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On the qualification requirements for the owners of pharmacies

Case No. 23/2000

 

THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

RULING

ON THE COMPLIANCE OF PARAGRAPH 2 OF ARTICLE 11 OF THE REPUBLIC OF LITHUANIA’S LAW ON PHARMACEUTICAL ACTIVITIES WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

 

14 March 2002

Vilnius

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Egidijus Jarašiūnas, Egidijus Kūris, Zigmas Levickis, Augustinas Normantas, Vladas Pavilonis, Jonas Prapiestis, Vytautas Sinkevičius, Stasys Stačiokas, and Teodora Staugaitienė

The court reporter—Daiva Pitrėnaitė

Liucija Schulte-Ebbert, a senior consultant to the Legal Department of the Office of the Seimas, acting as the representative of the Seimas of the Republic of Lithuania, the party concerned

The Constitutional Court of the Republic of Lithuania, pursuant to Paragraph 1 of Article 102 of the Constitution of the Republic of Lithuania and Paragraph 1 of Article 1 of the Law on the Constitutional Court of the Republic of Lithuania, on 6 March 2002, in its public hearing, considered case No. 23/2000 subsequent to the petition of the Higher Administrative Court requesting an investigation into whether Paragraph 2 of Article 11 of the Republic of Lithuania’s Law on Pharmaceutical Activities was in compliance with Paragraph 1 of Article 46 and Paragraph 1 of Article 48 of the Constitution of the Republic of Lithuania.

The Constitutional Court

has established:

I

The petitioner, the Higher Administrative Court, was considering an administrative case. The said court suspended the consideration of the case by its ruling and applied the Constitutional Court with the petition requesting an investigation into whether Paragraph 2 of Article 11 of the Law on Pharmaceutical Activities (Official Gazette Valstybės žinios, 1991, No. 6-161; 1993, No. 29-666; hereinafter also referred to as the Law) was in compliance with Paragraph 1 of Article 46 and Paragraph 1 of Article 48 of the Constitution.

II

The petition of the petitioner is based on the following arguments.

Paragraph 2 of Article 11 of the Law provides that pharmacies (save state pharmacies, state joint-stock and charity organisations’ pharmacies) may belong by right of ownership only to the natural persons who have had higher pharmaceutical education or the groups of natural persons in which more than half of the authorised capital of the pharmacy (part thereof) belongs to persons who have had higher or specialised secondary pharmaceutical education. Thus, Paragraph 2 of Article 11 of the Law establishes a limitation on acquisition of property on the grounds of the education of the individual. The petitioner points out that although a pharmacy belongs to the owner, his right of ownership is implemented by the head of the enterprise in respect of whom qualification requirements ought to be established. In the opinion of the petitioner, Paragraph 2 of Article 11 of the Law conflicts with the provision of Paragraph 1 of Article 46 of the Constitution that Lithuania’s economy shall be based on the right to private ownership, freedom of individual economic activity, and initiative, as well as with the provision of Paragraph 1 of Article 48 of the Constitution that every person may freely choose an occupation or business.

III

In the course of the preparation of the case for the Constitutional Court hearing, written explanations were received from the representative of the party concerned, the Seimas, who is L. Schulte-Ebbert, a senior consultant to the Legal Department of the Office of the Seimas. In her explanations she maintains that under the Constitution, the state has the right to regulate economic activity so that it serves the general welfare of the nation (Paragraph 3 of Article 46); the state also has a duty to defend the interests of the consumers (Paragraph 5 of Article 46). The provisions of Paragraph 2 of Article 11 of the Law, establishing certain limitations on the right of ownership to possess pharmacies are related to an exceptional character of pharmaceutical activities. Pharmaceutical activities are of crucial importance to the entire society. The activity of a pharmacy is a particularly important part of pharmaceutical activities. This activity is related to special goods, which are medicines and medicinal substances, therefore, special requirements may be applied to such an activity.

The representative of the party concerned points out that in modern society the freedom of economic activity must be coordinated with the interests of the society. The right of ownership and freedom of economic activity are of social nature and limitations may be imposed upon them. The limitations established in the Law are related only to the pharmaceutical activities directly linked with people’s health. In an attempt to ensure that only safe, high quality and effective medicines be used, the professional knowledge of the owner of the pharmacy, of its head and of the specialists working in the pharmacy is equally important.

In the opinion of L. Schulte-Ebbert, Paragraph 2 of Article 11 of the Law on Pharmaceutical Activities is in compliance with Paragraph 1 of Article 46 and Paragraph 1 of Article 48 of the Constitution.

