Report for the Hearing in Case-347/89

I — Relevant legislation and the course of the proceedings

A — The German legislation on the marketing, manufacture and importation oj proprietary medicinal products

The rules on the marketing, manufacture and importation of medicinal products are set out in the Gesetz über den Verkehr mit Arzneimitteln of 24 August 1976 (Law on trade in medicinal products, hereinafter referred to as the AMG, Bundesgesetzblatt I, 1976, p. 2445 et seq.).

Paragraph 4(1) of the AMG defines finished medicinal products (Fertigarzneimittel) as medicines prepared in advance and placed on the market in the packaging in which they are to be presented to the consumer. That definition should be compared with Article 1(1) of Council Directive 65/65/EEC of 26 January 1965 on the approximation of provisions laid down by law, regulation or administrative action relating to proprietary medicinal products (Official Journal, English Special Edition 1965-1966, p. 20), which defines a proprietary medicinal product as any ready-prepared medicinal product placed on the market under a special name and in a special pack.

1. In accordance with the requirements of Directive 65/65 (cited above), the Law of 24 August 1976 provides that finished medicinal products may be marketed only pursuant to a marketing authorization issued in accordance with the conditions laid down in Paragraph 21 et seq. of the AMG.

2. Pursuant to Council Directive 75/319/EEC of 20 May 1975 on the approximation of provisions laid down by law, regulation or administrative action relating to proprietary medicinal products (Official Journal 1975 L 147, p. 13) and in particular Article 16 et seq. thereof, Paragraphs 13 and 14 of the AMG provide that pharmaceutical companies must have a manufacturing permit issued by the competent authorities. Paragraph 4(14) of the AMG defines manufacturing so as to include extraction, production, preparation, treatment, processing, decanting including bottling, packaging and marking.

3. The rules governing the importation of pharmaceutical products are laid down in Paragraphs 72, 73 and 74 of the AMG.

B — The main proceedings

Eurim-Pharm, which is based at Piding in Bavaria, purchases medicinal products in other Member States of the European Community and imports them into the Federal Republic of Germany, where it repacks them to suit the requirements of the AMG, in particular Paragraphs 10 and 11 thereof, with a view to selling them on the German market.

For the purposes of that activity it has a manufacturing permit granted on 25 November 1982 pursuant to Paragraphs 13 and 14 of the AMG by the competent regional authority. In order for it to be able to import the medicinal products in question the customs authorities require it to produce the certificate laid down in Paragraph 73(6) of the AMG. As that procedure creates difficulties for it, Eurim-Pharm brought an action in the competent court for a declaration to the effect that it was unnecessary for it to produce the certificate in question on the ground that the products which it imported were not finished products within the meaning of the AMG, in particular Paragraph 4(1) thereof, because before they could lawfully be sold on the German market they had to be repackaged so as to satisfy the requirements of the AMG, in particular Paragraphs 10 and 11 thereof.

By judgment of 7 March 1984, the Bayerisches Verwaltungsgericht (Bavarian Administrative Court) München upheld Eurim-Pharm's argument on the ground that, since the products which it imported were not finished products, the certificate laid down by Paragraph 73(6) of the AMG was not necessary.

That decision was confirmed by judgment of 17 October 1985 of the Bayerischer Verwaltungsgerichtshof (Bavarian Higher Administrative Court), which dismissed an appeal brought against the judgment of 7 March 1984 by the Free State of Bavaria. However, the latter appealed on a point of law to the Bundesverwaltungsgericht (Federal Administrative Court). That court considered, contrary to the view taken by the first courts, that the medicinal products imported by Eurim Pharm were in fact finished medicinal products for which a marketing permit had to be obtained under Paragraph 21 of the AMG. Before they could be imported the certificate provided for in Paragraph 73(6) of the AMG had to be obtained. It further held that, since the packaging of the medicinal products did not comply with the requirements of Paragraphs 10 and 11 of the AMG, the import certificate laid down in Paragraph 73(6) could not be issued.

In view of the fact that that interpretation of the AMG would lead to a ban on medicinal products legally marketed in other Member States of the Community being imported in order to be repackaged and marketed in the Federal Republic of Germany, the Bundesverwaltungsgericht questioned whether the legislative provisions so interpreted were compatible with Articles 30 and 36 of the EEC Treaty.

