(Reference for a preliminary ruling from the High Court of Justice of England and Wales, Queen's Bench Division (Administrative Court) (United Kingdom of Great Britain and Northern Ireland))
(Directive 2001/83/EC Article 94 Financial inducements to medical practices which prescribe certain medicinal products to their patients Public health authorities Doctors Freedom to prescribe)
- This reference for a preliminary ruling concerns the interpretation of Article 94(1) of Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community code relating to medicinal products for human use (2) ('Directive 2001/83'). That provision prohibits the promotion of medicinal products by gift, pecuniary advantage or benefits in kind to persons qualified to prescribe them unless they are inexpensive and relevant to the practice of medicine. The question referred concerns prescribing incentive schemes that have been set up by Primary Care Trusts ('PCTs'), (3) in particular whether they are covered by, and contrary to, Article 94(1) of Directive 2001/83.
- The proceedings before the referring court take place in the wider context of a constantly increasing burden on the public purse, caused by the introduction of new medicines to the pharmaceuticals market. In some cases these new medicines may be extremely expensive, causing increases in the costs of treatment per patient. Even in cases of more moderately priced new medicines, their therapeutic 'added value', in comparison with older and much cheaper products, may be very limited or non-existent for the majority of patients. Nevertheless, it cannot be denied that more effective medicinal products may reduce the total expenditure on public health.
- It should also be recalled that even though direct expenditure on medicinal products is relatively small in comparison with overall spending in the public health sector, (4) it is constantly increasing. It is therefore no surprise that the authorities of Member States have taken various measures in order to slow down this development. The judgment in Menarini (5) is the most recent example of such measures being the subject of proceedings before the Court.
II Legal framework
European Union law (6)
- Article 95 EC is the legal basis for Community measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market. In making proposals envisaged under that article concerning, inter alia, health, safety and consumer protection, the Commission is to take as a base a high level of protection.
- Article 152 EC states:
'1. A high level of human health protection shall be ensured in the definition and implementation of all Community policies and activities.
Community action, which shall complement national policies, shall be directed towards improving public health, preventing human illness and diseases, and obviating sources of danger to human health. Such action shall cover the fight against the major health scourges, by promoting research into their causes, their transmission and their prevention, as well as health information and education.
...
5. Community action in the field of public health shall fully respect the responsibilities of the Member States for the organisation and delivery of health services and medical care.'
Directive 2001/83
- According to recital 1 in the preamble to Directive 2001/83, that directive codified and assembled in a single text the directives on the approximation of provisions laid down by law, regulation or administrative action relating to medicinal products for human use, which included Council Directive 92/28/EEC of 31 March 1992 on the advertising of medicinal products for human use ('Directive 92/28'). (7)
- Recitals 2, 47, and 50 in the preamble to Directive 2001/83 state:
'(2) The essential aim of any rules governing the production, distribution and use of medicinal products must be to safeguard public health.
...
(47) The advertising of medicinal products to persons qualified to prescribe or supply them contributes to the information available to such persons. Nevertheless, this advertising should be subject to strict conditions and effective monitoring, referring in particular to the work carried out within the framework of the Council of Europe.
...
(50) Persons qualified to prescribe medicinal products must be able to carry out these functions objectively without being influenced by direct or indirect financial inducements.'
- Article 4(3) of Directive 2001/83 provides:
'The provisions of this Directive shall not affect the powers of the Member States' authorities either as regards the setting of prices for medicinal products or their inclusion in the scope of national health insurance schemes, on the basis of health, economic and social conditions.'
- Title VIII, entitled 'Advertising', originally covered Articles 86 to 100 of Directive 2001/83, which concern advertising and information to the general public as well as to persons qualified to prescribe medicinal products.
- Article 86(1) in Title VIII of Directive 2001/83 (8) provides:
'For the purposes of this Title, 'advertising of medicinal products' shall include any form of door-to-door information, canvassing activity or inducement designed to promote the prescription, supply, sale or consumption of medicinal products; it shall include in particular:
the advertising of medicinal products to the general public,
advertising of medicinal products to persons qualified to prescribe or supply them,
...
the provision of inducements to prescribe or supply medicinal products by the gift, offer or promise of any benefit or bonus, whether in money or in kind, except when their intrinsic value is minimal,
...'
- A new Title VIIIa, entitled 'Information and Advertising', was inserted in Directive 2001/83 by Directive 2004/27/EC of the European Parliament and of the Council of 31 March 2004 amending Directive 2001/83/EC on the Community code relating to medicinal products for human use, (9) in order to clarify the scope of Directive 2001/83 and the definitions under it. The new Title VIIIa consists of Articles 88a to 100. It begins with a new Article 88a, which concerns the Commission's future information strategy to ensure good-quality, objective, reliable and non-promotional information on medicinal products.
- Article 94(1), now in Title VIIIa of Directive 2001/83, (10) provides:
'Where medicinal products are being promoted to persons qualified to prescribe or supply them, no gifts, pecuniary advantages or benefits in kind may be supplied, offered or promised to such persons unless they are inexpensive and relevant to the practice of medicine or pharmacy.'
