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Judul : Evidencing the Effectiveness of Health Interventions in Free Movement Cases.
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Evidencing the Effectiveness of Health Interventions in Free Movement Cases.

Angus MacCulloch, Lancaster University Law School

Two judgments on Articles 34/36 TFEU (concerning the free movement of goods) handed down by separate courts in the same week give stark examples of the importance of having a good evidence base before a State seeks to justify a public health intervention in the market. The first example was the judgment of the CJEU in Case C-148/15 Deutsche Parkinson Vereinigung, a preliminary reference considering the compatibility of a German measure setting fixed prices for prescription-only medicines. The second being the judgment of the Inner House of the Court of Session in Scotland in Scotch Whisky Assoc v LA [2016] CSIH 77, where the court upheld the Lord Ordinarys finding that the Scottish Governments plans to introduce Minimum Unit Pricing (MUP) for alcohol were not contrary to Art 34 (following the CJEU reference in Case C-333/14). Both measures involved health justifications for pricing restriction measures that fell foul of Art 34, but the results were very different.

Fixed Price Prescriptions

The German measure in DPV fixed the prices of all prescription-only medicines in Germany; restricting the ability of pharmacists to provide products at a discounted price. DPV, a self-help organisation for Parkinsons disease sufferers, had set up an arrangement with a Dutch mail order pharmacy DocMorris (yes, that DocMorris) to put in place a bonus system for its members. That bonus system was challenged. The scheme was found to infringe Art 34 TFEU as mail-order pharmacies are limited in the services they can offer, and the ability to price competitively is the most likely means they have to access the German market directly 24. The Court then turned to the argument that the system of fixed prices was justified in order to ensure a safe and high quality supply of medicinal products 32. The argument was that without set prices pharmacies may enter into ruinous price competition which might result in the closure of physical pharmacies in rural or underpopulated areas. It was argued those pharmacies alone were well suited to offering safe high quality supplies, tailored advice, and effective checks on medicines 33. At 35 the Court applied the test it set out in the Case C-333/14 SWA reference:

The reasons which may be invoked by a Member State by way of justification must thus be accompanied by an analysis of the appropriateness and proportionality of the measure adopted by that State, and by specific evidence substantiating its arguments.

It was this final point on specific evidence that proved to be crucial in the case, as the Court went on to explain in 36.

that court must examine objectively, through statistical or ad hoc data or by other means, whether it may reasonably be concluded from the evidence submitted by the Member State concerned that the means chosen are appropriate for the attainment of the objectives pursued and whether it is possible to attain those objectives by measures that are less restrictive of the free movement of goods.

In the subsequent paragraphs the Court went through the submissions of the parties and suggested that there was no evidence to substantiate the contention that the scheme was necessary to ensure a uniform supply of prescription-only medicines 37. In fact nothing before the Court suggested that without the system mail order pharmacies, competing on the basis of price, would threaten essential services, such as emergency care or providing activities in the general interest; in fact competition might encourage traditional pharmacies to improve such services [39-40]. The assertion of the Court at [42] is perhaps the most telling:

it should be noted that the existence of a genuine risk to human health must be measured, not according to the yardstick of general conjecture, but on the basis of relevant scientific research.

Because of the failure to provide convincing evidence of the effectiveness of the measure the Court found that it had not been shown to be an appropriate means of attaining the objectives relied on 45. It had therefore fallen at the 1st hurdle in the two-part test. As it was not shown to be appropriate, there was no need to consider if it was necessary.

