An EU member state must exercise caution when imposing restrictions on the online sale of medicinal products not subject to medical prescription by a service provider established in another member state, the Court of Justice of the European Union (CJEU) has recently affirmed. While certain conditions and prohibitions are acceptable, the member state of destination cannot unduly restrict the online selling of such products.
This case dealt with the interplay of two different sets of rules – the EU’s Community Code relating to medicinal products for human use and the EU’s E-commerce Directive.
The authorisation, importation and production of medicines for humans is regulated at EU level by the Community Code relating to medicinal products for human use. This legislative measure makes provision for detailed rules on the sale, production, labelling, classification, distribution and advertising of medicinal products for human use in the EU.
On the other hand, the E-commerce Directive establishes standard rules on various issues related to electronic commerce. It seeks to ensure the free movement of information society services between the member states by approximating the rules regulating the establishment of such service providers as well as rules regulating advertising and online contracts, among others.
The directive clearly obliges member states not to restrict the freedom to provide information society services from another member state and they can only derogate from this fundamental principle on the basis of necessary justifications relating to public policy, the protection of public health, public security and the protection of the consumers.
French law specifically prohibits pharmacists from soliciting clients through procedures and methods which are regarded as being contrary to the dignity of the pharmaceutical profession. National law obliges pharmacists to observe good practices in the distribution of medicinal products. It hence makes it obligatory for a health questionnaire to be included in the process of ordering medicinal products online. It also prohibits such products’ paid referencing.
The facts of this case were briefly as follows. A company incorporated in The Netherlands operates a dispensing pharmacy in the latter country together with a website specifically targeting French customers.
The medicinal products marketed via the site have been granted a marketing authorisation in France and are not subject to compulsory medical prescription. A wide-ranging advertising campaign promoting the website was based on the insertion of advertising leaflets in packages sent by other traders engaged in distance selling and the sending of advertisements by post. The said company also published, on its website, promotional offers consisting in a discount on the total price of an order of medicinal products once a certain amount was exceeded, and purchased paid search engine referencing.
A number of pharmacy operators and professional associations representing pharmacists established in France brought an action before the French national courts seeking compensation for the damage they claimed to have suffered as a result of the unfair competition engaged in by The Netherlands company, namely by failing to comply with French law regulating the online advertising and sale of medicinal products.
The national court of first instance ruled that by distributing more than three million advertising leaflets outside of its pharmacy, the company had solicited French clients by methods unworthy of the profession of pharmacists and engaged in acts amounting to unfair competition.
The EU institutions will do their utmost to safeguard such freedoms
Upon appeal, the appellate court filed a preliminary reference before the CJEU, requesting the latter for guidance in ascertaining whether the EU’s Community Code relating to medicinal products for human use and the EU’s E-commerce Directive authorise a member state to impose, within its territory, on pharmacists who are nationals of another EU member state, the aforementioned restrictions.
The CJEU maintained that an online sales service relating to medicinal products may, in terms of the e-Commerce Directive, constitute an information society service. The advertising campaign carried out by The Netherlands company, be it physical or electronic, constitutes an element that is ancillary to and inseparable from the online sales service. This means that, in accordance with the e-Commerce Directive, the member state of destination may not, as a general rule, restrict the free movement of information society services from another member state, except where such a restriction is justified by certain public interest objectives.
The CJEU observed that a national legal provision that imposes a general and absolute prohibition of any form of advertising by health professionals to promote their activities, goes beyond what is necessary to protect public health and the dignity of a regulated profession. It was up to the French national courts to determine whether the prohibition imposed by French law amounts to such a prohibition. If that were the case, and The Netherlands company is being prevented from carrying out any form of advertising outside its own pharmacy, regardless of the medium used or the scale thereof, it must be concluded that the prohibition goes beyond what is necessary to guarantee attainment of the objectives pursued.
The CJEU went on to observe that the e-Commerce Directive does not, in principle, preclude the application by the member state of destination of a prohibition to make promotional offers consisting in a discount on the total price of an order of medicinal products once a certain amount is exceeded. This is so provided that the prohibition is intended to prevent the excessive or inappropriate use of medicinal products. However, such a prohibition must be sufficiently circumscribed and targeted solely at medicinal products and not at mere para-pharmaceutical products.
The CJEU acknowledged that a requirement for the customer to complete an online health questionnaire prior to validation of a first online order for medicinal products is liable to have a deterrent effect on patients wishing to purchase medicinal products online. Nonetheless, in line with previous jurisprudence, the CJEU went on to note that an increase in the number of online interactive features, which the customer must use before being able to proceed to the purchase of a medicinal product, is an acceptable measure which is less detrimental to the free movement of goods than a prohibition of the online sale of medicinal products. Hence, it concluded that the French legislative requirement did not go beyond what is necessary to ensure that the objective pursued is achieved.
The court affirmed that prohibiting pharmacies from using paid referencing on search engines and price comparison websites could restrict the possibility for pharmacies to make themselves known to potential customers in another member state and to promote the online sales service that it offers to such customers. Such a prohibition must, therefore, be regarded as a restriction on the freedom to provide information society services.
The French government claimed that such a measure was justified by the requisite to ensure a balanced distribution of pharmacies throughout the national territory. The CJEU dismissed such claim, declaring that the government failed to provide evidence that such a measure was appropriate and necessary to attain such an aim. It therefore concluded that the prohibition was, as a rule, inappropriate, and was permissible only if it could be proven that it was necessary to protect public health and does not go beyond what is necessary in order to attain such an objective.
The four freedoms form the cornerstone of the EU’s Single Market. It, therefore, stands to reason that the EU institutions will do their utmost to safeguard such freedoms and interpret restrictively any justifications that member states might bring forth in their defence when they seek to pose barriers to the exercise of such freedoms.
Mariosa Vella Cardona, freelance legal consultant