ECLI:EU:C:1976:43

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DELIVERED ON 17 MARCH 1976 ( 1 )

Mr President,

Members of the Court,

This is not the first time that legal proceedings have been brought against Centrafarm BV, a Netherlands limited liability company having its registered office in Rotterdam. The Court has already had the opportunity of becoming acquainted with this undertaking as a result of questions referred under Article 177 relating to industrial and commercial property in Cases 15 and 16/64 which were answered in your judgments of 31 October 1974 ([1974] ECR 1147 and 1183).

The questions which are now referred to the Court for a preliminary ruling originate in a summons calling upon Mr Adriaan de Peijper to appear before the national court in connexion with conduct of which he is accused in the field of the protection of public health.

Here is a brief summary of the facts which need to be considered. In 1973 Centrafarm bought from an English wholesaler C.H.B. (Aerosols Ltd.) several batches of valium, the doses ranging from 5 to 10 mg, made up in packages of 500 tablets. This pharmaceutical product known under the generic name ‘Diazepam’ was imported by Centrafarm under its designation of origin ‘Valium’ manufactured by the Hoffmann-La Roche laboratory.

When these medicinal preparations, which were in a fit state to be supplied against a doctor's prescription, arrived in the Netherlands they were repacked by Centrafarm in standard packages bearing this firm's trade-mark and one of its serial numbers. Centrafarm then delivered these products in bulk to several pharmacists and inter alia to the pharmacy at the hospital of Leiden University.

The sole importer for the multi-national company Hoffmann-La Roche sells officially a similar product under the name ‘Valium’ in the Netherlands but at a much higher price. Under Netherlands law this product is a pharmaceutical preparation. It is a proprietary medicinal product within the meaning of Article 1 of Directive No 65/65 of the Council of 26 January 1965 on the harmonization of the provisions laid down by law, regulation or administrative action relating to the said products. It must be assumed that in the Netherlands and elsewhere valium can only be supplied against a doctor's prescription.

It appears from the file and the explanation which you were given during the oral proceedings that what Centrafarm does is to take the valium tablets out of their original packages, and repack them under the supervision of a qualified chemist attached to this firm. It puts these tablets in packages with labels bearing its own name and the generic name ‘Diazepam’ and its own reference, identification number and the expression ‘original product’.

These operations do not appear to be likely to bring about any deterioration of the constituents of the original valium or, from the therapeutic point of view, to have any effect on the quality of the tablets. In any case the identification of the origin of each batch of ‘Diazeparn’ sold by Centrafarm presents no difficulty.

This would make it possible, if need be, to identify also the person responsible for marketing and to stop the sale of the medicinal preparation and even to confiscate any batch suspected to be unsafe in the event of any therapeutic accident, unless of course the deterioration of the product is attributable to the manufacturer. This accounts for the fact that following an enquiry the Chief Public Health Inspector in the Netherlands was able to ascertain without any difficulty from its serial number that the Diazepam tablets in question had been manufactured by a laboratory belonging to the Hoffmann-La Roche group at Welwyn Garden City in England.

In the earlier Centrafarm cases which I have recalled the Court was asked whether putting on the market products which are the subject of parallel imports and thereby interfering with the normal progress of the original products is likely to have an adverse effect on the right enjoyed by the manufacturer, who is the proprietor of the trade-mark, or of the importer whom he has appointed to supervise the distribution of the product. An affirmative answer to this question would mean that these parallel imports would prevent them from adopting measures for the protection of the public in the event of any manufacturing defects being disclosed. The Court held on this point that ‘the protection of the public against risks arising from defective pharmaceutical products is a matter of legitimate concern and Article 36 of the Treaty authorizes the Member States to derogate from the rules concerning the free movement of goods on grounds of the protection of health and the life of humans and animals’(Centrafarm v Winthrop [1974] ECR 1196). This proposition which was merely foreshadowed in the abovementioned cases is the crux of the problem in the present case. In the field of public health, in the proper sense of this expression, the Court has today to decide to what extent the Treaty authorizes Member States to derogate from the rules relating to the free movement of goods.

The Officier van Justitie for the district charged Mr de Peijper with the following offences under Netherlands regulations: marketing a medicinal preparation which is the subject of a parallel import

—	without the consent of the Public Health Inspector,

—	without having in his possession a file containing all the data relating to the qualitative and quantitative composition and mode of preparation of this medicinal preparation,

—	and without having in his possession a report (also called a record) which makes it clear beyond any shadow of doubt that the imported medicinal preparation had in fact been prepared and checked in accordance with the data on this file.

In the Netherlands these offences attract the penalties prescribed by Article 26 of the Law on the supplying of medicinal preparations.

Although Mr de Peijper did not deny any of the facts alleged, he pleaded that his conduct was not punishable because the national provisions with which he did not comply constituted a ‘measure having an effect equivalent to quantitative restrictions’ which is prohibited by Article 30 of the Treaty. He went on to plead that, even if the national provisions were justified under the provisions of Article 36 ‘on grounds of protection of health and the life of humans’, they were in fact under the provisions of the same Article ‘a means of arbitrary discrimination or disguised restriction on trade between Member States’. Consequently they cannot fall within the exceptions provided for by Article 36.

