E-pharmacies in Europe: When Two Regulatory Worlds Collide

Anyone wishing to access a market that will soon include 25 European countries will need to understand in detail precisely how medicinal products can be sold online without breaching one or more of the regulations currently in place.

Regulations Have Evolved Along With the EU

At first glance, a significant amount of the regulation imposed on the pharmaceutical industry within the European Union appears to be based at national level. In the United Kingdom, for example, the principle legislation relating to pharmaceutical products remains the Medicines Act 1968, which governs the licensing of medicines for human use, and the assignment of products into categories such as:

• Those that may be sold generally and without prescription;
• Those that must be dispensed by a pharmacist, but again without prescription; and
• Those that may be supplied only by a pharmacist against a prescription issued by a medical practitioner.

However, through the 1990s, much of the regulatory activity in this area took place at the central level in Europe, with Brussels taking over a number of the legislative and policy functions previously left to nations.

The result is that most new market authorizations (product licences) are now granted at the European level via the European Agency for the Evaluation of Medicinal Products (EMEA) and although national bodies may still grant national market authorizations, there are now some areas ' such as biologics ' in which the EMEA has exclusive jurisdiction.

Such a move toward central authority is, of course, generally of benefit to the e-pharmacist who wishes to sell into the EU. It remains the case, however, that although the overall system of regulation has achieved a relative harmony throughout the EU, individual national states still can interpret those rules in a number of differing ways, possibly resulting in individual medicinal products falling into varying categories, depending on the EU country involved. In particular, it is possible to find a particular product classified as a prescription-only medicine (POM) in one country and not in another. Some medicines may be licensed in one country, but not in another. These variations are a source of considerable uncertainty for those wishing to sell pharmaceutical products on a pan-European basis.

Ad Ban Presents Challenges

Another area of real difficulty for the European e-pharmacist is the ban on advertising POMs to the public. The only advertising of POMs permitted in the EU is carefully controlled and directed solely at medical professionals. As a result, Web sites operated by pharmaceutical manufacturers and by e-pharmacists must be exceptionally careful not to advertise or promote products that are classified as POMs. As indicated earlier, this might be particularly difficult where the medicine in question is not classified as a POM in the e-pharmacist's home state, but is elsewhere in the EU. Given that it is extremely difficult, in practice, to bar all visitors to an Internet site from a particular country, the result is that a medicine cannot safely be advertised on a Web site if the medicine is designated as a POM anywhere in the EU.

Recent attempts to relax this advertising ban have been resisted. Toward the end of 2002, the European Commission proposed a relaxation on the advertising rules relating to POMs to treat AIDS, asthma and diabetes. The Commission's proposal was based in part on the fact that a number of patients in these areas currently get their information from the Internet in a totally unregulated way, and it would be better if manufacturers and others with appropriate knowledge in the field could give accurate information directly to the public. But the European Parliament rejected the proposal.

Having been “squeezed” by pharmaceutical regulations, the e-pharmacist then finds him or herself faced with a growing number of European regulations relating to the Internet and e-commerce.

The Distance Selling Regulations now give consumers purchasing over the Internet considerable rights to an array of information regarding the e-business with which they are dealing, and also give consumers the right to withdraw from an online contract and obtain a full refund for the goods ordered. The Data Protection regime within the EU places considerable obligations on data processors to ensure that information relating to individuals is accurate, complete and held securely, and there are yet other obligations regarding the holding and use of “sensitive” personal data, which includes information relating to an individual's health. By its very nature, an e-pharmacy is bound to record health-related information relating to its customers.

Also, all Internet traders within the EU must comply with the E-commerce Directive, which, like the Distance Selling Regulation, imposes a number of requirements on Internet businesses.

Country Of Origin Rule Applies, But Has Exceptions

A core principle behind the European approach to e-commerce is that in the case of a cross-border contract within the EU, it is generally the law of the seller that will apply to the contract (the so-called “country of origin” principle). Accordingly, in simple terms, if the contract meets with the requirements of the seller's local law, then it will be upheld, notwithstanding the fact that it does not meet the requirements of the laws in the buyer's country.

Consumers, however, have special rights, and can elect to sue or be sued in their country of domicile and may ensure that the contract is subject to any mandatory rules applicable in the consumer's country, regardless of the stated governing law in the contract. In addition, various derogations from the “country of origin” principle occur under the E-commerce Directive, particularly regarding issues relating to the protection of public health.

