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EU strikes down Germany's fixed-price drugs

Matt Zuvela
October 19, 2016

The European Court of Justice has issued a ruling that strikes against fixed prices for prescription drugs in Germany. The specific case dealt with mail-order prescriptions from the Netherlands used to treat Parkinson's.

Image: picture-alliance/dpa/D. Reinhardt

Wednesday's ruling from the European Court of Justice (ECJ) found that a German law fixing prices of prescription drugs "constitutes an unjustified restriction of the free movement of goods" in the European Union.

The case was brought before the court by a German non-profit group that focuses on improving the lives of Parkinson's sufferers and their families. The "Deutsche Parkinson Vereinigung" had reached an agreement with a Dutch mail-order pharmacy called DocMorris, whereby the group's members benefited from a bonus system when ordering prescription-only medications.

A German competition watchdog said this constituted unfair price competition for Germany's local pharmacies, which are protected by fixed-prices for pharmaceutical supply of prescription-only medical goods.

A regional court in Dusseldorf asked the Parkinson's group to end the bonus system for its members, and the organization's appeal to a higher court was referred to the European Court of Justice.

The court argued that the fixed prices made it difficult for pharmacies in other EU member states to gain access to the German market.  In addition, the court determined that price-driven competition was a key consideration for pharmacies outside of Germany as it was likely one of the only ways to enter the market, and because local pharmacies in Germany can also offer the added benefit of supply assurances and advice from staff tailored to each patient.

One argument brought in support of the fixed-price argument was that it helped ensure a better distribution of pharmacies throughout Germany. The court countered that price competition would "encourage the establishment of pharmacies in regions where the scarcity of dispensaries allows for the charging of higher prices."

The impact on consumers remains unclear as German officials review the court's decision.

The Federal Union of German Associations of Pharmacists, an umbrella organization of more than 60,000 pharmacists in Germany, said it was "appalled" by the court's decision and accused it of overstepping its bounds into German legislation.

"It cannot be the case that unbridled market forces triumph over consumer protection and public health," said the association's president, Friedemann Schmidt.

Schmidt called on the German government to take action and give itself more room to maneuver. He said a ban on mail-order pharmaceuticals would be a possible solution, adding that it would be "compliant with European law."