It is in the circumstances that the Netherlands court referred two question to you. In fact these two questions ask you to determine whether the national rules in question are compatible with the Treaty.

As a matter of principle the Court declines (see for example, Judgment in Case 78/72 of 11 April 1973 [1973] ECR 457) in proceedings under Article 177 of the Treaty to pronounce on a provision of national law with regard to a Community rule. However it is concerned to provide the court making the reference with the factors of interpretation under Community law which could be helpful to it in evaluating the effects of such provision. Similarly, although it is not within the scope of the Court's jurisdiction under Article 177 to give a ruling on the compatibility of the provisions of a specific national law with the Treaty, it acknowledges on the other hand that it has jurisdiction to provide the national court with all the factors of interpretation under Community law which may enable it to adjudicate upon this compatibility (Judgment of 17 February 1976, Case 91/75, Miritz).

In this case the barrier to trade between Member States originates primarily and directly in laws based on public policy and carrying penalties which a minister can therefore apply on his own initiative even if there has been no joinder of a party claiming damages. Consequently the only reason why these laws could not be applied is that the internal legal order must give way to the Community legal order. If this Court wishes to give a helpful answer to the national court, it seems to me to be impossible for it in these circumstances to avoid examining this problem of ‘compatibility’ by stating as it has already done, for example in the judgment in the Tasca case of 26 February 1976, that it is for the national court to decide, on the basis of the decision of this Court, whether the effects of the national rules, which it is called upon to consider, are such that they are incompatible with the Community rules in force. It seems to me all the more difficult for the Court to decline to consider these rules and to examine whether they are compatible with the Treaty (at least in the grounds of judgment) because the solution resulting from them is, from the point of view of criminal law, of direct and individual concern to Mr de Peijper, over and above the general scope which your reply most certainly has.

There is no doubt that the normal way of testing the compatibility of national laws is by means of the procedure laid down by Article 169. And the Commission in answer to a written request by the Court told us, at the conclusion of the oral submissions made by its Agent, that it had in fact just initiated such a procedure against the Netherlands rules. However, although the two procedures are related and there is a risk of confusing two procedures which have different objectives, I do not submit that the Court should stay the proceedings, as I did in the BRT case (Judgment of 30 January 1974 [1974] ECR 51), for reasons which moreover were different and based on the existence of an express provision of Community law.

Bearing in mind these points and following the policy adopted in the report for the hearing I must, first of all, analyse the Netherlands rules.

I shall then examine the Community directives relating to pharmaceutics, since the Netherlands Government and the Governments of the other Member States which submitted observations in this case take the view that this ‘Community legislation’ is a justification of the Netherlands rules if indeed it does not make them obligatory.

Finally, I shall have to comment on the argument submitted by the British Government relating to Articles 85 and 86.

I —

I shall therefore begin by analysing the Netherlands rules without concealing the fact that such an analysis is necessarily incomplete and only has a limited effect in the context of the non-contentious procedure of Article 177. The Commission itself reserved the right to submit supplementary observations if that should prove to be necessary in view of the interpretation given to these texts by the Netherlands Government and of the administrative practice adopted by the national authorities. It seems to me that these latter reservations will only be able to be withdrawn completely during the proceedings for failure to act which the Commission has just initiated. The accused in the main proceedings states (and he must bear the responsibility for doing so) that it cannot be said of the implementing decrees made by the Netherlands Government that they are conspicuous for their clarity, whether they are considered separately or as a whole, and that they can only be interpreted in general terms with difficulty. Having made these preliminary observations I will now examine these decrees.

(a)

In the Netherlands the supervision by the authorities over the sale of medicinal preparations is governed by:

—	the Law relating to the supplying of medicinal preparations (Wet op de geneesmiddelen voorziening);

—	the decree relating to pharmaceutical preparations (Besluit farmaceutische preparaten);

—	the decree relating to medicinal preparations in packages (Besluit verpakte geneesmiddelen).

These texts are closely connected with each other but the present case only refers to certain provisions of the order of the Secretary of State for Public Health relating to pharmaceutical preparations dated 22 January 1970. This text was amended at a later date but when the events occurred which gave rise to the proceedings instituted against Mr de Peijper it laid down the following rules:

In the first place, in order to be able to sell a medicinal preparation on the Netherlands market the manufacturer and the importer require the consent (toestemming) of the Chief Public Health Inspector responsible for medicinal preparations (Article 3 (1)); this consent is

refused if the medicinal preparation is harmful or therapeutically ineffective (Article 3 (4)).

Under the provisions of Article 4 (2) the inspector is entitled, before giving the importer his consent, to ask him to produce particulars of the composition and preparation of the pharmaceutical products which are to be imported. These particulars must have been ‘checked and approved’ by the persons responsible for the manufacture abroad. In addition under Article 6 (2) the importer must have such particulars, which have been ‘checked and approved’, in his possession and produce them to the inspector. In practice the manufacturer or the importer has to produce a file to the inspector in duplicate giving inter alia particulars of the composition and prescriptions relating to the preparation and analysis of the product (Article 4 (2) and Articles 5 and 6). This file must contain the signature, preceded by the formula ‘read and approved’, of a pharmacist employed by the manufacturer. This practitioner must direct and supervise the preparation of the medicinal preparation at the latter's premises (Article 9 (1)).