Directive 89/105/EEC
- Council Directive 89/105/EEC of 21 December 1988 relating to the transparency of measures regulating the pricing of medicinal products for human use and their inclusion in the scope of national health insurance systems (11) ('Directive 89/105') lays down a procedural framework for national measures to control the prices of medicinal products for human use or to restrict the range of medicinal products covered by national health insurance systems.
III Factual background
- The Association of the British Pharmaceutical Industry ('ABPI') is a trade association representing national and international pharmaceutical companies trading in the United Kingdom. It has brought an action in the High Court against the Medicines and Healthcare Products Regulatory Agency ('MHRA'), an executive agency of the Department of Health, whose functions include ensuring compliance with domestic and European Union legislation on the advertisement and promotion of medicines.
- In England and Wales the Secretary of State for Health is responsible for the provision of a comprehensive national health service. Medical services are funded locally by PCTs in England, and Local Health Boards in Wales. A general practitioner practice ('GP practice') is a group of general practitioners or an individual doctor ('doctors') contracted to a PCT to provide medical services.
- Doctors and other health professionals are granted specific powers to issue medical prescriptions. If they issue prescriptions to be funded by the NHS, they must comply with NHS rules and prescription controls. They must also comply with professional codes of conduct issued by the General Medical Council, a body which registers doctors to practice medicine in the United Kingdom and ensures that proper standards are met in the practice of medicine.
- As part of a general policy seeking to reduce their overall expenditure on medicinal products, the PCTs introduced financial incentives to induce doctors to prescribe in a certain way. There are essentially two types of scheme: those which reward doctors for prescribing specific named medicinal products ('prescribing incentive schemes'), and those which reward them for prescribing generic medicinal products. It is only the first type of scheme which forms the basis of the question referred.
- Prescribing incentive schemes apply both to new prescriptions, in respect of which doctors are encouraged to favour certain named medicinal products belonging to the same therapeutic class as those which otherwise might have been prescribed, and to existing prescriptions, in respect of which doctors are encouraged to change the medicines they are currently prescribing to a patient.
- The PCTs define therapeutic equivalents of medicinal products in the same therapeutic class in accordance with the instructions of the National Institute for Health and Clinical Excellence, which may also indicate whether a particular medicinal product is sufficiently efficacious to justify the cost of purchasing it, and whether one medicinal product is, in general, to be preferred on that basis.
- On 3 July 2006 ABPI wrote to MHRA expressing concerns about the prescribing incentive schemes implemented by PCTs. In its reply MHRA indicated (having previously held the opposite view) that it now believed that Article 94 of Directive 2001/83 covered only incentive schemes of a commercial nature. Since ABPI disputed this interpretation of Article 94 of Directive 2001/83 it brought proceedings before the referring court seeking a review of the legality of MHRA's position.
- Considering that an interpretation of Article 94(1) of Directive 2001/83 was necessary to enable it to give judgment in the case, the High Court decided to stay proceedings and to refer the following question to the Court of Justice:
'Does Article [94(1)] of Directive 2001/83/EC preclude a public body forming part of a national public health service, in order to seek to reduce its overall expenditure on medicines, from implementing a scheme which offers financial incentives to medical practices (which may in turn provide a financial benefit to the prescribing doctor) to prescribe a specific named medicine supported by the incentive scheme that is either:
(a) a different prescription medicine to the medicine previously prescribed by the doctor to the patient; or
(b) a different prescription medicine to that which otherwise might have been prescribed to the patient but for the incentive scheme,
where such a different prescription medicine is from the same therapeutic class of medicines used for treatment of the patient's particular condition.'
- The reference for a preliminary ruling was lodged at the Court Registry on 13 February 2009.
- Written observations were lodged by ABPI, the Czech, Estonian, Netherlands, Spanish and United Kingdom Governments, as well as the Commission.
- At the hearing held on 10 December 2009 all those who lodged written observations, with the exception of the Estonian Government, were present and made oral observations. In addition the French Government, which had not submitted written observations, presented oral arguments.
IV The ambit of this case
- At the outset, it is important to define the ambit of this case. It must be emphasised that it is not about generic substitution.
- The prescribing incentive schemes aim to encourage doctors currently prescribing or intending to prescribe specifically named medicine 'A' to start prescribing specifically named medicine 'B' (which belongs to the same therapeutic class) wherever possible.
- As the United Kingdom confirmed at the hearing, it is the case that medicine A is branded, because patents are still in force, and therefore manufactured by a single company. That is not the case for medicine B, however, for which patents are no longer in existence or never were in existence. Medicine B is therefore produced and marketed by various manufacturers.
- However, such substitution between named medicines does not amount to generic substitution. Generic substitution consists in replacing a branded medicine with a corresponding generic medicine with the same active ingredient. This is known as the 'active principle'. Thus the substitution takes place between two commercial variants of the same medicine.
- As is clear from the question referred, this case is about the replacement of one named medicine with another specifically named medicine with a different active ingredient. The Court is not called to rule upon the applicability of Article 94(1) to incentive schemes encouraging generic substitution between medicinal products with the same active ingredient.