Minimum Unit Pricing

The Inner House (IH) in SWA were tasked with applying the same two-part test, but this time the result was very different. The courts summary of the evidence presented by the Scottish Govt runs across many paragraphs, 125-[143], citing numerous studies, both domestic and international in scope. The Petitioner challenged the conclusions and methodology of a number of those studies, but the Scottish Government argued that the State had discretion and it was not unreasonable that it would prefer one body of evidence the other, so long as the information which supported the choice was cogent 130. As the IH was acting in an appeal it confined its review, in the most part, to confirming that the Lord Ordinary, in the Outer House, had correctly applied the law. The first important, and perhaps the most important, question was to confirm that the Lord Ordinary had identified the correct aim of the legislation. Both the AG and CJEU, in the reference, had noted that the legislation appeared to have a dual objective, whereas the Lord Ordinary had focused on a particular aim; the reduction of alcohol consumption by harmful and hazardous drinkers. The IH found that the Lord Ordinarys particular view was identical to that of the CJEU. That is perhaps surprising, as many commentators had seen a different emphasis in the CJEU; suggesting that it had struck some form of balance between the narrow goal of dealing with harmful and hazardous drinkers, and the wider goal of reducing general alcohol consumption. The IH implicitly rejected that interpretation of the judgment.

In its examination of the appropriateness of the measure the IH noted the extent of the problem with alcohol consumption; the societal, family, and personal effects of excessive alcohol consumption in Scotland are difficult to over-estimate 178. This assertion was based on the raft of statistical material [which] was produced 180. It also recognised the clear view that the policy would target harmful and hazardous drinkers. It noted that it was possible to attempt to rebut figures used in support of the measure, or counter the conclusions drawn by the Govt, but that there was and is ample objective material to support the proposition 182, and, at 183, that:

the Lord Ordinary cannot be faulted in finding that there was evidence from which it could be inferred that minimum pricing was an appropriate method of securing the objective by tackling the specific consumption of cheap alcohol.

When turning to the proportionality of the measure the IH considered the Petitioners preferred measure, the increase of general taxation, which they argued would be as effective as MUP. But that argument was rejected; the fundamental problem with an increase in tax is simply that it does not produce a minimum price 196. The IH pointed towards evidence that retailers have sold below cost or absorbed, or off-set, tax increases. Also that price increases in the lowest cost products would produce a greater reduction in sales than across the board price increases 199, as trading down to lower cost products was not possible. In fact a general taxation increase would have, disproportionate, undesirable and unnecessary effect on moderate drinkers, who do not generally represent a significant problem in societal terms 200. Finally, at [204], the IH addressed the choice of 50p per unit:

Such a figure, on the material produced, will reduce consumption amongst harmful and hazardous drinkers in that quintile of the population whose health is affected most by the consumption of cheap alcohol. The benefits of this are well documented.

On that basis the Inner House, upheld the findings of the Lord Ordinary and refused the reclaiming motion.

One interesting feature of the case before the IH was that the CJEU had made it clear in its preliminary reference that a domestic court should address the proportionality of the measure at the time it gives its ruling, not at the time the measure was adopted. As the original pleadings were lodged in 2012 a significant amount of new evidence and policy material had become available in the intervening period; including new evidence since the CJEU judgment in the reference was handed down in December 2015. The IH took note of the evidence that was considered by the Lord Ordinary, and the subsequent proceedings, and decided that it was in the interests of justice that any pertinent new material should be considered. But it stressed that the new information would only be significant if it was such that it would have altered the Lord Ordinarys view of the facts. It was apparent that the new evidence merely added to the exiting body of evidence that supported the effectiveness of MUP as an intervention.

Conclusions

In a series of recent decisions, including, for example, Case C-639/11 Poland & Case C-61/12 Lithuania, the CJEU has begun to stress the importance of evidence to support an attempt to justify a restriction on free movement. In DPV we see that requirement given greater emphasis, and a new focus on the type of evidence that will be required. It is not sufficient for a member State to rely on mere assertion or conjecture. They will have to produce more. The Courts preference is clearly for hard statistical or scientific evidence, although it will accept other forms. Domestic courts are charged with ensuring that the State has good evidence to support the appropriateness and proportionality those measures. The judgment of the IH shows how that analysis can be undertaken. It also makes clear that the analysis of proportionality is not an event, rather a process. If a policy stands or falls by its evidence, it must therefore be the case that changes in the evidence base can alter whether that measure is appropriate and/or necessary over time.

Barnard & Peers: chapter 12, chapter 16

Art credit: Beer Street and Gin Lane, William Hogarth

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