If the file satisfies these requirements it is initialled by the inspector. One copy is then returned to the manufacturer or his importer (Article 7 (2)). The other is retained by the inspector. The file must be kept at the manufacturer's place of business (Article 5 (1)) or by the importer (Article 6 (1)). The approval or the initials of the inspector amounts to consent within the meaning of Article 3 (1) and the medicinal preparation can then be sold in the Netherlands.

In the second place the product which is in fact manufactured or imported must conform to the particulars which the inspector has approved.

For this purpose the manufacturer is primarily responsible (Article 12 (1)). So far as the importer is concerned, Article 14 (1) requires that he shall have in his possession a report supplied by the manufacturer establishing that the manufactured or imported medicinal preparation has in fact been produced, analysed or checked in accordance with the directions referred to in Article 5 (1) (b) and (c). It is the pharmacist employed by the manufacturer and responsible for supervising production operations who draws up and signs a report certifying that the medicinal preparation has been manufactured in accordance with the directions for preparation and analysis described in the file.

The importer must have in his possession one copy of this report (Article 14 (1) (a)).

In the case of an imported medicinal preparation an expert approved by the inspector, who in practice is the pharmacist appointed for this purpose by the manufacturer, must have found that the medicinal preparation was made up, prepared and analysed or checked in accordance with the directions in the original file, that it was properly packed and that it can be kept in good condition for a reasonable period (Article 14 (1)). This pharmacist, who is under oath, draws up a report of his observations (Article 11). It is this document, also called the ‘record’, which has to be produced in the case of imported preparations placed on the marked as medicinal preparations in packages whether they are sold by the person in whose name the packaged medicinal preparation is entered on the register, that is to say, the manufacturer or his sole representative or by a parallel importer.

That was therefore the system in force at the time of the matters of which Mr de Peijper is accused.

(b)

At a later date, but before your judgments of 31 October 1974, a Royal Decree of 10 September 1974 (Stb 551) modifying the rules for importing packaged medicinal preparations was issued. This decree entered into force on 1 November 1974. Under the new version of Article 13 (a) of the decree relating to packaged medicinal preparations a registered medicinal preparation can only be imported by the person established in the Netherlands, in whose name the medicinal preparation has been registered or by the person established in the Netherlands who has in his possession a file approved by the Chief Inspector. This file must include the name of the packaged medicinal preparation and its registration number.

So the parallel importer of these medicinal preparations is from this moment onwards entirely dependent upon the manufacturer. Nevertheless this decree introduced an apparent exception by stipulating that, if the person in whose name the medicinal preparation is registered (that is to say, the manufacturer or the appointed importer) produces an appropriate declaration, the registration can also benefit third parties.

A decree of the Secretary of State for Public Health of 21 October 1974 (Stcrt 207) amending the decree relating to pharmaceutical preparations, which also entered into force on 1 November 1974, amended the decree relating to pharmaceutical preparations by incorporating the amendments provided by the Royal Decree of 10 September 1974 (Article C). In this way the harmonization of the rules for importing pharmaceutical preparations and packaged medicinal preparations was secured.

That, my Lords, is the analysis which I believe I am justified in making of these two decrees and which the oral replies to your questions have helped to elucidate.

Moreover, these two texts did not substantially modify the system in use in 1973. According to the findings of the Netherlands judge they did no more than state with greater accuracy and reinforce the rules in force at the time when the matters of which Mr de Peijper is accused arose. However, they provoked serious criticism in the Netherlands and it will be at least to their credit that they prompted the Commission to make representations to the Government of the Netherlands (OJ C 94 of 26. 4. 1974, p. 17), which culminated by a sheer coincidence, after the Court had asked the Commission a specific question on this point in an action for failure to act being brought against the Netherlands Government.

(c)

It therefore appears that in this State the protection of public health in the field of distribution of medicinal preparations is secured primarily by the obligation to make up a file and produce reports drawn up on his own responsibility in accordance with the duties and ethics of his profession by a pharmacist employed by the manufacturer, on the basis of data not available to third parties except with the consent of the manufacturer. The Netherlands rules proceed on the assumption — which a parallel importer can in practice hardly refute — that there may be considerable therapeutical differences in a given medicinal preparation produced by the same manufacturer. It is obvious that Centrafarm does not have in its possession documents emanating from the producer which are likely to enable it to prove under Netherlands law that the processes used for the pharmaceutical treatment of the medicinal preparations which it sells could not cause their constituents to deteriorate and that it is not in a position either to adduce this evidence by analyses made in its own laboratory. As the Officier van Justitie said, you might just as well search for a needle in a haystack.

So the circle closes in upon Centrafarm: as this firm is not the person in whose name the medicinal preparation was registered in the Netherlands and does not have access to the English manufacturer's file, it cannot show that the batches of Diazepam which it sells conform to the original file approved by the inspector.

It can therefore only sell this product by committing an offence under Netherlands law. The obligations imposed by the combined effect of these provisions amount in fact to the creation in the case of the pharmaceutical preparations covered by them, of what is in fact a legal import monopoly for the benefit of the foreign manufacturer, as the result of its subsidiaries or sole representatives in the Netherlands and elsewhere.

It is with the help of these observations that I can now answer the questions referred by the court in Rotterdam.