V Preliminary observations
- The parties propose a variety of legal arguments in support of their positions, which can essentially be classified into two lines of legal reasoning: one relying on policy, and the other invoking a legal principle. (12)
- The United Kingdom and the other intervening Member States adopt a position that could be characterised as based on policy. In essence they claim that European Union law recognises a Member State's competence to organise its public health system freely on the basis of the needs of its population, the public resources available, and conceptions of social justice that require the inevitably scarce economic resources available for health care to be used as effectively as possible to enable the provision of good and comprehensive public health services to everybody. This line of reasoning, when combined with arguments referring to the legislative history of Directive 2001/83, leads them to conclude that Article 94(1) of Directive 2001/83 does not apply to, or at least does not prohibit, measures taken by the public authorities in the context of limiting the increase in medicinal expenditure.
- On the other hand, ABPI and the Commission defend an interpretation of Article 94(1) of Directive 2001/83 that is based on arguments supported by a legal principle safeguarding respect for the best interest of the patient as the primary legal obligation of medical professionals. In essence they claim that the prohibition in Article 94(1) of Directive 2001/83 aims to preserve the independence and objectivity of doctors when prescribing medicines against the intrusion of inappropriate economic incentives. Hence, the ratio legis of the provision is to protect the patient by ensuring that prescribing is based solely on neutral and professional considerations, aimed at the patient's best interest, without any undue self-regarding motives on the part of the doctor. From this perspective, economic incentives provided by public authorities may be as harmful as remuneration or other economic advantage offered to doctors by companies engaged in the production or marketing of medicines.
- Before discussing the respective merits of these two lines of reasoning I would like to address the argument made by the United Kingdom concerning ABPI's motives for bringing this case. In its observations the United Kingdom states that ABPI represents the commercial interest of the pharmaceutical companies that manufacture and market the more expensive branded medicinal products. It is therefore not concerned, in the United Kingdom's submission, with preserving the independence of doctors or with patient safety, but wishes instead to maximise the prescription, and therefore the sale, of branded medicinal products manufactured and marketed by its members.
- In my view the self-regarding nature of ABPI's motives is legally irrelevant. As a line of business the pharmaceutical industry is lawful, socially useful and even encouraged by the European Union legislature. It is also inherent in the economic order of the European Union, which aims for an open market with free competition, (13) that private economic operators pursue lucrative purposes. This logic also applies to the pharmaceutical industry.
- Moreover, even if some form of financial incentive schemes designed to reduce medicinal costs seems to exist in other Member States, the United Kingdom appears to be the only Member State that has prescribing incentive schemes involving the substitution of specifically named medicines. (14)
VI Scope of application of Article 94(1) of Directive 2001/83
A The exemption in Article 4(3) of Directive 2001/83
- The first argument advanced by the United Kingdom in support of its interpretation of Directive 2001/83 relates to the responsibilities of Member States under Article 152 EC.
- It observes that if Article 94(1) of Directive 2001/83 were held to apply to public authorities, it would restrict the discretion that Member States have under Article 152 EC to adopt national provisions relating to the organisation and delivery of health services and medical care. It argues that the engagement of doctors, the prescription of medicines, and the level of public expenditure on medicines are all important features of the organisation and delivery of health systems in relation to which Member States have a large amount of discretion under Article 152(5) EC.
- The United Kingdom also observes that Article 4(3) of Directive 2001/83 recognises the right to control expenditure by exempting certain types of measures adopted to control public expenditure on medicines. It therefore seems to regard Article 4(3) of Directive 2001/83 as a general exemption from the internal market in the context of public health measures designed to reduce expenditure on medicinal products.
- Under Article 152 EC Community action in the field of public health is fully to respect the responsibilities of the Member States for the organisation and delivery of health services and medical care. (15) However, as the Court has consistently held, Member States must comply with Community law in exercising that power. (16)
- Furthermore, it should be recalled that Directive 2001/83 was adopted as an internal market measure with Article 95 EC as its legal basis.
- I am therefore not persuaded that Article 152 EC would lead to the exclusion of public authorities from the scope of Article 94(1) of Directive 2001/83.
- Nor am I convinced that Article 4(3) of Directive 2001/83 lends further support to this point. That provision sets out two clear exceptions: the setting of prices for medicinal products, and their inclusion in the scope of national health insurance schemes. In the present case the prescribing incentive schemes do not amount to a measure regulating the prices of medicinal products: the PCTs are not taking a decision to set prices, but are making a decision on the basis of the price that has been set. Nor can the prescribing incentive schemes be said to be measures concerning the inclusion of medicinal products within the scope of national health insurance systems. The prescribing incentive schemes aim to influence the use of medicines already included in the national health insurance systems.
- Therefore the present case does not fall to be considered under Article 4(3) of Directive 2001/83.
- The wording of Article 4(3) of Directive 2001/83 reflects the title of Directive 89/105, indicating that it covers the same subject-matter as Directive 89/105. (17) In my view Article 4(3) of Directive 2001/83 is therefore a reference to Directive 89/105, even though it does not expressly mention that directive. (18) Therefore, when Member States take any of the measures listed in Article 4(3) of Directive 2001/83 they must fulfil the requirements set out in Directive 89/105.
