Germany's system of setting fixed prices for prescription-only medication is in breach of EU law, the bloc's top court ruled Wednesday, arguing that it restricts the free movement of goods.
Cross-border market access is one of the fundamental values enshrined in EU law. The provision of prescription drugs is strictly regulated in Germany, where pharmacies tend to have a uniform appearance.
The ruling was brought in a case relating to drugs prescribed for the treatment of Parkinson's disease. A German self-help organization had teamed up with a Dutch mail-order pharmacy to provide patients with discounts on their medication.
This was challenged by Germany's Centre for Protection against Unfair Competition, in a case that was ultimately referred to the European Court of Justice.
The Luxembourg-based court found that Germany's fixed-price system for prescription drugs "constitutes an unjustified restriction of the free movement of goods" as it could hinder access to the German market for suppliers from other member states.
The judges rejected the argument that fixed prices ensure a better geographic distribution of pharmacies. To the contrary, they said, allowing chemists to set their own prices would let them charge a premium for setting up shop in remote areas.
Removing the fixed-price system could also lead to lower costs for patients and encourage pharmacies to compete on service, the court found.
The Federal Union of German Associations of Pharmacists criticized the ruling.
"It is unthinkable that unbridled market forces can triumph over consumer protection in health care," said Friedemann Schmidt of the pharmacy organization. "A possible solution would be a ban on mail-order sales of prescription drugs in Germany," he added.
The case has been referred back to the German court, which must reach a final ruling, taking into account the verdict out of Luxembourg.