is a German self-help organisation which has as its objective to improve the lives of patients suffering from Parkinson's disease and those of their families. DPV entered into a cooperation agreement with the Dutch mail-order pharmacy DocMorris, awarding DPV's members a bonus when purchasing prescription-only medicinal products for Parkinson's disease from DocMorris.

The German association, Zentrale zur Bekmpfung unlauteren Wettbewerbs (ZBUW), which aims to combat unfair competition, brought legal proceedings against DPV claiming that the bonus scheme infringes the German Act on Medicinal Products providing fixed prices for the supply by domestic pharmacies and mail-order pharmacies of prescription-only medicinal products in other Member States.

The regional court in Dsseldorf, Landgericht Dsseldorf, ruled in favour of ZBUW and prohibited DPV's bonus scheme. DPV appealed the ruling to the high court in Dsseldorf, Oberlandesgericht Dsseldorf, which referred the matter to the EU Court of Justice for a preliminary ruling on whether the German Act is contrary to EU law.

The judgment of the EU Court of Justice

Initially, the EU Court of Justice emphasized that the free movement of goods is a fundamental principle of the Treaty on the Functioning of the European Union (TFEU), which is expressed in the prohibition set out in Article 34 TFEU, of quantitative restrictions on imports between Member States and all measures having equivalent effect.

The EU Court of Justice emphasised that mail-order pharmacies are challenged in accessing the markets of foreign Member States, seeing that national pharmacies are better placed to provide patients with individually-tailored advice given by the pharmacy staff. In this context, price competition often provides a more important factor when it comes to securing foreign pharmacies' competitiveness and their access to foreign markets as opposed to national pharmacies.

Against this background, the EU Court of Justice found that a system of fixed sales prices for prescription-only medicinal products has a greater impact on foreign pharmacies than pharmacies established in Germany. This could impede market access for foreign products more than it impedes such access for domestic products, which would constitute a measure having equivalent effect as that of a quantitative restriction on imports.

The EU Court of Justice found that the system on fixed prices cannot be justified on grounds of the protection of health and life of humans and thereby be exempted from the prohibition of quantitative restrictions on imports.

Thus, the EU Court of Justice rejected ZBUW's argument that the system on fixed prices seeks to and is necessary to ensure a safe and high-quality supply of medicinal products as well as allowing for a better geographical allocation of traditional pharmacies and competition in Germany. The Court emphasized in this connection that such allegations must be based on relevant scientific research and not merely general conjecture as presented by ZBUW. ZBUW had thereby failed to satisfy its burden of proof and thus failed to show that the system of fixed prices could be justified on grounds of the protection of health and life of humans.

The significance of the judgment

A direct consequence of the judgment passed by the EU Court of Judgment is that foreign mailorder supplies, including Danish mail-order supplies, of prescription-only medicinal products to Germany will not be subject to the German fixed prices. In general, it will be legal to introduce bonus and discount schemes covering such medicinal products that are sold to consumers.

At the same time, the judgment implies that all other Member States similarly will have to ensure that any national provisions concerning fixed prices on prescription-only medicinal products comply with the EU Court of Justice case law. If necessary, national law must be adjusted to the extent that a system of fixed prices applies to foreign mail-order sales of prescription-only medicinal products.

Current Danish law does not prevent the sale by a foreign mail-order pharmacy of prescription-only medicinal products to a Danish consumer at a price that is lower than the price charged for the medicinal product by Danish pharmacies. However, one may consider, for instance, whether the Danish rules on subsidy to medicinal products bought in other EU/EEA countries which, among others, involve considerable documentation requirements also constitute a restriction on the free movement of goods.