- Even if it were possible to circumvent the explicit wording of Article 4(3) of Directive 2001/83, the prescribing incentive schemes at issue do not fulfil the requirements of Directive 89/105, as they fail to provide the safeguards required by it.
- The objective of Directive 89/105 is to increase transparency in the way that Member States set prices or control pricing arrangements in order to mitigate the problems caused by different national systems of price setting and health insurance to the functioning of the internal market in medicinal products. Directive 89/105 does not aim to lay down rules affecting the policies of those Member States. It merely sets out procedures to be followed when taking decisions relating to prices of medicinal products and their inclusion in national health insurance systems.
- When a Member State takes a decision within the scope of Directive 89/105 it must inform the manufacturer of its decision, of the reasons for it, and of the remedies available to him. (19) It is also required to communicate to the Commission a list of the medicinal products for which action has been taken, in accordance with the procedures under Directive 89/105. (20)
- The prescribing incentive schemes at issue have not been notified to the Commission pursuant to Directive 89/105. Furthermore, as the United Kingdom stated at the hearing, public authorities do not inform the manufacturers of such schemes. Whilst there seem to be means under national law to obtain such information, and there are remedies available, the affected manufacturers do not appear to be informed by the PCTs of the prescribing incentive schemes, but are required to find out such information for themselves. It does not therefore seem to me that the United Kingdom system has been planned with Directive 89/105 in mind.
- Finally, Article 4(3) of Directive 2001/83 does not provide for a general exemption from the internal market rules in the context of public health measures designed to limit expenditure on medicinal products, as the United Kingdom argues. Directive 89/105 specifies the ways in which national price control of medicinal products and their inclusion in health insurance systems can be adapted, at this stage of the development of European Union law, to the requirements of the internal market.
- Therefore, I am not persuaded that Article 4(3) of Directive 2001/83 or Directive 89/105 implies that the activities of public authorities as such are exempt from the scope of the special provisions under Title VIIIa of Directive 2001/83.
B The legislative history and purpose of Article 94(1) of Directive 2001/83
- The second argument advanced for excluding public authorities from the scope of Article 94(1) of Directive 2001/83 relates to its legislative history.
- It is true that Article 94(1) of Directive 2001/83 does not expressly exclude public authorities from its application. It does not state to whom it is addressed. There is evidence, however, to indicate that the provision might initially have been primarily aimed at commercial activities. In some language versions, for example, the concept of 'promotion' is expressed in words that could be understood as making an implied reference to commercial activities. (21)
- In support of this view the United Kingdom makes reference to recital 47 in the preamble to Directive 2001/83, which refers to the work carried out within the framework of the Council of Europe. The Government takes that to mean a reference to Resolution AP (82) 1 of the Committee of Ministers of the Council of Europe, adopted on 2 June 1982, 'On Regulations Governing Information Concerning Medicines and the Advertising of Them to Persons Qualified to Prescribe or Supply Them' (22) ('Resolution AP (82) 1'). Article 1 of Resolution AP (82) 1 states that the provisions set out in it 'concern promotional material, issued for commercial purposes, in favour of a medicine'.
- At the hearing the Commission observed that recital 47 in the preamble to Directive 2001/83 does not refer to Resolution AP (82) 1 explicitly, and that references to the work of the Council of Europe should be understood as a general source of inspiration when looking at Titles VIII and VIIIa of Directive 2001/83. In its view Directive 2001/83 has indeed been held to apply to non-commercial parties, namely in the case of Damgaard, (23) and the United Kingdom accepts that.
- In my view, by making reference to the work of the Council of Europe it is fair to assume that the legislature had the commercial promotion of medicines in mind. Nevertheless, neither the wording of Titles VIII and VIIIa of Directive 2001/83 in general nor Article 94(1) of that directive in particular, unlike Resolution AP (82) 1, restricts itself to commercial activities. In my view it can be inferred from that silence that the legislature, being aware of the possibility of restricting the scope of those provisions to commercial parties, deliberately chose not to make such a restriction. The Advocate General was of the same opinion in Damgaard, where he concluded that the legislature was consciously silent on the question. (24) That silence shows, in my view, that Article 94(1) of Directive 2001/83 can have a wider application than the corresponding provision in Resolution AP (82) 1.
- At the hearing the French Government observed that a systemic analysis of Articles 91 to 96 of Directive 2001/83 would show that Article 94(1) of Directive 2001/83 was not addressed to public authorities.
- I cannot agree with that conclusion. In Article 93(2) and (3), the addressee of the provision is clearly indicated. In the other provisions mentioned by the French Government the addressee is not specified, though in most cases activities of undertakings engaged in manufacturing and marketing of medicines can be considered to be the primary targets of the regulation. Therefore, the systemic analysis of these provisions does not produce compelling results as to the scope of Article 94(1) of Directive 2001/83.
