The CJEU, Europe's highest court, was considering a case between a German self-help organisation, the Deutsche Parkinson Vereinigung, and a German association for protection against unfair competition.
Deutsche Parkinson Vereinigung works with patients suffering from Parkinson's disease, and had negotiated a deal on prescription-only medicine for its members with Dutch mail-order pharmacy DocMorris.
The German competition association argued that this infringes German legislation which sets a fixed price for prescription medicine. The Higher Regional Court in Düsseldorf referred the matter to the CJEU to ascertain whether this fixed price system was compatible with the free movement of goods.
Germany's fixed price legislation affects pharmacies in other member states more than those in Germany, the CJEU said. The pharmacies outside of Germany have to sell by mail order to access the German market, and price competition is more important in mail order than in traditional pharmacies, "the latter being better placed to offer patients individually tailored advice and to ensure the supply of medicinal products in cases of emergency", the Court said.
It could be argued that a restriction on the free movement of goods is justified if it ensures a better geographical distribution of traditional pharmacies in Germany, for the "protection of the health and life of humans", but this has not been shown to be the case, the CJEU said.
"On the contrary, certain factors tend to suggest that increased price competition between pharmacies would be conducive to a uniform supply of medical products in so far as it would encourage the establishment of pharmacies in regions where scarcity of dispensaries allows for the charging of higher prices", it said.
The CJEU had not seen evidence that mail order price competition was likely to cause a large enough fall in the number of dispensing pharmacies to affect essential services such as emergency care, and it would benefit patients by reducing the costs of their prescription medicines, it said.
Traditional pharmacies can compete by offering personalised services to customers, and may even move into producing medicinal products, the CJEU said.
German pharmacy association ABDA said (link in German) called for Germany's politicians to step in to prevent "unbridled market forces prevailing over the protection of consumers in health care" and proposed a ban on mail order sales of prescription drugs.
Life sciences expert Marc Holtorf of Pinsent Masons, the law firm behind Out-Law.com said: "The judgment has the potential to dramatically change the German pharmacy market by substantially reducing the number of pharmacies. It is therefore not surprising that the German pharmacy association asked the German legislator to block online pharmacies from the German market directly after the CJEU's judgment had been announced."