Court of Justice 20-05-1976 ECLI:EU:C:1976:67

Centrafarm's operations and its positions on the Netherlands market

Centrafarm carries on business as a manufacturer and wholesaler of pharmaceutical products. As a manufacturer its main operations are the processing of imported basic materials into tablets, capsules etc; the products arising out of such processing are sold in the Netherlands under their generic name. It also imports, in the manufacturer's package, ‘proprietary medicinal products’, that is to say, pharmaceutical preparations sold under a trade-mark including ‘Valium’ manufactured by Hoffmann-La Roche. Centrafarm then carries out the packaging of these proprietary products, by affixing to each individual package a label bearing the trade-mark Centrafarm placed next to the original mark of the manufacturer. In addition these packages contain a leaflet in which Centrafarm guarantees the quality of the products.

Centrafarm only imports proprietary products in respect of which it has satisfied itself:

• that notice of the authorization to place them on the market has been published in the exporting State; such notice is provided for in all the Member States where the company buys proprietary medicinal products;

• that the vendor has obtained them from the manufacturer or importer duly approved by the latter.

An analysis of every proprietary medicine purchased in this way covering the identity, purity and the amount of active ingredients is carried out in the company's laboratories under the supervision of its pharmacists.

Since the judgments of the Court in Cases 15/74 and 16/74 the industry and the wholesalers' organizations have brought pressure to bear on the Netherlands authorities to apply Netherlands law with a view to prevent parallel imports. Hoffman-La Roche, in particular, whose trading policy is moreover being investigated by the Commission, is seeking to retain territorial frontiers within the Community.

The relevant Netherlands law

Pursuant to the ‘Wet op de Geneesmiddelenvoorziening’ (the Law relating to the supply of medicinal preparations, Staatsblad 1958, p. 408) and its implementing provisions, the manufacture of and trade in pharmaceutical products is subject to authorization being granted by the public authorities. This law distinguishes between a manufacturer's and a distributor's licence, the granting of the first implying the grant of the second. Centrafarm has a mnaufacturer's licence.

Mr De Peijper then submits the following observations on the provisions of the BFP set out or referred to above and on the way in which they are applied in practice:

• Articles 4 to 7 set out the conditions with which the manufacturer or importer must comply if he wishes to obtain the consent provided for in Article 3 (1) and the ‘certification’, provided for by Article 7, of the file referred to in Articles 5 and 6.

  In fact the party concerned immediately produces the file to the Chief Inspector for the purpose of its certification; this is by implication equivalent to consent within the meaning of Article 3 (1).

• Articles 5 and 6 provide that the manufacturer or importer must keep a file for — in short — every pharmaceutical preparation which he wishes to market in the Netherlands.

• The provisions of Article 7 provide that the Chief Inspector shall keep one copy of the file; he is therefore at all times able to take note of the particulars relating to the proprietary medicinal products in respect of which he has granted his consent.

• The questions referred do not strictly speaking relate to Article 14 (1) of infringing of which Mr De Peijper is also accused. The obligation in question in this case arises out of the duty to compile a file (Article 5). The national court obviously took the view that, if this latter obligation is inconsistent with Community law, it follows that the obligation provided for by Article 14 is as well.

The practices adopted by manufacturers of proprietary medicinal products

It is in the interest of the manufacturer of such a proprietary product that it is manufactured as much as possible in accordance with a single formula and made up in one qualitative and quantitative composition only in whatever country it will be marketed. Any other practice would entail manufacturing complications and therefore cause disadvantages from the economic point of view.

The manufacturer who wishes to market a new medicinal preparation normally opens a master manufacturing file in which he puts all the data covered by Article 5 (2) of the BFP. By doing so he takes account of the conditions laid down by the national laws of countries into which he plans to export his product. A file kept in this way is a source of information on the notification procedures carried out by the manufacturer or his approved importers in the countries into which the product is imported.

The Hoffmann-La Roche company kept such a master file for Valium. If the quantitative and qualitative composition of Valium recorded in this file is compared with the data for valium sold on the Netherlands market which are found in the particulars supplied by Hoffmann-La Roche to the Chief Inspector it is evident that the two products are absolutely identical.