All of these conflicting issues recently came to the fore in the case of Deutscher Apothekeverband e.V. -v- 0800 DocMorris NV (ECJ Case C-322/01). The Deutscher Apothekeverband (DA) is the German pharmacists' union, which objected to the operations of the Netherlands-based online pharmacy DocMorris, which was selling pharmaceutical products into Germany. While several of the medicines concerned were authorized in Germany, most of them were authorized in another EU member state. DocMorris treated medicines as POMs where they were classified as such under Dutch law and POMs were not dispatched until the original prescription had been produced.

DA objected to the medicines being offered to the public by mail order contrary to the German medicines law and the law on advertising in the field of medicine that prohibits the advertising of POMs.

The case was originally brought before the German courts, but has since been transferred to the European Court of Justice (ECJ). The procedure in the ECJ is that a case will be considered by an official known as the advocate general, who will give an interim opinion on the case, offering the parties the option of settling the matter before it goes to the full court. Earlier this year, the advocate general gave her opinion in the DocMorris case. The opinion stated that any national law prohibiting the importation of medicines via mail order by authorized pharmacies in another member state constituted a barrier to the free movement of goods enshrined in the European Treaty. The German prohibition on trading in medicines by mail order significantly impeded access to the German market for foreign pharmacies. Such a prohibition could only be justified if the medicines required authorization but had not been approved either in Germany or at a community level.

When it came to the question of advertising, to the extent that German law prohibited the advertising of medicines not authorized in Germany or were POMs, this simply reflected the provisions of the EU Directive on the Advertising of Medicinal Products and was permissible. Additionally, the advocate general commented that the facts of the DocMorris case had arisen prior to Jan. 17, 2002, which was when the E-commerce Directive was due to be transposed into national law by EU member states. It is interesting to consider what effect the directive might have had on the advocate general's opinion in the case, given that while the “country of origin” principle might have given supremacy to Dutch law (thus permitting DocMorris' activities), there is a derogation in the directive permitting the application of the buyer's local law in certain cases, including the protection of public health.

A Final Decision Is Due

The opinion of the advocate general is not binding on the European Court, but rather is designed to propose a legal solution to the case. The court is likely to give its judgment in the case before the end of the year.

As can be seen from the examples in this article, the European e-pharmacy is perhaps one of the most closely regulated business operations active in the European market, and given the European authorities' focus on public health and consumer rights, this level of regulation is unlikely to diminish.

The authorities in the European Union (EU) are steadily increasing the amount of regulation over the Internet and aspects of e-commerce in particular.

The pharmaceutical industry is one of the most regulated consumer-facing industries in the world, and the EU differs relatively little in its general approach from that to be found in the United States and Japan.

When the sale of pharmaceutical products occurs on the Internet, therefore, a number of regulatory issues need to be borne in mind, and a recent court case has highlighted a number of these issues.

Anyone wishing to access a market that will soon include 25 European countries will need to understand in detail precisely how medicinal products can be sold online without breaching one or more of the regulations currently in place.

Regulations Have Evolved Along With the EU

At first glance, a significant amount of the regulation imposed on the pharmaceutical industry within the European Union appears to be based at national level. In the United Kingdom, for example, the principle legislation relating to pharmaceutical products remains the Medicines Act 1968, which governs the licensing of medicines for human use, and the assignment of products into categories such as:

• Those that may be sold generally and without prescription;
• Those that must be dispensed by a pharmacist, but again without prescription; and
• Those that may be supplied only by a pharmacist against a prescription issued by a medical practitioner.

However, through the 1990s, much of the regulatory activity in this area took place at the central level in Europe, with Brussels taking over a number of the legislative and policy functions previously left to nations.

The result is that most new market authorizations (product licences) are now granted at the European level via the European Agency for the Evaluation of Medicinal Products (EMEA) and although national bodies may still grant national market authorizations, there are now some areas ' such as biologics ' in which the EMEA has exclusive jurisdiction.

Such a move toward central authority is, of course, generally of benefit to the e-pharmacist who wishes to sell into the EU. It remains the case, however, that although the overall system of regulation has achieved a relative harmony throughout the EU, individual national states still can interpret those rules in a number of differing ways, possibly resulting in individual medicinal products falling into varying categories, depending on the EU country involved. In particular, it is possible to find a particular product classified as a prescription-only medicine (POM) in one country and not in another. Some medicines may be licensed in one country, but not in another. These variations are a source of considerable uncertainty for those wishing to sell pharmaceutical products on a pan-European basis.

Ad Ban Presents Challenges

Another area of real difficulty for the European e-pharmacist is the ban on advertising POMs to the public. The only advertising of POMs permitted in the EU is carefully controlled and directed solely at medical professionals. As a result, Web sites operated by pharmaceutical manufacturers and by e-pharmacists must be exceptionally careful not to advertise or promote products that are classified as POMs. As indicated earlier, this might be particularly difficult where the medicine in question is not classified as a POM in the e-pharmacist's home state, but is elsewhere in the EU. Given that it is extremely difficult, in practice, to bar all visitors to an Internet site from a particular country, the result is that a medicine cannot safely be advertised on a Web site if the medicine is designated as a POM anywhere in the EU.

