Introduction
On 26 October 2016, the Court of Justice issued a judgment in Hecht Pharma v Hohenzollern Apotheke, (owned by Winfried Ertelt) (Case C-276/15) that clarifies the reach of the EU medicines regulatory framework with respect to medicinal products manufactured in a pharmacy. The Court ruled that a pharmacist’s manufacture of incense-extract capsules fell outside the scope of Directive 2001/83/EC as amended, (the “Medicines Code”) and as such, do not require a marketing authorisation.
The healing properties and biblical connotations of frankincense are widely recognised. Indeed, the Advocate General opinion recognised the “spiritual, therapeutic and olfactory properties ever since one of the wise men, Melchior, sourced it from his native Arabia.”1 The instant case is unlikely to reach the notoriety of the quest of the three wise men. Nevertheless, the decision will likely be welcomed by pharmacists seeking clarity on the boundaries of legitimate preparatory activities that can be undertaken without engaging the onerous provisions of the Medicines Code. The decision also creates an apparent regulatory lacunae which will be discussed in further detail below.
Case summary
Hecht Pharma (the Applicant) sells incense capsules in Germany as a food supplement. The Applicant sold these products to a pharmacy owner, Mr Eltelt (the Defendant). The Defendant then applied a manufacturing process that led to the sale of ‘incense-extract capsules’ (Weihrauch-Extrakt-Kapseln). These capsules were marketed as medicinal products (without a marketing authorisation). The Defendant also promoted the capsules in an information sheet for patients and a brochure. The Applicant sought an injunction on the grounds that these were promotional activities and contravened the Article 87 prohibition on advertising of unauthorised medicinal products.2
The injunction was dismissed at first instance and again on appeal which prompted the Applicant to pursue a CJ reference. The outcome of the Applicant’s appeal was therefore dependent upon whether the ‘incense extract capsules’ marketed and advertised by the Defendant must be authorised under the Medicines Code.
Legal framework
The Scope of the Medicines Code is set out in Article 2(1) which provides:
‘This Directive shall apply to medicinal products for human use intended to be placed on the market in Member States and either prepared industrially or manufactured by a method involving an industrial process.’
Further, in the context of the EU pharmaceutical regulatory framework, the starting position is that no medical product can be placed on the market without a valid authorisation granted in accordance with EU law.3
The exceptions to this overarching principle are narrowly construed. The derogations applicable in the instance case concern Article 3 of the Medicines Code.
However, the starting position in this case was to assess whether the activities of the Defendant engaged Article 2. If they did then the Applicant’s injunction would succeed because the Defendant would require a marketing authorisation and further the promotional activities would de facto fall foul of the Article 87 prohibition on advertising on unauthorised medicinal products.
When assessing the scope of Article 2, the Court noted that the Medicines Code does not define the concepts of ‘prepared industrially’ and ‘manufactured by a method involving an industrial process’. However, it was determined in the earlier Abcur case that those terms must “include, at the very least, any preparation or manufacture involving an industrial process” and that “such a process is characterised in general by a succession of operations”.4 In Abcur it was held that the production of significant quantities of a medicinal product coupled with large-scale or serial batch production of magistral formulae were activities characteristic of industrial preparation or manufacture by a method involving an industrial process’ and that such activities fell within the scope of Article 2 of the Medicines Code.5 In the earlier Advocate General opinion published on 30 June 2016 (the “A.G Opinion”) the facts of Abcur were cited in order to highlight the important distinction in scale of manufacturing activities. The A.G Opinion reasoned that the products in question in the instant case are essentially the result of an exercise of individual craftsmanship by artisanal methods by an official pharmacy. To support this conclusion, the Advocate General also referred to the production limitation of 100 packages imposed by German law as evidence that the production activities in this case did not involve any ‘significant quantity’.6
The Court of Justice has upheld the A.G Opinion ruling that the medicinal products in question do not fall within the scope of Article 2 of the Medicines Code. That determination ultimately rendered the remaining determination on Article 3 null. However, the Court acknowledged that should the German Court reject this position then it would become necessary to examine the applicability of Article 3.