Accordingly, by order of 3 August 1989 the Bundesverwaltungsgericht referred the following question to the Court of Justice for a preliminary ruling:

The national court's order was received at the Court Registry on 10 November 1989.

Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice, written observations were submitted by Eunm-Pharm GmbH, represented by Wolfgang A. Rehmann, Rechtsanwalt, the Free State of Bavaria, represented by Ulrich Luhmann, Rechtsanwalt, Munich, and the Commission of the European Communities, represented by Götz zur Hausen, Legal Adviser, acting as Agent.

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

B\decision of 10 October 1990, it assigned the case to the Third Chamber.

II — Summary of the observations submitted to the Court

A — The position taken by the Commission

After reviewing the Community rules set out in particular in Directives 65/65 and 75/319, which were implemented in the Federal Republic of Germany by the AMG, the Commission observes that a provision of the type referred to in the Bundesverwaltungsgericht's question has the effect of preventing imports of medicinal products lawfully marketed in other Member States.

It observes that such an import ban may, however, be justified under Article 36 of the EEC Treaty, since harmonization has not been fully achieved in the medicinal products sector in the Community.

In order to be justified under Article 36, a national measure must be necessary for the protection of public health and proportionate to the objective pursued, as the Court pointed out in its judgment in Case 215/87 Schumacher [1989] ECR 617.

The Commission considers that, whilst rules of the type at issue are useful for the protection of public health, they are not necessary where the medicinal products are imported by a manufacturer who has a manufacturing permit and intends to repackage the products in question in order to bring them into line with the German legislation. In the Commission's view, there is no danger to public health, since the medicinal products in question could not be marketed directly, but are still to be subject to a manufacturing operation involving no greater risks than the importation of intermediate products, for which no authorization corresponding to a marketing permit is required.

The Commission adds that it is possible to check that the importer of the product in question does in fact have a manufacturing permit. Also, as a manufacturer, he is answerable not only for the conformity of the new labelling with the German legislation, but also for the content of the medicinal product which he is placing on the market, as appears from the judgment in Case 1/81 Pfizer v Eurim-Pharm [1981] ECR 2913.

It follows that the requirement for a manufacturing permit and a marketing permit is sufficient to secure protection of public health.

The Commission proposes therefore that the question should be answered as follows: national legislation which debars a person authorized to manufacture medicinal products from importing medicinal products from another Member State with a view to bringing them into line in the Member State of importation with the national legislation in force concerning the marketing of medicinal products is incompatible with Articles 30 and 36 of the EEC Treaty.

B— Observations of Eurim-Pharm

Eurim-Pharm agrees with the conclusions drawn by the Bundesverwaltungsgericht from its interpretation of the AMG: medicinal products packaged abroad cannot be imported into the Federal Republic of Germany as a result of the combined provisions of Paragraph 10 and Paragraph 73(1) and (6) of the AMG.

It considers that that consequence is excessive. As the Verwaltungsgericht München and the Verwaltungsgerichtshof both observed, the importation of such medicinal products by an undertaking with a national manufacturing permit does not pose a serious threat to public health.

In Eurim-Pharm's view, the supervision, laid down in Paragraph 73 of the AMG, of finished medicinal products which, from the point of view of their packaging, are ready for sale to the ultimate consumer is justified by the fact that such products can be subject to no further checks by the national authorities. It must therefore be made sure that they have been authorized in the territory in which the AMG applies. Moreover, the customs authorities do no more than that.

In contrast, such supervision is unnecessary in the case of medicinal products which, as they have not yet been packaged in accordance with legal requirements for sale to consumers, cannot be marketed directly. As far as such products are concerned, the parallel importer should have not only its own marketing permit issued by means of a simplified procedure, but also a manufacturing permit. The competent national authorities should carry out their supervision under Paragraph 64 of the AMG in connection with the manufacturing permit. This is because repackaging operations are classed as manufacturing under Paragraph 4(14) of the AMG. As a result, moreover, the parallel importer is responsible for making sure that the products marketed comply with the legal requirements.

Eurim-Pharm also argues that simplified marketing authorization would enable the competent authorities to know exactly what medicinal products are marketed and by what importer. If the Free State of Bavaria considers that the supervision carried out pursuant to Paragraph 64 of the AMG is insufficient on the ground that only a sample check is carried out, it is pointed out that only a sample check is laid down for goods imported in bulk. Since the legislature considered that such a check was sufficient for bulk goods, it cannot be seen why the position should be different in the case of finished products.