A —

The first question relates to the first phase of the supervision carried out by the Netherlands authorities, that is to say, the licence to market a medicinal preparation in the Netherlands and the duty to make up a file.

As the advocates for the accused in the main proceedings have rightly emphasized, the assumption made by the national court, on the basis of which it has referred its questions to the Court, is that a proprietary medicinal product or a pharmaceutical preparation has been manufactured in one or more Member States in accordance with a given, uniform method, having a given uniform quantitative and qualitative composition and in respect of which the manufacturer or the person responsible for putting it on the market in each of these States has obtained the requisite marketing licences (vergunningen). This product therefore circulates lawfully in each of these States and third parties have notice, through notifications given in an official publication or otherwise, that these licences have been granted in each of these States.

The court asks whether, in these circumstances, the fact that the authorities of the Member States, on the territory of which this product is imported by a parallel importer, make such importation subject to a licence issued on the basis of data, which can only be obtained with the cooperation of the manufacturer of the medicinal preparation or of appointed importer and which these authorities already have in their possession following an application for authorization made by the manufacturer or by his appointed importer, amounts to a measure having equivalent effect prohibited by Article 30 which cannot be justified by the exceptions specified in Article 36.

Having regard to the contents of the file it appears to me to be established that the competent Netherlands authorities have in their possession a file relating to valium manufactured by Hoffmann-La Roche in Switzerland and sold by its appointed representative in the Netherlands, a file which was produced to them by the manufacturing company or by its sole representative for the Netherlands. On the other hand it is quite clear that they do not have in their possession either the file for valium manufactured in the United Kingdom or the report showing that the pharmaceutical preparation sold by Centrafarm is exactly the same as the valium manufactured in Switzerland and sold by the sole representative for the Netherlands.

Although there is no difference between the Swiss valium sold by Hoffmann-La Roche's sole representative in the Netherlands and the valium bought in England by Centrafarm and sold by this firm in the Netherlands, the view can be taken that the file relating to the Swiss valium must be deemed to apply to the English valium sold by Centrafarm.

But, even if it is assumed that the Netherlands authorities have in their possession the file for British valium, it would still be necessary to be sure that there is no difference between the valium manufactured and packaged in England, which Centrafarm bought, and the Diazepam which Centrafarm sells in the Netherlands after having repacked it. The ‘records’, which the Netherlands authorities may have in their possession, only relate to the valium manufactured and packaged in Switzerland or the valium repacked by the sole representative in the Netherlands; they do not cover the product repacked by Centrafarm. This is the decisive question.

(a)

There appears to me to be no doubt that the requirement prescribed by Netherlands law, in such a case, is a measure having an effect equivalent to a quantitative restriction under Article 30.

Even if the Netherlands rules do not appreciably affect the total volume of trade in Diazepam between Member States, a view which the Officier van Justitie believes he can prove, they are capable of affecting the pattern of this trade.

Moreover, and contrary to the view put forward by the representatives of the British Government and by the Officier van Justitie, the measure in question is not applicable without distinction to national and imported products; if it were it would not be discriminatory. It amounts in fact to treating certain imported products differently because of their origin. The persons who import the product direct from the country of manufacture (Switzerland) are treated differently from those who import it after it has already been placed on the market in a Member State (United Kingdom).The obligation to produce a file and a report on manufacture is in fact imposed indiscriminately upon traders who are in a fundamentally different position vis-à-vis the manufacturer. You have already had occasion in your judgment of 30 April 1974, Sacchi ([1974] ECR 428) to deal with discrimination which benefits, within the Community, specific patterns of trade or particular traders as compared with others. You examined the problem again in your judgment of 11 July 1974, Dassonville ([1974] ECR 852), and you criticized ‘the formalities required by a Member State for the purpose of proving the origin of a product, which only direct importers are in practice in a position to satisfy without coming up against serious difficulties’.

(b)

But is such a measure having equivalent effect justified on grounds of public health under Article 36 of the Treaty?

The right of Member States to invoke the exceptions specified in this Article is not an absolute right and does not confer any discretion upon them.

Council Directive No 64/221/EEC of 25 February 1964 on the coordination of special measures concerning the movement and residence of foreign nationals which are justified on grounds of public policy, public security or public health (OJ, English Special Edition 1963-1964, p. 117) has already listed the only diseases or disabilities which might justify a refusal to allow Community nationals to enter into the territory of Member States.

Moreover, the exception provided by Article 36 in the interest of public health, just as in the case of public policy and public security, is subject to the condition that ‘such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States’. This is another way of saying that Member States have no discretion at all in this field. Their powers are limited by the fact that the measures adopted for the purpose of the objective which it is sought to attain must be adequate and also that these measures must be proportionate to the aim it is sought to achieve. The Court has given its decision on this point in connexion with the protection of articles having an artistic, historic or archaeological value, the protection of industrial and commercial property, and in connexion with public policy and public security (Judgment of 10 December 1968, Commission v Italian Republic [1968] ECR 423; Judgment of 30 April 1974, Dassonville [1974] ECR 428; Judgment of 20 February 1975, Commission v R.F.A. [1975] ECR 181). It has confirmed its decision in connexion with the protection of plants (Judgment of 8 July 1975, Rewe [1975] ECR 843). The Officier van Justitie in the Netherlands himself admits that the only restrictions which are admissible are those which are ‘reasonable and proportionate to the aim it is sought to achieve’.

