Permissibility of discount and bonus systems operated by EU mail-order pharmacies

Federal Court of Justice (BGH) establishes "level playing field" with regard to pricing by locally established German pharmacies on the one hand and EU mail-order pharmacies on the other

The Federal Court of Justice (BGH) had to decide in several parallel proceedings on the question of the permissibility of discount and bonus systems in the supply of prescription-only medicinal products by EU mail-order pharmacies.

The individual proceedings were directed, on the one hand, against a pharmacy based in the Netherlands, which offered medicines for the German market via internet mail-order trade, and, on the other hand, against three pharmacies based in North Rhine-Westphalia, which advertised the mail-order service of a pharmacy based in the Netherlands, as well as against a large German mail-order trading company, which advertised in an insert in its catalogue for a pharmacy based in the Netherlands that promised bonuses for the redemption of prescriptions.

These were sued by operators of domestic pharmacies, the Central Office for the Prevention of Unfair Competition, and two pharmacy associations, inter alia for infringement of the price-fixing provisions applicable in pharmaceutical law for prescription-only medicinal products, for discontinuation of the announcement or granting of the bonuses or recommendation of the Dutch mail-order pharmacy.

With regard to the permissibility of discount and bonus systems operated by pharmacies, the Federal Court of Justice (BGH)already on 09.09.2010 in several landmark decisions(link to press release 172/10) considered a breach of the pharmaceutical price-fixing not only to be present when a pharmacist dispenses a price-bound medicinal product at a price other than that to be calculated according to the Pharmaceuticals Price Ordinance (Arzneimittelpreisverordnung). Rather, the judges also affirmed such a breach "if, although the correct price is charged for the price-bound medicinal product, the customer is granted advantages coupled with the acquisition of the medicinal product, which make the acquisition appear economically more favourable for him".

However, this behaviour of pharmacists – so the Federal Court of Justice (BGH) already in 2010 – is only suitable to impair the interests of competitors and other market participants in a manner "noticeable" within the meaning of the Act Against Unfair Competition (UWG) if no "permissible advertising gift" within the meaning of the Medicines Advertising Act (Heilmittelwerbegesetz) is involved. In this context, the Federal Court of Justice (BGH) considered an advertising gift worth EUR 1 to be still permissible, but in the case of an advertising gift worth EUR 5, it affirmed a noticeable impairment.

The question then arose whether German pharmaceutical price law also applies to medicinal products imported into Germany via mail-order trade.

Decision of the court

The Federal Court of Justice (BGH) wanted to affirm the question of whether German pharmaceutical price law also applies to the pharmacy sale price of prescription-only medicinal products that are placed on the domestic market by a mail-order pharmacy resident in another Member State of the EU via mail-order trade, but found itself prevented from doing so by a decision of the Federal Social Court (BSG).

The Federal Social Court (BSG) had decided in another context withjudgment of 28.07.2008 – Az. B 1 KR 4/08 Rthat German pharmaceutical price law does not apply to mail-order pharmacies that send medicinal products from European foreign countries to German consumers.

Against this background, the Federal Court of Justice (BGH) referred this question to the Joint Senate of the Federal Supreme Courts for decision, which decided withresolution of 22.08.2012 – Az. GmS-OGB-1/10that German price regulations basically also apply if prescription-only medicinal products are supplied by a mail-order pharmacy based in another Member State of the European Union to end consumers in Germany.

The provisions of the Medicines Act (Arzneimittelgesetz) accordingly provide a sufficient legal basis for subjecting foreign mail-order pharmacies that supply prescription-only medicinal products to end consumers on the domestic market to German pharmaceutical price law.

On the basis of this decision by the Joint Senate of the Federal Supreme Courts and the above-mentioned landmark decisions from 2010, the Federal Court of Justice (BGH) has now in its respective judgments issued on26.02.2014 – Az. I ZR 77/09 and Az. I ZR 79/10 – or the respective resolutions adopted on 26.02.2014 – Az. I ZR 72/08, Az. I ZR 119/09 and Az. I ZR 120/09– granted the individual claims for injunctive relief in the result.

Furthermore, in its decision Az. I ZR 77/09, the Federal Court of Justice (BGH) established that in the underlying facts, it "was not decisive that the Dutch mail-order pharmacy did not supply the consumers who order prescription-only medicinal products from it directly under the contested business model, but rather through the intermediation of the defendant, since the regulation made with regard to the place of performance is manifestly intended to circumvent German pharmaceutical price law".

Conclusion

Pharmacies that are based in European foreign countries must also comply with the provisions of the Medicines Act (Arzneimittelgesetz) and the Pharmaceuticals Price Ordinance (Arzneimittelpreisverordnung) when dispensing prescription-only medicinal products and in their offers directed (also) at German customers. EU mail-order pharmacies are therefore permitted to grant their customers only "mini-discounts" just like German pharmacies.