European Court of Justice is currently reviewing two cases where the applicants challenge the legality of Spanish legal acts constraining the setting-up of pharmacies. The legal acts in question impose a quantitative restriction limiting the pharmacies in an area by reference to the population and a geographical restriction preventing the establishment of a pharmacy within 250 metres of another pharmacy.

On 30 September 2009 the Court’s Advocate-General Maduro passed his opinion on the two cases, concluding that EC law (Article 43 EC on the freedom of establishment) precluded such legislation as that at issue if the purpose sought by such legislation could be achieved by less restrictive means, and if it is not pursued in a coherent and consistent manner, i.e., if the legislation, in fact, fails to meet the purpose of making the health system function in an economically sound manner.

Although the European Court of Justice has not yet passed its own judgment on the two cases and although the Court is not obliged to follow the opinion of its Advocate-General, in practice the Court often accedes to the opinion of Advocates-General. Moreover, in this case the opinion of Advocate-General Maduro is based on established case-law of the Court regarding interpretation of Article 43 EC, and is therefore even more reliable.

Under Latvian law, the setting-up of pharmacies is constrained both by number and by location. The main legal acts limiting the maximum amount of pharmacies that may be set up by one owner and the location of pharmacies are the Pharmacy Law and Cabinet of Ministers Regulations No. 102. According to the Pharmacy Law, one pharmacy is not allowed to have more than two branches. In addition, the branches can only be set-up in the suburbs where there are no other pharmacies within 5 kilometres.  Cabinet of Ministers Regulations No. 102, for their part, set out the criteria for establishing the location of pharmacies and the maximum amount of pharmacies in populated areas.

In the light of the opinion of Advocate-General Maduro, it follows that also Latvian legal constraints on the opening of new pharmacies could be challenged. It is clear that such constraints restrict the freedom of establishment guaranteed under Article 43 EC; it remains to be clarified whether the restriction can be justified in accordance with the case-law of the European Court of Justice.

In practice, the legal acts imposing constraints on opening of new pharmacies can be challenged either by appeal to the administrative courts of a decision declining authorisation for opening of a new pharmacy (branch) or by application to the Constitutional Court (in Latvian – Satversmes tiesa).

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Healthcare & Pharmaceuticals
Franchise & Distribution
Litigation & Dispute Resolution