Consequently I have to consider, within the terms of reference laid down by the first question of the national court, whether the production of the reports required under the Netherlands rules certifying that the batches sold by Centrafarm correspond to and are the same as the batches purchased in the United Kingdom, which comply with a file deemed to be in the possession of the Netherlands authorities, is not a superfluous formality.

Although the qualitative and quantitative composition and the method of preparation are the determining factors for the purpose of authorizing a medicinal preparation, there is no doubt that the same cannot normally be said to the same extent of the packaging or presentation. If all that a parallel importer does is to repack a medicinal preparation, it would be going too far to conclude that these operations caused the constituents to deteriorate and have some therapeutic effect on this medicinal preparation, provided that these particular operations were carried out under the supervision of a qualified pharmacist and that the origin of each batch of, this medicinal preparation sold by the importer can be identified, which would make it possible if need be to bring the ‘production line’ and the marketing to a halt, or to identify and confiscate the whole of the suspect batch.

In fact this requirement does appear to meet organizational exigencies and administrative convenience. The Netherlands legislature has delegated to the sole importer alone the task of checking whether a batch of imported products conforms to the medicinal preparation officially authorized. But if the parallel importation is only possible with the consent, granted at the discretion of a manufacturer, who moreover has every interest in refusing his authorization, then this requirement does not appear to me justified by the exception of public health.

The application of a system based upon presumptions — and this is what the Netherlands system proves to be in the final analysis — under which a challenge on a question of fact or a point of law cannot be made to the same extent and in the same conditions in the case of domestic and imported products, has already been criticized in your judgment of 30 September 1975 in Joined Cases 89/74, 18 and 19/75, Arnaud [1975] ECR 1023. Unlike the fraudulent practices in the case of wine it must be borne in mind that marketing the product of the parallel importer has not given rise to any ground for the belief that there is any such risk (cf. Judgment of 8 July 1975, Rewe [1975] ECR 860). It is reasonable to suppose that if the slightest difficulty had occurred it would have been reported without fail.

The Member States have as a general principle a considerable degree of freedom to make rules for the distribution of medicinal preparations and it is understandable that some of them have recourse to methods which make the task of the supervisory authorities as simple as possible. But this freedom stops at the point where the methods selected are no longer strictly essential for achieving the aim sought or where the same objective could be attained by adopting rules which do not restrict free trade so much (see the opinion of Mr Advocate-General Alain Dutheillet de Lamothe in Case 11/70, Internationale Handelsgesellschaft [1970] ECR 1148).

The question then arises how Netherlands law should be adjusted in order to encourage free trade between Member States to the greatest possible extent whilst complying with the well-known requirements of public health.

My Lords, you do not have to answer such a question when exercising your jurisdiction under Article 177. This is exactly what the procedure prescribed by Article 169 has been designed for. Nevertheless I would like to say a few words on the method of ensuring that a medicinal preparation, which is in fact the subject of a parallel importation, conforms to or is identical with the medicinal preparation imported direct from the original manufacturer, other than the method of requiring the importer to have in his possession a report signed by the pharmacist employed by the manufacturer, which he obviously cannot obtain from the latter, if only because it contains manufacturing secrets. Although the Netherlands authorities believe that they can rely only on such a report, it does not appear to me that it would call for undue effort on the part of the Public Health Inspector, to have recourse, as the Commission suggests, to Article 17 (1) of the decree relating to pharmaceutical preparations under which the manufacturer, the importer and the wholesaler must produce, on request, for examination by the public health authorities full particulars of the checks made to ensure that the requirements prescribed by the Netherlands rules have been complied with and to ask the manufacturer to produce the report relating to the manufacture and packaging and presentation of medicinal preparations which later become the subject of a parallel import, if need be by drawing his attention to the fact that, if the request is refused, the authorization to trade in the Netherlands, which he was granted, may be withdrawn.

The inspectorate could in this way, with the help of this report, confirm in its laboratories whether the composition, method of preparation and packaging of the medicinal preparation conforms to the information on the original file. It is this manufacturer who is best placed to show whether there are any differences between the product which be manufactures in different countries and whether these differences are caused by specific provisions of national laws or by any other reason.

In this way respect for the secrecy of manufacturing processes would be protected. If this procedure was to entail further examinations which might be expensive, the inspectorate could under Article 14 (1) of the decree relating to pharmaceutical preparations instruct an independent institute to check, on its behalf, whether the product sold by the parallel importer is from the therapeutic point of view different from the product imported by the original manufacturer.

This would certainly mean heavier burdens for the health inspectorate and for the parallel importer additional expenses and some delay. But such consequences are unavoidable if it is borne in mind that only this method of establishing the position meets the requirements of the protection of public health.

But in my opinion this protection of public health, including the essential factor of public health policy constituted by the cost of medicinal preparations, is well worth such an effort. An example of a rather similar situation is found in the supervision of the safety of imported moter vehicles.

It would also be possible to consider requiring a manufacturer or his appointed importer in the Netherlands to declare, when he lodges his file, or at a later date by way of correction, whether he produces under the same name for different Member States a medicinal preparation which is nevertheless different and to describe the nature and purpose of these differences.

