WRITTEN QUESTION E-4091/96 by Alexandros Alavanos (GUE/NGL) to the Commission (17 January 1997)

Subject: Pricing of medicines

It appears from newspaper reports that the Commission is taking action against Greece over imports of medicines on the legal grounds that 'setting the wholesale price at the lowest price in a Member State may make it impossible to cover the cost of importing a product from another Member State and therefore stop the marketing of that product'.

As the Commission is surely aware, Greek pharmaceutical companies are required to provide a breakdown of costs to justify any request for price increases.

1. What are the Commission's full legal arguments?

2. Could not the fact that Greek companies provide a breakdown of costs and Greek law requires the lowest European price to be applied be regarded as a means of safeguarding fair competition, given that the lowest price stipulation could be seen as a cost indicator by companies outside Greece?

Answer given by Mr Monti on behalf of the Commission (7 March 1997)

The new rules on the pricing of medicines in Greece are essentially based on the lowest wholesale price in Europe. The Commission takes the view that fixing the wholesale price on the basis of the lowest price in a Member State may, by making it impossible to cover the real cost of a product imported from another Member State, stop the marketing of that product. The outcome would not be the same if the rules provided for a calculation of the real cost of the product and compared the price with those relating to a wider and more objective geographical base, e.g. the European Union. This is because the Member State in which the trader obtains the medicines may charge prices that are appreciably higher than those in the Member State which charges the lowest prices and to which the Greek rules refer.

Moreover, the lowest price charged in a Member State does not reflect the market price; it is the result of reductions or price freezes imposed by that Member State. Price freezes and price reductions therefore have a knock-on effect, despite differences in pricing arrangements as between Member States and differences in general economic conditions between the Member State concerned and the Member State providing the benchmark.

Accordingly, in its interpretative communication 86/C 310/08 on the compatibility with Article 30 of the EEC Treaty of measures taken by Member States relating to price controls and reimbursement of medicinal products ((OJ C 310, 4.12.1986. )), the Commission draws the attention of the Member States to the fact that the various components of the cost must be taken into consideration with a view to establishing prices that are sufficiently remunerative. This is fully in line with the case-law of the Court of Justice ((Judgments in Joined Cases16 to20/79 Openbar Ministerie v Danis [1979] ECR3327, Case56/87 Commission v Italy [1988] ECR2919, Case 181/82 Laboratoria Roussel v Netherlands [1983] ECR3849 and Case231/83 Cullet v Centre Leclerc [1985] ECR305. )).

For the reasons set out above, the Commission has initiated against Greece the procedure under Article 169 of the EC Treaty and is currently considering the reply of the Greek authorities to the letter of formal notice it addressed to them.