Lastly, Eurim-Pharm states that the interpretation given of Paragraph 73 of the AMG by the Bundesverwaltungsgericht would oblige undertakings to shift the whole packaging operation to the country of manufacture, which would constitute a considerable barrier to intra-Community trade.

Accordingly, even if it were regarded as justified for the parallel importer to have to prove at the time of importation that the medicinal products being imported are covered by a marketing permit, it should be sufficient to prove that the permit exists and that the products imported correspond to products which are authorized in the national territory and, if necessary, to produce an undertaking to the effect that they will be repackaged in accordance with the provisions of the AMG. Any other requirement would be incompatible with Community law.

C — Observations of the Free State of Bavaria

The Free State of Bavaria maintains that the Bundesverwaltungsgericht has misinterpreted the AMG.

It considers that, whilst Paragraph 73(6) of the AMG requires imported medicinal products to be authorized in the territory of the State of importation, it does not embody a requirement for the products to be labelled in accordance with the provisions of the German Law.

It follows that where authorized medicinal products are concerned the importer is entitled to an import certificate and it is not necessary for the products to be packaged abroad in order to be able to import them into the Federal Republic of Germany.

Accordingly, the Free State of Bavaria considers that the rules relating to importation which are laid down in the AMG do not preclude the importation of finished medicinal products with a view to providing them, in the national territory pursuant to a national permit, with labelling and a package leaflet complying with the national legislation.

Consequently, there is no need for the Court of Justice to rule on the question referred by the national court.

The Free State of Bavaria also argues that the provisions of the AMG are compatible with Community law.

Paragraph 73 is intended to guarantee maximum safety by enabling checks to be carried out to make sure that the medicinal products imported are in fact authorized in the Federal Republic of Germany. In any event, there is a simplified authorization procedure for parallel importers. The customs clearance certificate provided for in Paragraph 73(6) enables it to be checked (a) that a marketing permit exists and (b) that the medicinal products imported are the same as those in respect of which authorization has already been granted. There is no restriction on the quantity which may be imported.

The Free State of Bavaria adds that under Article 36 of the EEC Treaty national authorities may carry out the necessary checks, as is clear moreover from the Commission communication of 6 May 1992 on parallel imports of proprietary medicinal products for which marketing authorizations have already been granted (Official Journal 1982 C 115, p. 5).

It is therefore for the Member States to decide what level of protection they wish to adopt in order to enable them to check on any differences between variants of a given product depending on its origin.

Such checks are justified because undertakings belonging to a given pharmaceutical group do not all manufacture precisely the same product. This involves serious risks to public health, of which the Free State of Bavaria lists a number of examples. This makes it necessary to carry out heightened supervision of parallel imports. The Free State of Bavaria points out that the Commission brought an action for failure to fulfil obligations against the Federal Republic of Germany in respect of Paragraph 73(6) of the AMG but abandoned it.

The Free State of Bavaria adds that prior control at the frontier cannot effectively be replaced by checks carried out in connection with manufacturing operations as provided for in Paragraph 64 of the AMG.

A manufacturing permit is granted only for manufacturing operations generally and not for a particular product. What is more, checks carried out in situ are not sufficient, because they generally are required to be carried out only every two years.

The requirement for an import certificate enables the competent authority to be informed of imports and hence to require the importer where necessary to eliminate certain known risks before importation takes place. It also enables it to be checked that an importer intending to repackage the medicinal product does in fact have a manufacturing permit. This makes it easier to assess the risks and to adopt the necessary measures to deal with a risk which has been identified or has already materialized.

In conclusion, the Free State of Bavaria considers, in the first place, that the barrier to imports which was identified by the Bundesverwaltungsgericht does not exist since a medicinal product may be imported even if its labelling does not satisfy the requirements laid down by the German legislation, secondly, that the requirement to have authorization in order to carry out the parallel importation of medicinal products is compatible with Articles 30 and 36 of the Treaty and, thirdly, that the impon certificate laid down in Paragraph 73(6), which provides for prior checks on the existence of a marketing permit, does not constitute an excessive burden for importers.

1 Language of the case: German.