- In Damgaard, the Court had to consider the scope ratione personae of Article 86, in Title VIII of Directive 2001/83. The question before the Court was whether communications from a third party unconnected with the manufacture, marketing or distribution of a medicinal product were covered by the original Title VIII. The Court gave the provision at issue a broad interpretation, holding that Directive 2001/83 did not require a message to be disseminated in the context of a commercial or industrial activity, or by a commercial party, for it to be held to be advertising. The reason for this was that Directive 2001/83 did not expressly rule out such a conclusion, (25) and such advertising was liable to harm public health, the safeguarding of which is the essential aim of Directive 2001/83. (26)
- This indicates that those covered by the present Titles VIII and VIIIa of Directive 2001/83 need not be persons linked to pharmaceutical companies. Indeed, as the Advocate General said in Damgaard, Article 86(1) of Directive 2001/83 stresses the purpose of the activity and is not concerned with the party called upon to carry it out. (27)
- When discussing the scope ratione personae of Article 94(1) of Directive 2001/83 it is important to have in mind the purpose of the provision. The essential aim of Directive 2001/83 is to safeguard public health. (28) In view of this, the function of the provisions in Titles VIII and VIIIa is to ensure that promotion of medicinal products does not endanger public health or consumer safety.
- The aim of Article 94(1) of Directive 2001/83 is to preserve the independence and objectivity of a doctor's prescribing decisions and thus to protect the integrity of the relationship between doctor and patient. This can be seen from the legislative history. Directive 2001/83 codified a number of existing directives in the area of medicinal products for human use, one of which was Directive 92/28 which included the equivalent of Article 94 of Directive 2001/83. (29) The aim of Directive 92/28 in relation to health professionals was, as reflected in its preamble, to ensure that persons qualified to prescribe medicinal products were able to carry out these functions objectively, without being influenced by direct or indirect financial inducements. (30) This aim is now expressed in recital 50 in the preamble to Directive 2001/83.
- The importance of the independence of doctors is evident from international and national guidelines and laws on medical ethics. These state that the traditional role of public health agencies at all levels of government includes a variety of programmes and activities targeted to the identified needs of the population and the capacity to carry out those functions effectively. (31) On the other hand, the primary responsibility of doctors remains to act in the best interests of their patients. This duty is recognised in many international and national ethics guidelines, as well as in the Hippocratic Oath that doctors take when they enter the profession. (32) The guidelines vary in their detail but the themes are common. All guidelines include the duty of the doctor to remain objective and to use his independent judgment in treating patients or when prescribing medicines. Guidelines warn against anything that might impair or influence a doctor's judgment in carrying out his activities or lead to personal profit, such as inducements by pharmaceutical companies. (33)
- It is of interest to note that even the Department of Health recognises that financial incentives are not appropriate to reward individual doctors. In its 'Strategies to achieve cost-effective prescribing: Interim Guidance for Primary Care Trusts', it states: '[a]ll payments under a scheme should go into practice funds and not to individuals. It is good practice to specify appropriate use of the money, e.g. for the benefit of patients of the practice'.
- For the sake of clarity, it has to be emphasised that it is not against medical ethics for a doctor to pay attention to the price of a medicinal product when choosing which medicines to prescribe. This may be in the specific interest of the patient concerned in those countries where the patient has to bear, either entirely or partly, the cost of the medicine. (34) It also cannot be ruled out that practitioners take into consideration requirements of social justice and cost efficiency which require that the scarce resources available for health care are used rationally and economically, taking into account the interests of all patients. Medical ethics, however, require that a doctor's discretion in the context of prescribing decisions is not constrained by any inappropriate self-regarding financial motives.
- This aim of safeguarding the doctor's independence, referred to in recital 50 in the preamble to Directive 2001/83, can be undermined not only by economic operators with industrial or commercial interests in the pharmaceutical sector, but also by other parties.
- Interpreting Article 94(1) of Directive 2001/83 as not applying to parties without commercial or industrial interests in the pharmaceutical sector would undermine the purpose of Article 94 of Directive 2001/83, because it would mean that such persons were allowed to influence doctors prescribing, by means that are prohibited under Article 94(1) of Directive 2001/83. This would lead to an unsatisfactory result since in reality there are, besides public authorities, a number of other parties outside the pharmaceutical sector, which might have a motive to influence prescribing practices. For example, in many Member States parties other than pharmaceutical companies and public health authorities may share the financial burden of prescribing. This applies, inter alia, to public, semi-public and private health or accident insurers, employers in the context of occupational health provision and health service providers. Furthermore, as ABPI observes, State-funded bodies, charities or other not-for-profit entities such as patient interest groups might also have a motive to try and influence prescribing practices. Their exclusion from the scope of Article 94(1) of Directive 2001/83 would result in a different set of rules applying to different parties. This would be contrary to the aim that Article 94(1) of Directive 2001/83 pursues, namely to maintain objectivity and independence in prescribing.