According to the particulars supplied by Hoffmann-La Roche, the quantitative data for valium sold in the United Kingdom differ nevertheless, to a certain extent, from the data for ‘Netherlands’ valium but only in so far as the non-active substances of the product (lactose and maize starch) are concerned.

However an analysis carried out at the request of Centrafarm by a Netherlands institute raises the presumption that there are no differences between ‘English’ and ‘Netherlands’ valium. On the other hand if these differences have to be acknowledged, they are in any event unimportant, since they do not relate to constituents which are therapeutically active.

The events leading up to the main action

Mr De Peijper refers to correspondence between Centrafarm and the Chief Inspector during the years 1972 to 1973 which establishes that there was a dispute concerning the question whether — as Centrafarm considered was the case having regard to the provisions of the BFP which were in force at that time — a parallel importer of a medicinal preparation already on sale in the Netherlands did not have to produce his own file for this medicinal preparation. The Chief Inspector's submission in support of the oppsosite view was essentially that it was not sufficient to argue that the public authorities already have a file for the medicinal preparation imported by the parallel importer; in fact the possibility cannot be rules out that a manufacturer of pharmaceutical products may market a specific medicinal preparation of his own manufacture and even under the same designation in every case, the qualitative and quantitative composition of which varies, however, according to the country where it is marketed.

Article 20 et seq. of the Treaty

National measures which discriminate between imported and home-produced products as well as measures impeding imports are measures having an effect equivalent to quantitative restrictions within the meaning of Article 30. This view is based on the objective of Article 30, on an analysis of Articles 36 and 37 in conjunction with Article 30, on a comparison with provisions of the Treaty similar to the provisions of this Article (Articles 48, 52, 59, 60, 68) and on Article 3 of Commission Directive No 70/50/EEC. However this directive does not contain an exhaustive enumeration of measures having equivalent effect; this emerges from its thirteenth recital and the words ‘entre autres’ (‘must be taken to include’) and ‘notamment’ (‘in particular’) appearing respectively at the beginning of Article 2 (3) and in the second sentence of Article 3.

The view defended in this case has also been accepted by the Court, in particular by its judgment of 11 February 1974(Dassonville, Case 8/74, [1974] ECR 837). This judgment moreover allows the conclusion to be drawn that Article 30 also applies to a national measure which results in certain importers, in particular those who undertake parallel imports, having to fulfil requirements which they cannot satisfy or which they can satisfy less easily than other importers.

The case-law of the Court also shows that the exceptions specified by Article 36 must not be given a wide interpretation. This means that national measures, introduced for the purpose of protecting one of the interests referred to by this article, are only admissible to the extent to which their restrictive effects are in proportion to the results sought and cannot be replaced by another regulation which, even though it is equally effective, would be less of a hindrance to intra-Community trade.

When the Community has adopted a directive for the harmonization or national laws in one of the fields referred to in Article 36, the Member States are entitled to supplement the Community provisions but not to take stricter measures which are not justified by the directive and which constitute arbitrary discrimination within the meaning of Article 36 (cf. Judgment of 8 July 1975, Rewe, Case 4/75 [1975] ECR 843). Moreover directives for the approximation of laws can only cover national measures which are compatible with Community law.

The particulars which have to be supplied to enable the Netherlands authorities to check a file and in the end to grant their authorization under Article 3 of the BFP can only be given either by the manufacturer or the importer duly appointed by him or by third parties with the cooperation of the manufacturer or the importer he has duly appointed.

The manner in which the Netherlands authorities apply the provisions in force amounts to a measure having equivalent effect within the meaning of Article 30. As the statement made above on the practices adopted by manufacturers of proprietary medicinal products makes clear, it is unrealistic to raise, as the Netherlands authorities, unlike those of the other Member States, do, a presumption that the product sold in the manufacturer's country is not the same as the product with the same name sold in the country into which it is imported. When during the main proceedings Mr De Peijper's counsel invited the Chief Public Health Inspector, whom the Kantongerecht heard as an expert witness, to give specific examples supporting the view of the Netherlands authorities, he was unable to do so. Further these authorities do not give anyone other than the duly appointed importer the opportunity of rebutting the said presumption that the products are dissimilar, although such a rebuttal could very well be proved, if necessary, by analyses made by these other persons or by an independant institution without in any way adversely affecting the interests of public health.