B —

The second situation envisaged by the Netherlands judge is concerned with a pharmaceutical preparation or a proprietary medicinal product which has been authorized and properly marketed in a country from which it is exported to another country on the territory of which a preparation is authorized and marketed, the qualitative and quantitative composition of which contains, as compared with the first, differences of such minor importance that there are grounds for thinking that the manufacturer only introduced them in order to prevent parallel imports. The judge asks you whether in such a case the requirement referred to in the first question is a measure having equivalent effect which is not justified by the exception of public health.

This question is explained by the fact that during the proceedings before the Netherlands judge the expert who was summoned to appear by the Officier van Justitie and who was none other than the Chief Public Health Inspector, stated that there was a difference between English and Netherlands valium and that this difference was that the English tablets contain a little more maize starch and lactose than the Netherlands tablets. But he had stated that he could not say whether this difference had any pharmaceutical effect. Moreover the colouring matters used differed according to the nationality of the tablets and, in his view this could be a matter of importance. Whereupon the advocate appearing for Mr de Peijper, without being contradicted, remarked that the colouring matters used for the English tablets were also allowed in the Netherlands.

My Lords, it may be asked, and more and more people are asking this question, what interest a manufacturer of pharmaceutical products can have in manufacturing in different forms a medicinal preparation intended to be marketed under the same name in different countries and which, looked at purely from the point of view of rationalizing production and costs, should be composed, prepared and checked in exactly the same way.

There is no doubt that some of these different forms may be obligatory under specific national public health rules. But even allowing for these rules the question often remains unanswered, unless the view is taken that the differences in question were introduced for purely commercial reasons with a view to dividing up the market and taking advantage of a profitable situation.

Moreover the fact that the price of the product imported in parallel is much lower than the price of the medicinal preparation sold by the importer appointed by the manufacturer is by no means irrelevant. In fact the cost of public health and therefore of the sickness benefits of social security schemes is a factor forming an integral part of public health policy. The Officier van Justitie takes a somewhat ingenuous view of the matter when he says that the demand for pharmaceutical products depends far less on price and the advertising of these products than does the demand for other products and that this demand is solely determined by the prescriptions of doctors who are not themselves in any way influenced by prices and advertising.

If the sickness insurance funds show such little interest in the cost of health, we have to ask ourselves why there are doctors under contract to social security organizations and pharmacies belonging to mutual benefit societies. We also have to consider why the price system for medicinal preparations is governed by regulations in most Member States and why the manufacturers of medicinal preparations allocate such large sums for advertising with which they bombard the members of the medical profession. These questions raise the whole problem of the cost of medicinal preparations in the social security budget of our Member States.

Consequently I am inclined to the view that a price difference as great as the one between the official price at which Diazepam is sold in the United Kingdom and at which it is sold in the Netherlands raises a presumption of interference with the free movement of goods, if not with the rules of competition under the Treaty.

But in my opinion it is necessary to be quite certain that these differences do not have any therapeutic effect since this will mean that they are only accounted for by the manufacturer's intention to partition the market. It is impossible to be too careful when considering this point.

The essential requirements of public health have to be weighed against the principle of the free movement of goods. I readily admit that it is a little dangerous to give preference to the free movement of goods, even in the second case. This risk seems to me, however, to be negligible.

In the second place the cheapness of a product cannot be weighed against the fact that it may be harmful. But, on the one hand, is not what is good for the English also good for the Dutch? And on the other hand no incident has been reported as yet in the Netherlands concerning the Diazepam put into free circulation by Centrafarm: moreover the product in question is not new. In any case since manufacturers of pharmaceutical products are tempted to make use of differences in the law for the purpose of making profits and partitioning the markets it is impossible to rely on their discretion in this field. Lastly, further substantial evidence of the absence of differences or of the minor nature of the differences between the Valium distributed by the manufacturer and Centrafarm's Diazepam might, if I have correctly understood the question raised by the Judge-Rapporteur and the reply thereto, be the fact that the sole Netherlands distributor imports, if necessary, not only the Valium produced in accordance with the Swiss formula but also the Valium produced in accordance with the English formula.

In other words I share the Commission's view that the prohibition on the marketing of a specific form of medicinal preparation at a time when another form of this preparation is authorized could only be justified under Article 36 if it is shown, on the basis of criteria which are clearly objective, that the use of this form has a therapeutic effect.

In order to avoid the discrimination or distortions prohibited by Article 36 it is primarily the Commission, acting in concert with the competent authorities of the Member States and the Pharmaceutical Committee set up by Council Decision of 20 May 1975 (OJ L 147 of 9. 6. 1975, p. 23) and not the national court to determine these criteria. You are aware that the task of this body is to examine any question in the field of proprietary medicinal products brought up by its Chairman, either on his initiative or at the request of the representative of a Member State. The Commission may also take the opinion of the Committee for Proprietary Medicinal Products mentioned in Article 8 of Council Directive No 75/319/EEC of 20 May 1975 (OJ L 147 of 9. 6. 1975, p. 15), which has been set up in order to facilitate the adoption of a common policy by Member States in relation to authorizations to place these proprietary medicinal products on the market.