- One further factor worth noting is that the relative economic importance of the pharmaceutical industry varies between the Member States. In addition, there are differences between the Member States, depending on the date on which product patents protection was introduced for medicinal products and the degree of research and innovation on the part of their pharmaceutical industries, as to the comparative significance of imports and domestic production, and, within the second category, as to the division between branded original medicines, branded generic medicines and purely generic products. It cannot be ruled out that considerations of industrial or commercial policy might also affect the approach chosen by a Member State as to the ways and means of limiting its medicinal products expenditure. Otherwise there would have been no need for legislation such as Directive 89/105 to be adopted.
- Finally I would like to emphasise that my proposed interpretation of Article 94(1) of Directive 2001/83 would not prevent public authorities from controlling expenditure on medicines. As the Commission observes, the goal pursued by the prescribing incentive schemes, namely the reduction of expenditure on health care, is itself legitimate. Nevertheless, this goal can be reached by different means which do not impede or undermine the interests protected by Directive 2001/83. As the Advocate General observed in Menarini, there are many alternative options available to Member States to control expenditure on costs. These measures may include, in different combinations, State price-setting, State price freezes and reductions, reference price or fixed price systems, pharmaceutical budgets, positive and negative lists, non-prescription pharmaceuticals, exclusion of pharmaceuticals from reimbursement, greater contribution by the patient and promotion of generic drugs. (35) Many of these are expressly permitted under European Union legislation.
- For all the reasons set out above I therefore conclude that public authorities must be considered to fall within the scope of Article 94(1) of Directive 2001/83.
VII The meaning of promotion for the purposes of Article 94(1) of Directive 2001/83
- In relation to the meaning of promotion, ABPI submits that the word should be given its natural meaning: a measure that encourages the use of a product.
- The United Kingdom submits, relying on Damgaard, (36) that in defining promotion regard must be had to the whole context, in particular the underlying motivation, which in this case is the lowering of expenditure on medicines. Therefore, prescribing incentive schemes are not, according to that government, in the nature of advertising or promotion.
- At the hearing the Commission pointed out that Damgaard required a number of factors to be considered in deciding whether the activity amounted to advertising: the situation of the author of a communication about a medicinal product, the nature of the activity carried out, the content of the message, as well as 'other circumstances'. It observed that in the present case it was the content of the message that was highly relevant.
- The concept of promotion is not directly defined in Directive 2001/83, but it is an essential element in the definition of advertising in Article 86(1) thereof. In that provision advertising of medicinal products is defined as any form of (i) door-to-door information, (ii) canvassing activity or (iii) inducement, which is designed to promote, inter alia, the prescription of medicinal products. In Article 86(1) of Directive 2001/83, the provision of inducements to prescribe or supply medicinal products by the gift, offer or promise of any benefit or bonus, whether in money or in kind, except when their intrinsic value is minimal, is given as an example of advertising. Such conduct is prohibited under Article 94(1) of Directive 2001/83 where medicinal products are being promoted to persons qualified to prescribe or supply them.
- In my view 'where medicinal products are being promoted to persons qualified to prescribe or supply them' in Article 94(1) of Directive 2001/83 refers back to promotion as included in the definition of advertising in Article 86(1) of Directive 2001/83. In the latter provision the concept of promotion is an essential element in the definition of advertising. In Article 94(1) of Directive 2001/83 the introductory words simply seek to define the context in which the prohibition imposed under that article is operable, as opposed to personal or social circumstances in which it is lawful to give gifts and advantages even to persons qualified to prescribe and supply medicines.
- In determining whether something constitutes advertising, the Court in Damgaard stated that the definition emphasises the purpose of the message. (37) Furthermore, the Advocate General considered in his Opinion in that case whether the concept of advertising in Article 86(1) of Directive 2001/83 should be construed subjectively or objectively. (38) He concluded that the fundamental criterion for separating advertising from mere information lies in the objective pursued: if the intention is to promote 'the prescription, supply, sale or consumption' of medicinal products, there will be advertising for the purposes of Directive 2001/83; if, on the other hand, 'purely' informative material is being disseminated without promotional intent, it will not come within the Community rules on advertising of medicinal products. The crucial element is thus the deliberate and direct intention of the party who issues the message. According to the Advocate General in Damgaard, when Article 86(1) refers to an activity 'designed to promote' certain conduct, it refers to the volition which guides the action and is, therefore, rooted in subjective criteria.
- The purpose of the prescribing incentive schemes at issue is to promote named medicines with different active ingredients, medicine B, as substitutes for other named medicines, medicine A. This also means that the prescribing of medicine A is positively discouraged. Medicine B is produced by undertakings in the pharmaceutical industry. Hence, the prescribing incentive schemes have the deliberate and direct intention of promoting within the NHS certain medicinal products at the expense of others, even if their overall objective is to save budgetary resources and thus to improve the provision of public health services. Indeed, the United Kingdom admitted at the hearing that the point of the schemes is to favour certain producers over others.
- This is true despite the fact that more than one manufacturer usually markets medicine B.