The disputed rules are not justified by reasons relating to the protection of health. They go further than is necessary, not only because the said presumption that the products are dissimilar is purely theoretical but also because, in order to check whether a proprietary product which has been marketed complies with the data in the manufacturer's file, all that is required is that the authorities in fact have these data in their possession. If these data have been supplied by the manufacturer or the duly appointed importer it is unecessary to ask other importers for this information as well.

In any case it is quite impossible to accept the view that the burden of proof lies on the parallel importer. The opposite view is the correct one namely that, since it is in the interest of the manufacturer to protect the identity of the medicinal preparations which he markets in different Member States, the authorities can require him or his duly appointed importer to produce a declaration certifying this identity or, failing that, to give partiulars of the differences. These persons are better placed to make such a declaration; moreover the manufacturer is always responsible for the products he manufactures. However effectively a manufacturer were to market a product in different forms — apart from the case where he does so in order to comply with the different requirements of the national laws concerned — he would probably do so for reasons which have nothing to do with the therapeutical efficacy of the product.

Even if the authorities are presumed to be entitled to place the burden of proof on the parallel importer, there are ways of discharging this burden which do not make the importer dependant on the cooperation of the manufacturer or his duly appointed importer. Belgian law for example has recourse to such means.

The rules prescribed by Netherlands law other than those at issue in this dispute provide the authorities with an effective way of protecting public health. For example these authorities are entitled to make the granting of a distribution licence subject to conditions and to withdraw it if it is in the interest of public health to do so.

Finally in the light of the Dassonville judgment there is no doubt whatever that placing obstacles in the way of parallel imports by insisting on formalities which the parallel importer either cannot or can only fulfil with greater difficulty amounts to arbitrary discrimination or a disguised restriction on trade between Member States.

The British Government makes the following observations:

The Netherlands legislation

In accordance with a generally accepted practice ‘pharmaceutical preparations’ must be understood to mean medicinal preparations sold under a name derived from the substance used fonder hun stofnaam'). ‘Pharmaceutical preparations’ are capable of being distinguished from ‘medicinal preparations in packages’ (Verpakte geneesmiddelen'), since this expression refers to medicinal preparations sold under a trade-mark.

The present proceedings relate to pharmaceutical preparations in spite of the fact that the national court ‘suddenly introduced into its questions the expression “proprietary medicinal product”’.

In the Netherlands the supervision of the sale of medicinal preparations takes place in two stages, the first being the authorization to market the medicinal preparations on the Netherlands market (cf. Article 3 of the BFP) and the second the manufacture of and trade in the authorized medicinal preparations.

It appears from Articles 3 to 7 inclusive of the BFP that the authorization covers not only a specific substance having specific characteristics but also the method of preparation and the system of checks used during the preparation. ‘In other words an authorized medicinal preparation is a product which has been manufactured in accordance with a method described with a high degree of accuracy and has undergone specific checks’.

Even if a medicinal preparation has been authorized the authorites are concerned to ensure that it is manufactured in a way which corresponds completely to the data produced for its authorization. The medicinal preparation which is placed on the market must therefore correspond in every way to the product which was authorized. As far as imported products are concerned the Netherlands legislature endeavours to obtain this guarantee by adopting two different methods: on the one hand it makes the manufacturer responsible for ensuring the above-mentioned conformity (Article 12 of the BFP); on the other hand the importer must himself be able to prove this conformity (cf. Article 14).

It can be assumed that the importer need only have in his possession copies, or a summary of the conclusions, of the records referred to in Article 11 of the BFP; which have to be drawn up by the manufacturer and from which it must follow that the provisions of Article 5 (1) (b) and (c) were complied with at the time of manufacture in order to fulfil the requirements of Article 14 (1) (a).

Read together these provisions have two objectives:

• they require that the records relating to the medicinal preparation which has in fact been imported (cf. Articles 14, 11) conform with the data on the file relating to the authorized medicinal preparation (cf. Articles 5, 6);

• in the case of imports they designate the person whose duty it is to prove this conformity.

In this way the Netherlands authorities are absolutely sure that there is conformity which makes it easier to carry out the later checks.

