Introduction

The European Court of Justice (ECJ) has, in two recent judgments, upheld the right of Member States to restrict the ownership of pharmacies to pharmacists. These rulings are the culmination of two separate legal challenges - one by German pharmacist associations against a decision to permit a Dutch pharmacy to operate a branch in Germany, and the other by the European Commission against Italy for legislation which allowed only pharmacists to own and operate private pharmacies. These rulings come as a blow to the expansion plans of multi-national pharmacy chains in Europe.

Background

One of the cornerstones of the EC’s single market is the freedom of establishment for companies. Under these rules, which are enshrined in the EC Treaty (Articles 43 and 48), companies are entitled to carry on economic activities in more than one Member State. National laws which restrict the ability of businesses to work across the EU are incompatible with this so called “fundamental freedom”, which is central to the effective functioning of the internal market. Member States may adopt restrictions to this freedom in the interests of public health, but such measures must be proportionate and employ the least restrictive means possible.

Within the EU, Member States remain responsible for the organisation and delivery of health services and medical care and for the geographic distribution of pharmacies and monopoly for dispensing medicines (Directive 2005/36/EC). There is no EC legislation specifying the categories of persons entitled to operate pharmacies, and as such, the rules governing the retail supply of medicinal products varies widely from one Member State to another. For instance, only self-employed pharmacists can own and operate pharmacies in some Member States such as Italy, whereas non-pharmacists may own pharmacies in other Member States if they entrust their management to employed pharmacists.

European Court of Justice rulings

The ECJ was asked to determine whether German and Italian legislation, which provides that only pharmacists may own and operate pharmacies, was compatible with EC law. It came to the conclusion that, although national legislation prohibiting non-pharmacists from operating pharmacies or acquiring stakes in companies operating pharmacies did constitute a restriction on the freedom of establishment, this was justified by the objective of ensuring that the provision of medicinal products to the public is reliable and of good quality.

The Court found that the very particular nature of medicinal products distinguished them from other goods. As such, the ECJ decided that the operation of pharmacies by non-pharmacists could represent a risk to public health and Member States should be able to take protective measures to ensure the reliability and quality of the provision of medicines to the public. It is therefore lawful for Member States to decide that only qualified, independent pharmacists may sell medicinal products in order to ensure that adequate safeguards are in place to protect the public. This was found to be particularly important with regards to the supply of medicinal products at the retail level as there is a serious health risk if such products are consumed unnecessarily or incorrectly.

While these decisions do not require Member States to amend their existing rules, they are a set back to the plans of a number of chains to pierce the German and Italian markets.