- Indeed, the Advocate General in Damgaard was of the opinion that '[f]rom the definition given in [Directive 2001/83], for example, it is difficult to deny that the campaigns frequently launched by public authorities to encourage the consumption or prescription of generic medicinal products are in the nature of advertising.' Furthermore, 'promotions directed at persons qualified to prescribe are not unlawful, even in the case of generic products sold only on prescription, since [Directive 2001/83] only prohibits advertising of that kind of product when it is directed at the general public.' (39)
- I do not consider that the words 'where medicinal products are being promoted' in Article 94(1) of Directive 2001/83 could only mean promotion that takes place in the context of commercial activities, even if in some language versions of that provision the concept of promotion is expressed in words that could be understood as making an implied reference to commercial activities, (40) sometimes even using a word synonymous with advertising. (41) After Damgaard, such a conclusion would produce the absurd result that although it may be unlawful for someone in the position of an independent third party to advertise by means of a communication a medicinal product available on prescription only, it would be lawful for him to give money to induce doctors to prescribe that product.
- For the reasons stated above, the prescribing incentive schemes described in the order for reference amount, in my view, to promotion within the meaning of Article 94(1) of Directive 2001/83 and are as such prohibited.
- For the sake of clarity it should be added that I do not find the end of Article 94(1) of Directive 2001/83 ('unless they are inexpensive and relevant to the practice of medicine') pertinent for this case. In my view that exemption refers primarily to gifts or other benefits in kind, not to pecuniary advantages such as financial incentives. In addition, the prescribing incentive schemes intend to influence doctors when making prescribing decisions, whereas the exception contained in the last sentence of Article 94(1) of Directive 2001/83 intends to exclude from the scope of that provision insignificant advantages.
VIII The issue of cooperation in good faith
- I will comment finally on the issue of cooperation in good faith which has been raised by ABPI.
- ABPI observes that the United Kingdom used its privileged standing to submit observations in Damgaard, which sought to advance to the Court the issue of the public health exemption, relied on in the present case, which had no relevance to the situation in Damgaard. According to ABPI this conduct by the United Kingdom reveals a procedural lacuna that should be closed by the Court, since Article 10 EC and the duty of cooperation in good faith which it enshrines require a Member State in similar circumstances to notify both the referring court in its territory and the affected party of its intentions to submit observations in a parallel reference under Article 234 EC.
- I doubt whether the Court should reply to this concern.
- The possibility for Member States to submit observations in all preliminary ruling proceedings is provided for by the Statute of the Court. (42) Such a system is justified by their status as parties to the Treaties and because Member States are in a position to give to the Court useful information concerning national legislation and other relevant legal and factual information.
- Whether this possibility has in fact created unfairness to one of the parties in later national proceedings as a result of a private party's inability to express views in earlier preliminary ruling proceedings is a matter for the national court, to be decided on the basis of national law.
- I do not consider that the Member State Governments have a general duty derived from European Union law to inform parties to other national proceedings or the relevant national courts about the observations they have made in preliminary ruling proceedings before this Court in relation to issues which are the same or similar to those in the national proceedings. In many Member States it can be impossible for the government to be aware of such proceedings pending before the various courts of that State.
IX Conclusion
- On the basis of the preceding reasoning I propose that the Court give the following answer to the High Court:
Article 94(1) of Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community code relating to medicinal products for human use precludes a public body forming part of a national public health service, in order to seek to reduce its overall expenditure on medicines, from implementing a scheme which offers financial incentives to medical practices (which may in turn provide a financial benefit to the prescribing doctor) to prescribe a specific named medicine supported by the incentive scheme that is either:
(a) a different prescription medicine to the medicine previously prescribed by the doctor to the patient; or
(b) a different prescription medicine to that which otherwise might have been prescribed to the patient but for the incentive scheme,
where such a different prescription medicine is from the same therapeutic class of medicines used for treatment of the patient's particular condition.
1 Original language: English.
2 OJ 2001 L 311, p. 67.
3 PCTs are a part of the National Health Service ('NHS') in England.
4 The figures based on OECD's System of Health Accounts (SHA) (http://www.oecd.org/document/8/0,3343,en_2649_33929_2742536_1_1_1_37407,00.html) indicate that, in the OECD countries included in the statistics, the costs of medicinal products dispensed to out-patients are between 13.22 (Denmark) and 36.26 (Hungary) per cent of overall health expenditure. See 'Total Health Expenditure by ICHA-HC Healthcare Function, 2006' linked to the site mentioned above. As the United Kingdom stated in its written observations, the primary care medicines bill represents, in the United Kingdom, about 8 to 9 per cent of NHS expenditure or about GBP 8 billion a year.
5 Joined Cases C-352/07 to C-356/07, C-365/07 to C-367/07 and C-400/07 [2009] ECR I-0000. For a comprehensive description of the various measures taken by the Member States to limit their medicines expenditure see 'Pharmaceutical Systems in the European Union 2006, Comparative Analysis', Gesundheit Österreich Gmbh and Geschäftsbereich Öbig (http://www.centad.org/seminar/2.%20Price%20regulation/Habl_PharmSystemsEU25.pdf)
6 Since the reference in the present case was made prior to the entry into force of the Treaty on the Functioning of the European Union (OJ 2008 C 115, p. 47), references to articles of the Treaty establishing the European Community (OJ 2002 C 325, p. 33) are retained throughout.