It appears from certain statements of the Netherlands Government that in its view the difficulties arising out of the laws and practices of the Netherlands in the case of parallel imports must be accepted not only for the purpose of protecting public health but also having regard to the technical aspects of the supervision which has to be undertaken.

The first question

This question assumes that there is a parallel import of a medicinal preparation which has been authorized in the importing as well as the exporting country on the basis in both cases of an identical method of preparation and qualitative and quantitative composition. In other words this question deals with the case where the medicinal preparations manufactured in the exporting country are in all respects the same whether they are intended for the domestic market or for export.

The court making the reference does not deny that the data which the Netherlands authorities endeavour to collect in respect of each batch of medicinal preparations supplied are important for public health. It simply wishes to know whether, for the purpose of establishing these facts, these authorities can proceed in the way they did. The question raised refers ‘a little too narrowly’ to the obligation to provide a file imposed upon the importer by Article 6 of the BFP. It is true that the performance of this obligation does not provide the authorities with any additional information. However the aim of the legislature is not to provide the authorities with supplementary data but to ensure that the parallel importer is himself also able to prove, with the cooperation of the expert in his employment, the requisite conformity between the file and the records, that is to say, between the medicinal preparation which was authorized and the one which was in fact imported. In order to be able to comply with this condition the parallel importer must obviously have in his possession both the file and the records. Therefore the Netherlands legislature makes the parallel import dependent upon the cooperation of the manufacturer, which means that in practice such an import cannot be effected, as the manufacturer is under no legal obligation to cooperate in this way and it is very much in his interest not to do so.

Moreover the Netherlands authorities do not appear to adopt any other way of establishing this conformity. The fact that parallel imports of medicinal preparations are impossible is due to a combination of legal provisions and an administrative practice.

The Council directives referred to by the British, Danish and Netherlands Governments are in no way connected with the questions referred. On the one hand they only apply to medicinal preparations in packages (‘proprietary medicinal products’ according to the wording of the directives) whereas the questions refer to pharmaceutical preparations. On the other hand they aim at the harmonization of laws and can only therefore cover national provisions which are compatible with Community law.

An effective limitation on the number of importers is a measure having equivalent effect within the meaning of Article 30. The restriction in question in this case has an adverse quantitative effect on the supply of imported products. Further, it prevents offers being made at lower prices and this precludes the normal expansion of trade channels. The only question therefore is whether the restrictions in question come within the exceptions specified in Article 36.

There is no doubt that Member States are entitled to make the sale of medicinal preparations subject to regular checks. The only question is how this power may be used. Only those restrictions which are absolutely necessary for the protection of health and life of humans are admissible under the Treaty. This conclusion follows from the wording of Article 36 and from the fact that it constitutes an exception.

It is clear from the case-law of the Court that formalities with which only direct importers are in fact able to comply may constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States, but different treatment of imported and national products does not necessarily amount to such discrimination, since in each specific case account must be taken of the actual circumstances surrounding these two categories of products. All these considerations also apply to the different ways of treating imports by authorized importers and parallel imports. In this connexion it is appropriate to recall the judgment of the Court of 30 April 1974(Sacchi, Case 155/73, [1974] ECR 409) which held that it is incompatible with Article 30 to favour particular trade channels in relation to others.

The restriction in question is not justified by concern for the protection of public health. In fact, as the Commission explains in detail, this objective can be attained by less restrictive methods.

Further, the method chosen by the Netherlands authorities involves arbitrary discrimination, since it means that two different situations are dealt with in the same way. The parallel importer finds that in fact the same obligations are imposed upon him as upon a duly appointed importer in spite of the fact that he himself is unable to perform — that is to say through the expert in his employment — these obligations but is dependent upon the cooperation of a third party in whose interest it is to refuse such cooperation.

Finally Netherlands regulations imply some disguised restriction on trade since without any justification they prevent the development of potential trade channels.

To sum up, the Commission submits that the first question should be answered as follows:

National rules relating to the sale of imported medicinal preparations which provide as a condition precedent to such sale that importers must have in their possession the manufacturer's data which establish the conformity of the imported with the authorized medicinal preparation only comes within the limits of Article 36 if the national authorities concerned also make use, where necessary, of other data enabling the requisite compatibility to be established or demand the necessary data directly from the manufacturer.

