Pharmacy Granted Authorization to Secure Premises with Increased Fees
In a landmark decision, the German Federal Court of Justice (BGH) has ruled that regulations on drug price fixing do not apply to pharmaceutical retailers based in other European Union (EU) countries. This ruling, made in Case No. I ZR 74/24, has significant implications for foreign retailers operating in the German market.
The ruling specifically relates to regulations of the Drug Law in a version valid until December 14, 2020. The BGH, in its decision, applied guidelines from the European Court of Justice (ECJ) and considered the case against the backdrop of recent legal and regulatory developments, including the BGH ruling itself and ongoing EU pharmaceutical law reforms.
Traditionally, German competition law prohibits agreements that fix prices among competitors, including cross-border price-fixing practices by pharmaceutical retailers. The Federal Cartel Office (FCO) actively monitors price control mechanisms in the pharmaceutical sector, as such practices violate antitrust rules.
Despite this ruling, it is essential to note that pharmaceutical retailers based in other EU countries, operating in the German market, are subject to German and EU competition laws. These retailers must comply with the antitrust rules as interpreted post-BGH ruling, which likely reinforces prohibitions against any form of drug price fixing or concerted price controls.
The ruling has been met with mixed reactions. The Federal Association of German Pharmacists' Associations (ABDA) regretted the decision, fearing it could lead to increased prices for prescription drugs. However, the legislator could assume that the regulation was a suitable means of securing the drug supply in Germany.
The average out-of-pocket cost per pack for patients has increased by 10% to 3.30 euros since 2019. Courts had previously been on the side of the Bavarian Pharmacists' Association in a case involving the Dutch-based online pharmacy Tanimis Pharma. The Higher Regional Court (OLG) Munich ruled that the price binding was not contrary to EU law.
The ruling has been criticised for potentially violating the freedom of goods traffic within the EU. However, the focus on transparency and secure supply through initiatives like the European Shortages Monitoring Platform (ESMP) and the proposal for a Critical Medicines Act reflects the EU’s increasing regulatory involvement in pharmaceutical markets, promoting competition and preventing drug shortages without resorting to price-fixing arrangements.
In summary, following the BGH ruling in Case No. I ZR 74/24 and recent regulatory developments, price fixing in the pharmaceutical sector by retailers based outside Germany but operating in the German market is strictly prohibited. The rules are enforced by the Federal Cartel Office, which scrutinises any pricing agreements or mechanisms that could restrict competition or artificially control drug prices. These regulations are also aligned with ongoing EU reforms promoting competition, transparency, and prevention of drug shortages without resorting to price-fixing arrangements.
[1] https://www.bundeskartellamt.de/shared_documents/pressemitteilungen/2020/03/2020-03-13-amazon-preise-dynamisch-regulieren.pdf [2] https://ec.europa.eu/health/pharmaceuticals/human/regulatory_framework/paediatric_regulation/index_en.htm [3] https://ec.europa.eu/health/pharmaceuticals/human/esmp_en.htm [4] https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12524-Critical-Medicines-Act-Proposal-for-a-Regulation-on-Critical-Medicines-for-Human-Use_en
- The BGH's ruling on pharmaceutical retailers from other EU countries operating in the German market has significant implications for the health-and-wellness industry, especially in terms of medical-conditions treatments, as it is crucial for retailers to comply with the antitrust rules, ensuring competition and price transparency, in accordance with the ongoing EU pharmaceutical law reforms.
- The ruling in Case No. I ZR 74/24 has been met with varying responses, with some in the education sector, such as the Federal Association of German Pharmacists' Associations, expressing concerns about potential price increases for prescription drugs, while others argue that these regulations are essential to securing a reliable drug supply and promoting competition within the industry.
- The finance and business sectors are closely watching the implications of this ruling, as the prohibition on drug price fixing by retailers based outside Germany but operating in the German market may encourage competition and prevent market manipulation, potentially leading to positive impacts on the overall economy by fostering a more competitive pharma industry.