7 OJ 1992 L 113, p. 13.
8 Article 86 of Directive 2001/83 corresponds, in essence, to Article 1 of Directive 92/28.
9 OJ 2004 L 136, p. 34.
10 Article 94 of Directive 2001/83 corresponds, in essence, to Article 9 of Directive 92/28.
11 OJ 1989 L 40, p. 8.
12 On the distinction between policies and principles in law see Ronald Dworkin, Taking Rights Seriously (Harvard University Press, Seventeenth printing 1999), pp. 22 and 23.
13 Article 119 TFEU (ex Article 4 EC).
14 At the hearing the Commission indicated that most incentive systems involved setting a budget, which the GP practice may not exceed. The Netherlands Government stated that the Netherlands has financial incentive schemes in place, but did not elaborate further on the details of such schemes. France indicated that the French authorities introduced a system similar to the one in the United Kingdom, in March 2009. Under that system the doctor signs a contract with medical insurers, agreeing to prescribe cheaper medicines in order to ensure efficient prescribing. In return the medical insurer provides the doctor with a financial sum.
15 Article 152(5) EC.
16 See Menarini, cited in footnote 5, paragraphs 19 and 20 and case-law cited therein.
17 See for example Article 1 of Directive 89/105 which refers to the 'control [of] prices of medicinal products' and 'restrict[ing] the range of medicinal products covered by their national health insurance systems'.
18 Article 4 of Directive 2001/83 indicates, with a variable level of linguistic precision, the areas that are not affected by Directive 2001/83.
19 See for example Article 3(1) and (2) of Directive 89/105.
20 See for example Articles 2(3), 3(3), 6(3) and (4), 7(4) and 8(1) and (2) of Directive 89/105.
21 For example, the German language version speaks about 'Verkaufsförderung' and the Swedish version about 'marknadsföring'.
22 Council of Europe, Committee of Ministers (Partial Agreement in the Social and Public Health Field), adopted at the 348th meeting of the Ministers' Deputies.
23 Case C-421/07 [2009] ECR I-0000.
24 Points 57 to 61.
25 Damgaard, paragraph 21.
26 Ibid., paragraph 22.
27 The facts in Damgaard occurred in 2003. The Court thus analysed Title VIII of Directive 2001/83 in its original form, which included Article 94. However, when the case came before the Court it was already known that a new Title VIIIa would be inserted into Directive 2001/83. Indeed, the Opinion of Advocate General Ruiz-Jarabo Colomer referred to the new Title VIIIa of Directive 2001/83 in setting out the legal framework. Against this background, it is not unlikely that the Court took this amendment into account in Damgaard, or at least tried to avoid contradictions with it. Therefore, the Court's analysis in that case, relating to the scope of the original Title VIII, is also relevant to the analysis of the scope of Title VIIIa in the present case. This is further supported by the legislative history of the directive, since Article 86 of Directive 2001/83 was originally Article 1 in Chapter I ('Scope, definitions and general principles') of Directive 92/28, which applied to the whole of Directive 92/28.
28 Recital 2 in the preamble to Directive 2001/83; Damgaard, cited in footnote 23, paragraphs 16 and 22; Case C-527/07 Generics (UK) [2009] ECR I-0000, paragraph 24.
29 See point 6 above, and footnote 10 above.
30 Recital 8 in the preamble to Directive 92/28.
31 World Medical Association Statement on Health Promotion (http://www.wma.net/en/30publications/10policies/h7/index.html), second paragraph.
32 The words of the Hippocratic Oath can be found in the Declaration of Geneva (1948) adopted by the General Assembly of the World Medical Association at Geneva, Switzerland, in September 1948, which attempted to modernise the Hippocratic oath. That declaration reads: '[t]he health of my patient will be my first consideration'.
33 According to the World Medical Association International Code of Medical Ethics, '[a] physician shall not receive any financial benefits or other incentives solely for referring patients or prescribing specific products'. (http://www.wma.net/en/30publications/10policies/c8/index.html).
34 Unlike in many other Member States, in England and Wales the patient either pays nothing, if he is exempt, or pays a fixed price determined in advance by the Department of Health. That fixed price is always the same, no matter what the price of the medicine prescribed. So doctors in fact have no incentive to think about the cost of a medicine on the NHS because patients are never personally affected, as they might be in other national health insurance systems in other Member States.
35 Points 57 and 58, and Commission study mentioned therein.
36 Paragraph 24.
37 Paragraph 20.
38 Points 38 and 39.
39 Ibid., footnote 15.
40 See footnote 21. The German word 'Verkaufsförderung' is a combination of the words for 'sales' and 'promotion', and as such seemingly a reference to the text in Article 86(1) of Directive 2001/83 ('die Abgabe, den Verkauf ... von Arzneimitteln zu fördern').
41 The Swedish language version uses 'marknadsföring' as synonymous with advertising in the heading of Title VIII and in Articles 87(1) and 90(1) of Directive 2001/83. The Finnish language version of Article 94(1) uses the word 'mainonta', which is a direct translation of the word 'advertising'.
42 Article 40 of the Statute of the Court of Justice.
