German Law to Fix Drug Prices Unconstitutional

(CN) - Europe's highest court ruled Wednesday that Germany's fixed-price prescription drug scheme runs afoul of EU law.

Deutsche Parkinson Vereinigung is a self-help organization that seeks to improve the lives of patients with Parkinson's disease and their families. To that end, it created a bonus system with Dutch mail-order pharmacy DocMorris by which patients could order their prescriptions at a discount.

A German consumer watchdog group sued, arguing the bonus system violates Germany's law requiring prescription drugs to have a fixed price by the manufacturer, to which pharmacies add their markups. A court in Dusseldorf agreed and ordered Deutsche Parkinson to stop promoting the bonus system to its patients.

An appeal ensued, leading the appellate court to ask the European Court of Justice whether Germany's fixed-price law for prescription drugs violates the EU's constitutional guarantee of the free movement of goods.

In a 5-page opinion issued Wednesday, the Luxembourg-based high court ruled that imposing fixed prices on pharmaceuticals impacts pharmacies in other member states and could impede access of foreign companies to the German market. This is particularly true since Germany lifted its ban on mail-order pharmacies, who rely on price competition to survive.

The court noted that while restrictions of the free movement of goods can be justified to protect human life and health, Germany's fixed-price scheme is not the way to meet those objectives.

Furthermore, the court said Germany offered no evidence that its scheme was meant to protect traditional pharmacies and the emergency care they provide, since they have advantages like offering tailored care and being able to deliver prescriptions quickly that makes them continuously viable.

The high court's ruling is binding on the Dusseldorf court, which makes the final decision in the case consistent with the EU court's finding.

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