Laws
EU Court asked to annul bans on pharmacy ownership
Laws that restrict retailers from owning drugstores in Germany and Italy were challenged at the European Union's top court in a dispute that may lead to the lifting of similar bans across half of the 27-nation EU.
Celesio AG, Europe's biggest drug wholesaler, contends the ownership restrictions contravene EU rules that guarantee companies' freedom to provide services anywhere in the EU. A "fundamental'' change in the EU's health-care system could result from a ruling backing Celesio. At stake are similar bans in more than 10 EU nations, including Spain, Austria and France.
“This would be the biggest reform of health services ever undertaken at the European level,” said John Chave, the secretary-general of the association representing pharmacies in the EU. A ruling lifting the national rules “would create a precedent'' and "ownership restrictions across the EU would have to go.”
The opening of a DocMorris drugstore in Germany in 2006 triggered one of two cases heard jointly today by the European Court of Justice in Luxembourg. Lawyers for Germany, Italy and at least four other EU nations and pharmacy groups, are fighting the position of Stuttgart-based Celesio and its supporters.
Celesio rose as much as 4.9 percent in Frankfurt trading today and was up 3 percent or 83 cents at 2:46 p.m. in Frankfurt trading. The shares have lost 34 percent this year.
‘Hope’ for Change
“What we see today is of course due to the hearing,” Silke Stegemann, an analyst at UniCredit in Munich said in a telephone interview. “These are investors who expect a more liberal market in early 2009. There are hopes that things will change.”
The goal of a restrictive system such as in Italy is to maintain public health and it's not a decision that should be made at the EU level, said Giuseppe Fiengo, a lawyer for Italy.
“The political choice which was made remains with the EU member states,” said Fiengo. “In this case we do not care about the right to set up a business.”
Claudius Dechamps, a lawyer for the Saarland pharmacy association, which opposes the establishment of Celesio's DocMorris pharmacies in Germany, said the goal of companies to increase profits and boost shareholder value “is clearly in conflict with general health policies.”
Independence
“The independence and focus on the patient by pharmacist- owned pharmacies is very important,” said Dechamps. “If this were not the case you could not guarantee the safety of pharmaceuticals.”
Christian Koenig, a lawyer for Celesio, said any government rationales for the law based on public health concerns aren't justified.
“I'm concerned that it's necessary for the population to get good advice, but it's not true that this can be provided by pharmacist-owned pharmacies exclusively,” Koenig told the 13- judge panel.
Celesio is backed by the justice ministry of the German state of Saarland, which approved a license for a DocMorris pharmacy in the town of Saarbruecken in June 2006. Under German law, only licensed pharmacists can open shop and they can't operate more than four outlets within close proximity.
“Saarland recognized a restriction which is not necessary, not appropriate and not proportionate to offering a service in the public interest,” Wolfgang Schild, secretary of state for the state of Saarland, told the court.
Italian law limits ownership of pharmacies to registered pharmacists or companies comprised only of pharmacists.
The court's ruling could also be decisive in legal actions by the EU's executive agency against Austria, Bulgaria, France, Portugal and Spain. In February, the European Commission added Germany to a list of nations it plans to sue for overly restrictive ownership laws.
(Published by Bloomberg - September 3, 2008)