Recent attempts to relax this advertising ban have been resisted. Toward the end of 2002, the European Commission proposed a relaxation on the advertising rules relating to POMs to treat AIDS, asthma and diabetes. The Commission's proposal was based in part on the fact that a number of patients in these areas currently get their information from the Internet in a totally unregulated way, and it would be better if manufacturers and others with appropriate knowledge in the field could give accurate information directly to the public. But the European Parliament rejected the proposal.

Having been “squeezed” by pharmaceutical regulations, the e-pharmacist then finds him or herself faced with a growing number of European regulations relating to the Internet and e-commerce.

The Distance Selling Regulations now give consumers purchasing over the Internet considerable rights to an array of information regarding the e-business with which they are dealing, and also give consumers the right to withdraw from an online contract and obtain a full refund for the goods ordered. The Data Protection regime within the EU places considerable obligations on data processors to ensure that information relating to individuals is accurate, complete and held securely, and there are yet other obligations regarding the holding and use of “sensitive” personal data, which includes information relating to an individual's health. By its very nature, an e-pharmacy is bound to record health-related information relating to its customers.

Also, all Internet traders within the EU must comply with the E-commerce Directive, which, like the Distance Selling Regulation, imposes a number of requirements on Internet businesses.

Country Of Origin Rule Applies, But Has Exceptions

A core principle behind the European approach to e-commerce is that in the case of a cross-border contract within the EU, it is generally the law of the seller that will apply to the contract (the so-called “country of origin” principle). Accordingly, in simple terms, if the contract meets with the requirements of the seller's local law, then it will be upheld, notwithstanding the fact that it does not meet the requirements of the laws in the buyer's country.

Consumers, however, have special rights, and can elect to sue or be sued in their country of domicile and may ensure that the contract is subject to any mandatory rules applicable in the consumer's country, regardless of the stated governing law in the contract. In addition, various derogations from the “country of origin” principle occur under the E-commerce Directive, particularly regarding issues relating to the protection of public health.

All of these conflicting issues recently came to the fore in the case of Deutscher Apothekeverband e.V. -v- 0800 DocMorris NV (ECJ Case C-322/01). The Deutscher Apothekeverband (DA) is the German pharmacists' union, which objected to the operations of the Netherlands-based online pharmacy DocMorris, which was selling pharmaceutical products into Germany. While several of the medicines concerned were authorized in Germany, most of them were authorized in another EU member state. DocMorris treated medicines as POMs where they were classified as such under Dutch law and POMs were not dispatched until the original prescription had been produced.

DA objected to the medicines being offered to the public by mail order contrary to the German medicines law and the law on advertising in the field of medicine that prohibits the advertising of POMs.

The case was originally brought before the German courts, but has since been transferred to the European Court of Justice (ECJ). The procedure in the ECJ is that a case will be considered by an official known as the advocate general, who will give an interim opinion on the case, offering the parties the option of settling the matter before it goes to the full court. Earlier this year, the advocate general gave her opinion in the DocMorris case. The opinion stated that any national law prohibiting the importation of medicines via mail order by authorized pharmacies in another member state constituted a barrier to the free movement of goods enshrined in the European Treaty. The German prohibition on trading in medicines by mail order significantly impeded access to the German market for foreign pharmacies. Such a prohibition could only be justified if the medicines required authorization but had not been approved either in Germany or at a community level.

When it came to the question of advertising, to the extent that German law prohibited the advertising of medicines not authorized in Germany or were POMs, this simply reflected the provisions of the EU Directive on the Advertising of Medicinal Products and was permissible. Additionally, the advocate general commented that the facts of the DocMorris case had arisen prior to Jan. 17, 2002, which was when the E-commerce Directive was due to be transposed into national law by EU member states. It is interesting to consider what effect the directive might have had on the advocate general's opinion in the case, given that while the “country of origin” principle might have given supremacy to Dutch law (thus permitting DocMorris' activities), there is a derogation in the directive permitting the application of the buyer's local law in certain cases, including the protection of public health.

A Final Decision Is Due

The opinion of the advocate general is not binding on the European Court, but rather is designed to propose a legal solution to the case. The court is likely to give its judgment in the case before the end of the year.

As can be seen from the examples in this article, the European e-pharmacy is perhaps one of the most closely regulated business operations active in the European market, and given the European authorities' focus on public health and consumer rights, this level of regulation is unlikely to diminish.