Based on the facts presented, the Court was able to dismiss Article 3(1) as an irrelevant consideration on the basis that this exception is limited to medicinal products prepared in a pharmacy in accordance with a medical prescription for an individual patient (commonly known as the magistral formula). The Court then addressed the Article 3(2) derogation to any medicinal products prepared in a pharmacy in accordance with the prescriptions of a pharmacopoeia and that are intended to be supplied directly to patients served by the pharmacy in question. The Court considered that the implementation of this exception is subject to a cumulative set of conditions that must be fulfilled namely: the products must be prepared (i) in a pharmacy; (ii) in accordance with the prescriptions of a pharmacopoeia; and (iii) intended to be supplied directly to the patients served by the pharmacy in question. However, the Court ultimately remained deferential to national law on this issue. It held that it remains for the German (referring) Court to ascertain whether the medicinal product at issue were prepared in accordance with the prescriptions of a pharmacopoeia. Therefore, Article 3(2) must be interpreted as not precluding provisions of national law that require pharmacists to comply with the pharmacopoeia during the manufacture of officinal formulae.
Comment
At first blush, this case should provide welcome relief to pharmacists insofar as it clarifies the boundaries of legitimate pharmacy practices that can be undertaken without engaging the onerous requirements of the Medicines Code. So, applying the reasoning in the A.G Opinion, pharmacists involved in activities that resemble ‘individual craftsmanship by artisanal methods’ would continue to be exempt from the scope of the Medicines Code.
However, one of the unresolved issues in this case concerns the regulatory gap created by the ruling on the scope of Article 87. When framing the referral questions, the German Court considered that both the requirement to have a marketing authorisation and the prohibition of advertising concern only medicinal products which come within the scope of the Medicines Code and not those which come under one of the exceptions to the Medicines Code. The A.G Opinion agreed with this interpretation and extrapolated on this by saying that Article 87 does not prohibit the advertising of medicinal products that do not have a marketing authorisation. Rather, it prohibits advertising only in respect of medicinal products which do not have a marketing authorisation in cases where one is required.7
However, this analysis creates an inconsistency by neglecting to consider the treatment of pharmacy medicinal products. In the instant case, the pharmacy manufactured and sold the ‘incense-extract capsules’ as medicinal products. Whilst not explicitly addressed by the Court, it is assumed that the products at issue have a sufficiently modifying pharmacological effect that meet the definition of a “medicinal product” under the Medicines Code. So, the situation is created whereby a product meets the pharmacological threshold to be classified as a medicine. However, the manufacturing processes involved in producing it serves to exempt that product from the medicines regulatory framework meaning that the product does not require a marketing authorisation. Nevertheless, that same product can be marketed and advertised as a medicinal product in spite of the general prohibition under Article 87 that would otherwise prohibit the advertising of unauthorised products. In this respect, it is submitted that the Court has created a regulatory lacunae for pharmacy products.
Conclusion
In one respect, this decision provides helpful clarification as to the interpretation of the scope and derogations from Articles 2 and 3 of the Medicines Code respectively. The extensive consideration in the A.G Opinion as to the boundaries of Article 2, should serve as reassurance to pharmacists. However, the decision also creates an apparent regulatory gap. In this author’s view, the legislation has not anticipated a situation whereby an unapproved product falling within the classification of a medicinal product but exempt from the Medicines Code can still be advertised as a medicinal product. This situation appears to contradict the spirit and purpose of the general prohibition created by Article 87 of the Medicines Code.

1 Opinion of Advocate General Szpunar delivered on 30 June 2016
2 Article 87 of the Medicines Code: “Member States shall prohibit any advertising of a medicinal product in respect of which a marketing authorisation has not been granted in accordance with Community law.”
3 Article 6(1) of the Medicines Code: “No medicinal product may be placed on the market of a Member State unless a marketing authorisation has been issued by the competent authorities of that Member State in accordance with this directive”
4 See judgment of 16 July 2015 in Abcur (C 544/13 and C 545/13, EU:C:2015:481, paragraph 50).
5 See judgment of 16 July 2015 in Abcur (C 544/13 and C 545/13, EU:C:2015:481, paragraph 51).
6 Indeed, the Defendant was able to demonstrate that in 2015 a total of 213 packages were dispensed thus showing that the upper limit will rarely be exceeded.
7 Opinion of Advocate General Szpunar delivered on 30 June 2016 at paragraph 44.