The second question

It is appropriate to call attention first of all to the fact that the difference in the composition etc. referred to in the question may in certain cases also be explained by the differences between the national laws relating to pharmaceutics. In so far as these differences have been brought about artifically by the manufacturer the problems which arise do not come within Article 36. In fact, this provision is concerned with the maintenance of national standards in the fields which it enumerates. However, on the assumption which has been made these standards are not at issue.

However a Member State which applies national restrictions, which are lawful in themselves, or authorizations in such a way that they raise obstacles over and above the minimal obstacles inherent in these rules endangers the attainment of the objectives of the Treaty and for this reason may infringe Article 5 of the Treaty.

Member States are under a general duty and consequently have the power to combat abuses such as the one envisaged by the national court. A Member State cannot therefore argue that its own laws do not expressly entitle it to proceed in this way.

It is clear from what has been said in connexion with the first question that the national authorities have the necessary means to decide whether the differences recorded between the two variants of the medicinal preparation in question may have a therapeutic effect. If they do not, there is no need to retain the obstacles to the sale of this product in the importing country. In the event of doubt or dispute, an independent expert can give his opinion on this question. If they do, the protection of public health is a valid ground for opposing the sale of these two variants on one and the same market.

To sum up the Commission submits that the second question should be answered as follows:

When the sale of the same medicinal preparation is authorized in more than one country and there are differences between various authorized forms, a ban on the import of another form of this product can be justified on the ground of protecting public health only if, by applying objective criteria, the differences in question are found to have a therapeutic effect

During the oral proceedings on 18 February 1976 the Netherlands Government, the Officier van Justitie for the District of Rotterdam represented by Mr H. R. G. Feber, Mr De Peijper, represented by Professor W. Van Gerven of the Brussels Bar and Mr A. F. De Savornin Lohman of the Rotterdam Bar, the British Government represented by Mr Robin Auld Q. C. of Gray's Inn and Mr Francis Jacobs of the Middle Temple and the Commission represented by its Legal Adviser, Mr B. Van der Esch, developed the arguments put forward in the written procedure.

The new matters raised on this occasion may be summarized as follows:

The Court invited the Netherlands Government to state whether the Netherlands authorities already had in their possession the file relating to the medicinal preparations in question, of failing to compile which Mr De Peijper has been accused and which the Netherlands representative of the Hoffmann-La Roche firm handed over to them.

The Officier van Justitie for the District of Rotterdam in his answer to this question in the name of the Netherlands Government states that the British manufacturer of the Hoffmann-La Roche group never placed the said file at the disposal of the Netherlands authorities. On the other hand the latter have the file relating to the products manufactured by Hoffmann-La Roche in Switzerland. These however are not the products at issue and it is in no way proved that, although the products of the two manufacturers bear the same name, their method of preparation and composition are in every respect identical.

The Officier van Justitie and the Commission also answered another question raised by the Court relating to the connexion between the Royal Netherlands decree of 10 September 1974 relating to packaged medicinal preparations and the Netherlands decree of 21 October mentioned in the order making the reference.

The Commission answered a third question put by the Court asking what explanation the Netherlands Government gave the Commission concerning the said decree and whether there was an exchange of views on this matter, whether the Commission has finished its examination of the decree and, if so, whether it has stated its views on the conformity of the decree with Community law.

Mr De Peijper, in answer to a question by the Court during the hearing asking what opportunities the manufacturer has of following what happens to each batch which he produces, although it has been packaged by the importer, produced to the Court by way of example a bottle originating from the manufacturer and containing tablets. The label on this bottle shows that the medicinal preparation was produced in the United Kingdom. The batch number (‘batch-nummer’) is on the right hand side of the label. After packaging Centrafarm puts on the left hand side of the label on its own bottle its own file number (‘chargenummer’). The company adopts a daily system of accounting which enables it to determine in the case of each batch the relationship between the English and the Netherlands numbers.

The British Government calls attention to the fact that a large number of factors concerning the method of manufacture, even including the nature of the inactive ingredients, can have a therapeutic effect simply because they have for example an effect on the rate at which the human body can absorb a medicinal preparation.

The Advocate-General delivered his opinion at the hearing on 17 March 1976.