The Commission cannot, by sheltering behind national laws, leave the national authorities, the manufacturers and parallel importers in contention with each other.

III —

I must now consider whether, as the Officier van Justitie and the representatives of the British Government maintain, the Netherlands legislation complies with the directives adopted by the Community authorities, even if it is not in fact made mandatory by these directives.

The directives concerned are Council Directive No 65/65 of 26 January 1965 (OJ 22 of 9. 2. 1965, p. 369) and Directive No 75/319 of 20 May 1975 (OJ L 147 of 9. 6. 1975, p. 13).

In this connexion it is not very helpful to maintain, as the Commission does, that these directives only refer to ‘proprietary medicinal products’ and do not apply to the pharmaceutical preparations covered by the questions referred. It seems to me that the product at issue before the national court is a ‘medicinal preparation prepared in advance, marketed under a special name and specially packaged’, that is to say, a ‘proprietary medicinal product’ within the maning of Article 1 of Directive No 65/65. Moreover this court mentions ‘preparation’ or ‘proprietary medicinal products’ without distinguishing between them.

Now Article 3 of the 1965 directive provides that ‘No proprietary medicinal product may be marketed in a Member State without a prior authorization issued by the competent authority of such Member State.’

Under Articles 3 and 4 of Directive No 65/65 the person responsible for marketing the proprietary medicinal preparation shall make application to the competent authority of the Member State where the preparation in question is in fact to be marketed for the issue of the necessary authorization for this purpose, which must be accompanied by particulars and documents specifying inter alia the qualitative and quantitative composition and the method of preparing the medicinal preparation.

Pursuant to Directive No 75/318 (OJ L 147 of 9. 6. 1975, Annex, Part I, B, pp. 3 and 4) the description of the method of preparation must include ‘mention of the various stages of manufacture, so that an assessment can be made of whether the processes employed in producing the pharmaceutical form might have produced an adverse change in the constituents’.

Article 1 of Directive No 75/319 states that ‘Member States shall take all appropriate measures to ensure that the documents and particulars listed in points 7 and 8 of Article 4, second paragraph, of Directive No 68/65/EEC are drawn up by experts with the necessary technical or professional qualifications before they are submitted to the competent authorities. These documents and particulars shall be signed by the experts’.

Under Article 22 of Directive No 75/319, in the case of the export of any batch of a registered medicinal preparation or of an authorized proprietary medicinal preparation, the manufacturer must enclose with the batch in question, for use by the importer, documents relating to its preparation and supervision. Provisions are also laid down in connexion with labelling proprietary medicinal products.

By way of compensation facilities are granted to manufacturers with a view to effecting mutual recognition of authorizations. This arrangement is designed to allow free movement of medicinal preparations for the maximum benefit of public health so long as the pharmacopoeia of the Member States have not been harmonized.

As the advocates for the accused in the main proceedings emphasized, the directives adopted so far are concerned with the case of a manufacturer who produces the same medicinal preparation for the various Member States, prepared, composed and checked in accordance with uniform standards, or with the case of an importer of a medicinal preparation coming from a third country, prepared under these conditions, who, when he markets it in the Member States, comes up against disparities between laws and, for this reason, has to make separate applications for authorizations to the national authorities of each country.

The manufacturer in question is the one, who, according to Article 9 of the second directive, is responsible for marketing a medicinal preparation and, who, having obtained an authorization for this purpose in one Member State, wishes to go on and market it in at least five other Member States, In such a case the Member State which, on the basis of the particulars required by Directive No 75/318 of 20 May 1975, has granted the first authorization, shall, at the request of the manufacturer, forward to the Committee for Proprietary Medicinal Products set up to operate in the Community, a file containing a copy of the first authorization as well as the particulars and documents listed in the second paragraph of Article 4 of Directive No 65/65/EEC. This Committee shall forthwith forward the file to the competent authorities of the other Member States and such forwarding shall be deemed to be equivalent to submitting an application for a marketing authorization to the said authorities.

So the task of this Committee is to ensure cooperation between the competent authorities when examining applications for marketing authorizations, in order to prevent, as far as possible, differing decisions on these authorizations, which for the time being remain purely national decisions (Answer of 30 October 1975 to a written question, OJ C 272 of 28. 11. 1975, p. 11).

On the basis of Article 100 the aim of the approximation of laws is to remove barriers to trade which are the common result of disparities between the national rules of the various Member States. The purpose of the approximation is to remedy only the ‘effect of the disparities between certain national provisions … relating to medicinal preparations which is to impede trade in proprietary medicinal products within the Community’. It only aims at liberating trade in proprietary medicinal products within the Community from these barriers in so far as this liberation should not already result from the application of Articles 9 to 37 of the Treaty to the measures in force in the Member States, taken individually.

But the residuary powers, which are moreover important, left to the Member States by Article 36 in the case of public health cannot be extended by means of directives adopted pursuant to the approximation of laws (Article 100).

Directives adopted in application of this article, just like the ones relating to public policy and equal pay, can only coordinate the measures in force in the Member States: they cannot have any effect on the scope of Article 36.

IV —

Lastly, and in my opinion as an alternative submission, the British Government calls attention to the fact that the replies to the questions referred by the Netherlands court should be sought in the field covered by Articles 85 and 86 and not in the context of Articles 30 to 36 of the Treaty.

