CJEU decides that binding retail price maintenance for prescription drugs in Germany violates EU law

In the case before the Higher Regional Court of Düsseldorf, the German Parkinson’s Disease Association (Deutsche Parkinson Vereinigung eV - DPV) - a self-help organization with the objective to improve the lives of patients with Parkinson’s disease - teamed up with the Dutch mail-order pharmacy DocMorris.

The case concerned a mailing sent by DPV to its members advertising certain bonus schemes and bonuses available for buying prescription drugs for Parkinson’s disease from DocMorris.

This mailing had been challenged by the German Association against Unfair Competition (Zentrale zur Bekämpfung unlauteren Wettbewerbs ev - ZBW) as violating provisions of the German Medicinal Products Act (Arzneimittelgesetz) as well as the German Regulation on Prices for Medicinal Products. Both these statutes aim to ensure a uniform retail price for prescription drugs in Germany and need to be observed by pharmacies.

In the first instance, the Regional Court of Düsseldorf granted ZBW’s action and ordered DPV to cease and desist from sending the mailing in suit, i.e. advertising bonus models for prescription drugs. DPV appealed this decision whereupon the Court of Appeal (i.e. the Higher Regional Court of Düsseldorf) referred the following questions to the CJEU for preliminary ruling:

(1) Must Article 34 TFEU be interpreted as meaning that a system of fixed prices laid down by national law applicable to prescription-only medicinal products constitutes a measure having equivalent effect within the meaning of Article 34 TFEU?

(2) If the Court answers Question 1 in the affirmative: is the system of fixed prices for prescription-only medicinal products justified under Article 36 TFEU on grounds of the protection of health and life of humans if that system is the only means of ensuring a consistent supply of medicinal products to the population across the whole of Germany, in particular in rural areas?

(3) If the Court also answers Question 2 in the affirmative: what is the degree of judicial scrutiny required when determining whether the condition mentioned in Question 2 is in fact satisfied?

Today, the CJEU found that the German model ensuring a uniform retail price is an illegitimate restriction on the free movement of goods. The CJEU’s decision can be accessed here. In essence, the argued that

(1) the price maintenance might make it harder for foreign pharmacies to enter the German market and, thus, has an equivalent effect to a quantitative restriction on imports within the meaning of Art. 34 TFEU;

(2) [+ (3)] although a restriction on the free movement of goods can be justified for health reasons, price maintenance is not appropriate for attaining this objective. Thus, the system of fixed prices for prescription-only medicinal products is not justified under Art. 36 TFEU.

The CJEU especially rejected the argument of the German government that the fixed price would ensure a high-quality of prescription only drugs throughout the country, also in rural areas. The court found that neither was there any evidence whatsoever that the supply of such drugs in rural areas would be negatively affected by allowing price competition, nor that the patient’s health would be put in jeopardy.

It remains to be seen how exactly the CJEU decision will be interpreted by the German legislator and what changes will be introduced to the German pharmaceutical law. Still, this much seems certain, the decision is likely to have a huge impact on the German pricing for prescription drugs.