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Germany: Prescription Drugs Cannot Be Sold Via Video Chat and Vending Machines

(May 24, 2019) In a decision published on May 11, 2019, the Administrative Court of Karlsruhe (Verwaltungsgericht Karlsruhe, VG Karlsruhe) held that the Dutch mail order pharmacy DocMorris cannot use vending machines in Germany to sell drugs that are authorized for sale only through pharmacies. The Court stated that vending-machine sales were not covered by the Dutch government’s authorization of the plaintiff to operate a mail order pharmacy, but required an authorization to operate a local pharmacy. (VG Karlsruhe, Apr. 4, 2019, Docket No. 3 K 5393/17, ECLI:DE:VGKARLS:2019:0404.3K5393.17.00, Landesrechtsprechung Baden-Württemberg website (in German); Arzneimittelgesetz [AMG] [Medicinal Products Act], Dec. 12, 2005, BUNDESGESETZBLATT [BGBl.] [FEDERAL LAW GAZETTE] I at 3394, § 43, para. 1, § 73, para. 1, as amended, German Laws Online website.)

Applicable Law

Section 43 of the German Medicinal Products Act provides that “[m]edicinal products […], which are not released for trade outside of pharmacies […] may[…] be placed on the market professionally or commercially to the consumer exclusively in pharmacies and not by sale at a distance without official authorisation.”

Section 73, paragraph 1, states that

(1) [m]edicinal products which are subject to compulsory marketing authorisation […] may only be introduced into the purview of the present Act, if they are authorised for marketing […] or if they have been exempted […] and if

1a.       in the case of shipment to the final consumer, the medicinal product is shipped, according to the German regulations governing sale at a distance or electronic commerce, by a pharmacy of a Member State of the European Union […] which is authorised to conduct sale at a distance under its national laws, in so far as they correspond to German pharmacy law as regards the provisions governing sale at a distance, or according to the German Act on Pharmaceutical Services.

Facts of the Case

The plaintiff is a Dutch mail order pharmacy. (VG Karlsruhe para. 2.) Since April 19, 2017, the plaintiff has offered pharmaceutical video consultations with drug delivery in the municipality of Hüffenhardt, Germany. (Id. para. 3.) For that purpose, customers, who were sitting in an office space formerly occupied by a pharmacy in Hüffenhardt, were connected via video chat to a pharmacist or pharmaceutical assistant in the Netherlands. After the consultation, the Dutch pharmacist or pharmaceutical assistant would check the scanned-in prescription, among other things, and decide whether to dispense the requested drug via a drug vending machine located on the premises and connected to the pharmaceutical warehouse in Hüffenhardt. (Id. paras. 5–7.)

On April 21, 2017, the Regierungspräsidium Karlsruhe, the head of the administrative region of Karlsruhe, decided that the plaintiff would no longer be allowed to use vending machines to dispense drugs that are required to be sold through pharmacies, as this was a violation of the German Medicinal Products Act and was not covered by the plaintiff’s authorization to conduct a mail order business. (Id. paras. 3, 11, 12.)

On April 26, 2017, the plaintiff filed suit with the Administrative Court of Karlsruhe against the prohibition order. (Id. para. 15.) The plaintiff mainly argued that dispensing prescription drugs via video chat was covered by its Dutch authorization to operate a mail order pharmacy because the term “mail order” must be broadly interpreted and includes innovative new procedures, such as same day delivery. (Id. para. 16.) In addition, the plaintiff alleged that the prohibition violated European Union (EU) law. (Id. paras. 22 & 23.)

Decision

The Court held that the Regierungspräsidium Karlsruhe was justified in prohibiting the distribution of prescription drugs via video chat and vending machine. It stated that the distribution of prescription drugs violated section 43, paragraph 1 of the Medicinal Products Act, because neither did the plaintiff have an authorization to operate a traditional local pharmacy nor did the distribution via vending machine constitute a sale by mail order. (Id. para. 46.) According to its own submission, the plaintiff did not have an authorization to operate a traditional local pharmacy and did not consider it necessary. (Id. para. 49.)

The Court added that the distribution via vending machine, however, was also not a sale by mail order. It explained that the term “mail order” is not statutorily defined, but it is generally understood as delivering the product to the consumer and not just retrieving it from the connected warehouse and handing it over to the consumer. There is generally a certain time span between the purchase and the handing over of the product. In the case at issue, however, the customer has the possibility to take the product home directly from the place where the video consultation took place. This creates the appearance of a local traditional pharmacy and not a mail order pharmacy. (Id. paras. 56 & 77.)

The Court further held that the prohibition does not violate EU law, in particular the principle of free movement of goods. (Id. para. 121.) Article 34 of the Treaty on the Functioning of the European Union (TFEU) provides that “[q]uantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.” (Consolidated Version of the Treaty on the Functioning of the European Union (TFEU), 2016 O.J. (C 202) 1, EUR-Lex website.) Article 36 of the TFEU enumerates several grounds on which such restrictions are justified. In the opinion of the Court, the prohibition constitutes a measure having an equivalent effect but is justified on the grounds of protection of the health and life of humans. (VG Karlsruhe paras. 124 & 128.) The Court ruled, in accordance with the jurisprudence of the European Court of Justice, that the requirement that only pharmacists may operate pharmacies and the consequent resulting restriction on the freedom of movement of goods are justified by the objective of ensuring that the provision of medicinal products to the public is reliable and of good quality. (Id. para. 129.) The EU Member States have the power to determine the appropriate level of protection of public health. (Id. paras. 132 & 133.)