European Court of Justice Allows Ban on Pharmacy Sweepstakes

On July 15, 2021, the ECJ ruled, following a referral from the Federal Court of Justice (Bundesgerichtshof, "BGH"), that a national prohibition of  advertising by mail-order pharmacies is permissible with regard to prize competitions in which participants can win everyday items after submitting a prescription for a medicinal product for human use. This means that national legislators are free to regulate the sales modalities of pharmacies themselves when dispensing prescription medicines.

The starting point of the proceedings was a prize competition advertisement by DocMorris, a mail-order pharmacy based in the Netherlands. The latter offered its customers who filled a prescription the chance to win various prizes, including an e-bike. The Apothekerkammer Nordrhein (North Rhine Chamber of Pharmacists) considered this competition to be an inadmissible addition pursuant to Section 7 of the German Drug Advertising Act (Heilmittelwerbegesetz, "HWG"). In the second instance, the Frankfurt Higher Regional Court (Oberlandesgericht, "OLG") followed this opinion, as consumers were influenced in an unobjective manner by the prize draw.  The possibility of participating in a prize competition triggers an incentive that runs counter to the protective purpose of Section 7 (1) HWG. The prohibition of gifts is intended to avoid an indirect health hazard and primarily to prevent customers from being unobjectively influenced in their decision as to whether and which remedies to use. It could be argued that this is not the issue in the present case because the drug in question has already been prescribed and there is no reason to fear misuse of the drug by influencing the physician. However, there is the obvious possibility that the patient presents his prescription at the defendant instead of at another pharmacy, in particular at an inpatient pharmacy. In this respect, the OLG referred to the "DocMorris/Deutsche Parkinsonvereinigung" decision of the ECJ, which had stated that mail-order pharmacies, in contrast to stationary pharmacies, were not in a position to provide individual advice to patients through their staff on site, but had a limited range of services. The mail-order pharmacy could only provide advice by telephone and on explicit request. However, since it could be significant for the customer to receive unsolicited advice even when a prescription is filled - for example, with regard to interactions with other medications - the decision in favor of an inpatient pharmacy or a mail-order pharmacy was relevant to health and should not be influenced.

Following the allowed appeal, the BGH submitted the legal dispute to the ECJ for a response. The BGH asked whether the fundamental prohibition of advertising gifts was compatible with the objectives and provisions of Directive 2001/83, the Community Code relating to medicinal products on human use. It was true that the Directive did not contain any specific provision on advertising for medicinal products in the form of prize competitions. In addition, it can be inferred from the decision "Deutsche Parkinson Vereinigung" (C-148/15, judgment of October 19, 2016) that mail-order pharmacies established in other member states cannot be prevented from entering into price competition with established pharmacies in order to compensate for the restriction of their range of services resulting from the impossibility of providing individual advice to patients on site. In the opinion of the BGH, although it is to be feared that consumers will be improperly influenced, it is not to be feared that there will be an inappropriate or excessive use of pharmaceuticals.

In its decision, the ECJ first clarified that the Community Code relating to medicinal products on human use does not apply to such advertising. It is not a question of the customer buying a particular drug, but, as emphasized by the Apothekerkammer Nordrhein, of the downstream decision in favor of the pharmacy from which the customer buys the drug. Thus, it is not advertising for a specific drug, but advertising for the entire range of prescription drugs. However, such advertising does not fall within the scope of the Directive. The ECJ then went on to state, beyond the specific question referred, that such a prohibition is also not in conflict with the Electronic Commerce Directive 2000/31.

The prerequisite for participation in the competition was the sending of the prescription, which took place outside the online store of the mail-order pharmacy. Finally, the ECJ stated that the fundamental freedoms of the EU Treaty do not stand in the way of a corresponding prohibition. Since the measure essentially concerns the sale of goods, it must be measured against the free movement of goods. However, taking into account the established case law, such a prohibition is merely a sales modality which is not capable of hindering trade between the member states, since the regulation applies to all pharmacies which offer prescription medicines in Germany. The regulation also applies to all medicinal products, regardless of whether the medicinal product originates from Germany or another member state. In the ECJ's view, this result also does not contradict its earlier "Deutsche Parkinson Vereinigung" decision, since the prohibition in question had a much smaller impact on mail-order pharmacies than an absolute prohibition of price competition.

The decision strengthens the autonomy of the member states in the sensitive area of pharmaceutical distribution. In this respect, the ECJ tightens the scope of application of the European directive, which only applies when certain medicines are involved. In addition to this scope of application, the member states may enact national regulations that relate to the sale of medicinal products in general. Already in the decision "A" (C-649/18, October 1, 2020), the ECJ had granted the member states a not inconsiderable freedom in designing national regulations for pharmacies in order to protect consumers due to the health risks associated with the use of medicinal products. This line has now been continued. The scope of application of the national provision of the HWG is thus significantly broader than the scope of application of the European Directive. At the same time, such a broader scope of application does not conflict with European law, as long as the free movement of goods is preserved.

The Apothekerkammer Nordrhein expressly welcomes the decision, as it is of fundamental importance beyond the specific facts of the case. Thus, the argument that Dutch mail-order pharmacies like to put forward, namely that they must ultimately be free in their marketing measures in order to be able to operate appropriately in Germany, which usually means ignoring regulations on health protection, is off the table. Accordingly, mail-order pharmacies based abroad must also comply with such consumer protection regulations, provided they are regulations that apply to all market participants. This also puts a stop to the extensive interpretation of the "Deutsche Parkinson Vereinigung" decision. It will now be up to the national courts to determine which marketing measures linked to sales lead to improper influence.

The Apothekerkammer Nordrhein was also represented before the ECJ by its regular advisors Morton Douglas and Anne Bongers-Gehlert (both competition law, pharmacy law), with whom it has been conducting fundamental proceedings in German pharmacy law for many years. DocMorris was represented before the German courts by the law firm Diekmann. Raue was then mandated in the proceedings before the ECJ.