ECJ: Prescription medicine can be sold in Germany by foreign internet pharmacy below German fixed price
The European Court of Justice (ECJ) decided today that the German law requesting one fixed ex-factory and retail price for a prescription (Rx) medicine infringes Art. 34 TFEU and is not justified if it prohibits foreign internet pharmacies from selling at a lower price in Germany. Hence, price competition within the distribution chain must be possible if the product concerned is sold into Germany via an online / internet pharmacy from abroad.
Background: § 78 II AMG requests pharmacies to sell a certain prescription medicine at one price; § 78 III AMG requests manufacturers to apply one ex-factory price for an Rx product (which can usually be freely set during the first year for a new API – during the AMNOG process – but then has to apply to all packs of that medicine). This de facto means that – for Rx medicines – rebates and discounts to pharmacists were prohibited during the last approx. 10 years. Moreover, Germany – unlike other countries – has allowed internet sales in prescription medicines, not just in OTC medicines as requested by the ECJ serveral years ago.
The ECJ case: This German „ban on price competetion“ for Rx medicines has been partly lifted by the ECJ which argued that foreign internet pharmacies must be allowed to compete on price with German pharmacies as price competition would be the only instrument they can use to access the German market because competing in services would not be an option for them. A Parkinson patient organization offered its members a „bonus system“ if they purchase from the foreign internet pharmacy DocMorris; the compliance of this „bonus system“ of the Dutch online pharmacy is subject to the ECJ procedure; under German law it would infringe §§ 78 II and III AMG but the ECJ held that these restrictions should not be applied to foreign internet pharmacies.
Implications: Foreign online pharmacies like DocMorris since serval years argued that certain German price restrictions would not apply to them due to the principle of free movement of goods and services. Foreign pharmacies might now offer bonus system and discounts to patients and payers also for Rx medicines but only if these products contain a German PIL and comply with regulatory requirements.
It remains to be seen to what extent the German legislator reacts to the ECJ case. It is not clear yet if the ban on price competition will be lifted completely (also for sales purely in Germany). The legislator could also enact a ban on internet sales of Rx medicines as – according to the ECJ – only OTC medicines must be available in the EU via online sales.
The main implications of the judgement concern pharmacists and wholesalers as foreign online pharmacies like DocMorris can now apply lower (wholesale and retail) margins and profit from an increased volume. The impact for the innovative pharmaceutical and biotech industry might be moderate as long as the judgement and follow-up legislation concerns only inter-community trade via foreign internet pharmacies.
The judgement can be found here.
For further information please contact Dr. Alexander Natz.