There is no doubt that, in so far as the discrimination or distortion was deliberately brought about by one manufacturer, such behaviour could be the subject-matter of a procedure under Article 86.

There is more than one piece of evidence which could raise the presumption that this is the case. In the United Kingdom the Monopolies Commission at the beginning of 1973 ordered the Hoffmann-La Roche group to reduce the sale price of tranquillizers supplied to the National Health Service by 50 to 60 % and to repay the excess profits made in the past by this firm (OJ C 73 of 13. 9. 1973, p. 36). On 30 January 1976 the Kammergericht, Berlin, ordered this group to reduce the price of Valium by 28 %.

In the Netherlands the Department of Economic Control, following an inquiry carried out at Hoffmann-La Roche's place of business in the Netherlands, informed the management of this undertaking as well as the Swiss group that Netherlands rules relating to competition would be applied if Hoffmann-La Roche did not reduce the price of librium and Valium sold in the Netherlands to a satisfactory level, unless they could show good reason why this should not be done. This department does not appear since then to have given effect to its intention to apply these rules (replies of 25 January 1974 to two parliamentary questions, annexed to the report of the debates of the Second Chamber of the Netherlands, Session 1973-1974, Nos 1561 and 1580). Nevertheless the Royal Netherlands Society for the advancement of pharmacy issued a warning to those of its members who obtain by means of parallel imports, in particular in the United Kingdom, cheap supplies of medicinal preparations, of which similar preparations are available in the Netherlands, registered as packaged medicinal preparations, and who do not pass on this advantage to their customers; the Department of Economic Control has been led to strengthen its supervision in this field.

On a Community level the Commission's replies to various written questions asked by Members of the European Parliament show clearly that it decided in 1973 to carry out an investigation under the provisions of Regulation No 17/62 into the pharmacy sector and in particular into the valium and librium sold by the Hoffmann-La Roche group, because of the considerable differences between the prices at which these products are sold in the United Kingdom and in the other Member States (OJ C 68 of 21. 8. 1973, p. 18; OJ C 19 of 27. 1. 1975, p. 24; OJ C 242 of 22. 10. 1975, p. 16; OJ C 1 of 5. 1. 1976, p. 14; see also the report of the debates at the hearing of 13 October 1975, OJ 195, Annex p. 10). Finally, in February 1976 in reply to written question No 657/75, the Commission confirmed that it was carrying out three investigations in this sector pursuant to the rules of competition under the Treaty.

In other words, as the advocates for the accused in the main proceedings have said, the proper question could be whether the adjustment and application by a Member State of its rules so as to allow a manufacturer to take unfair advantage of the differences between pharmaceutical authorizations in different Member States for purely commercial reasons entirely unconnected with Article 36, if indeed they do not conflict with it, is a measure prohibited by Article 30, or, if one prefers, whether by means of national provisions an import monopoly has not been established in the Netherlands for the benefit of a foreign manufacturer and his sole distributor which falls within Article 86.

It is certainly to be regretted that the procedures initiated by the Commission under Regulation No 17, as well as the one it initiated under Article 169 have not yet come to an end so that the precise degrees of liability can be taken into consideration, which is what happened in the sugar cases and the BRT v SABAM case.

But, even if an infringement by an undertaking of Article 86 was to be superimposed on an infringement by the Netherlands of Article 36, it in no way follows that the one infringement would be exclusive of the other: the two infringements may be cumulative, although there would be the risk of finding oneself in the same situation as in the sugar cases where the Italian importers and the European refiners were victims of the Italian rules in the case of invitations to tender for imports.

In keeping with these observations and subject to the reservations which I have made. I submit that the Court should give the following answers:

Article 36 provides no justification for rules adopted by a Member State which make the grant to a parallel importer of a medicinal preparation of another Member State of an authorization to market this medicinal preparation in that Member State conditional upon the importer's proving that the imported medicinal preparation conforms to a medicinal preparation which is in every respect the same and has already been authorized in that Member State, if this proof can only be produced by the importer with the consent, which may be granted or withheld at will, of the manufacturer or of his officially appointed importer.

If the rules of a Member State are based on the presumption that a medicinal preparation, authorized in different forms in that State and the other Member States, is different in each of the Member States for which it is manufactured, and, if these rules make it more difficult for the parallel import of one form of these medicinal preparations lawfully marketed in another Member State than for the importer supplied direct by the manufacturer of medicinal preparations in a form authorized in the Member State responsible for these rules, to produce evidence to the contrary or that the only differences between the medicinal preparation, in the form which is the subject of a parallel import, and the authorized form of this medicinal preparation have no therapeutic effect, these rules amount to a measure having equivalent effect which is not justified by Article 36. It is for the Commission to ensure that objective criteria are laid down which enable it to be made certain that these differences have a therapeutic effect and that they are neither a means of arbitrary discrimination nor a disguised restriction on trade between Member States.

( 1 ) Translated from the French.

Opinion of Mr Advocate General Mayras delivered on 17 March 1976. # Adriaan de Peijper, Managing Director of Centrafarm BV. # Reference for a preliminary ruling: Kantongerecht Rotterdam - Netherlands. # Case 104-75.

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