IV

In the course of the preparation of the case for the Constitutional Court hearing, written explanations were received from K. Kuzmickas, Chairperson of the Committee on Health Affairs of the Seimas of the Republic of Lithuania, A. Klišonis, J. Matulevičius, V. Nekrašas, J. Olekas and V. Šustauskas, who are members of the Committee on Health Affairs of the Seimas of the Republic of Lithuania, K. R. Dobrovolskis, Minister of Health of the Republic of Lithuania, E. Gentvilas, who was then Acting Minister of Economy of the Republic of Lithuania, R. Stanikūnas, Chairperson of the Competition Board of the Republic of Lithuania, M. Anciuvienė, Deputy Director General of the European Law Department under the Government of the Republic of Lithuania, A. Mickis, Head of the Medicines’ Registration Centre of the State Service for the Control of Medicines, S. Janonis, Director of the National Patients’ Fund, U. Trumpa, President of the Lithuanian Free Market Institute, E. Tarasevičius, President of the Lithuanian Pharmaceutical Association, L. Akramas, President of the Pharmacy and Pharmacy Market, A. Blažys, Chairperson of the Association of Manufacturers of Medicines, E. Kvedarienė, Chairperson of the Board of the Provifarma Association of Pharmacies.

V

1. At the Constitutional Court hearing, L. Schulte-Ebbert, the representative of the party concerned, the Seimas, virtually reiterated the arguments set forth in her written explanations.

2. At the Constitutional Court hearing, the following specialists spoke: E. Bartkevičius, Vice-Minister of Health of the Republic of Lithuania, L. Darulienė, Chief of the Legal Division of the Competition Board of the Republic of Lithuania, A. Mickis, Head of the Medicines’ Registration Centre of the State Service for the Control of Medicines, E. Tarasevičius, President of the Lithuanian Pharmaceutical Association, J. Urbienė, Director of the Provifarma Association of Pharmacies.

The Constitutional Court

holds that:

I

1. Paragraph 2 of Article 11 of the Law on Pharmaceutical Activities provides: “Pharmacies (save state pharmacies, state joint-stock and charity organisations’ pharmacies) may belong by right of ownership only to the natural persons who have had higher pharmaceutical education or the groups of natural persons in which more than half of the authorised capital of the pharmacy (part thereof) belongs to persons who have had higher or specialised secondary pharmaceutical education.”

The petitioner doubts whether Paragraph 2 of Article 11 of the Law is in compliance with Paragraph 1 of Article 46 and Paragraph 1 of Article 48 of the Constitution.

2. The petitioner requests an investigation into whether Paragraph 2 of Article 11 of the Law is in compliance with Paragraph 1 of Article 48 of the Constitution. However, it is clear from the reasoning presented in the petition that the petitioner doubts as to the compliance of not entire Paragraph 1 of Article 48 of the Constitution but only its provision that every person may freely choose an occupation or business.

3. Subsequent to the petition of the petitioner, the Constitutional Court will consider whether Paragraph 2 of Article 11 of the Law is in compliance with Paragraph 1 of Article 46 of the Constitution and the provision of Paragraph 1 of Article 48 thereof that every person may freely choose an occupation or business.

II

On the compliance of Paragraph 2 of Article 11 of the Law on Pharmaceutical Activities with Paragraph 1 of Article 46 of the Constitution.

1. Paragraph 1 of Article 46 of the Constitution provides: “Lithuania’s economy shall be based on the right to private ownership, freedom of individual economic activity, and initiative.”

This provision defines the constitutional values upon which the national economy is based: private ownership, freedom of individual economic activity, and initiative.

The notion of individual economic activity is a broad one. It includes the freedom to freely choose business, freedom to freely conclude contracts, freedom of fair competition, equal rights of entities of economic activity etc. The freedom of individual economic activity and initiative is the whole complex of legal opportunities which creates preconditions for an individual independently to adopt decisions necessary for his economic activity (the Constitutional Court’s ruling of 18 April 1996).

The freedom of individual economic activity creates opportunities to realise various aspirations of persons. Under the Constitution, the national economy shall be based on the freedom of individual economic activity and initiative, therefore, one may not establish any such legal regulation creating inappropriate conditions for the implementation of the freedom of economic activity. Under Paragraph 2 of Article 46 of the Constitution, the state shall support economic efforts and initiative which are useful to the community.

2. The freedom of economic activity and initiative are based on the inborn right of an individual to personal freedom, as well as on the inborn right to ownership (the Constitutional Court’s ruling of 20 April 1995).

Paragraph 1 of Article 23 of the Constitution provides that property shall be inviolable. Paragraph 2 thereof stipulates that the rights of ownership shall be protected by law. These constitutional provisions imply that the Constitution, while guaranteeing the protection of ownership, establishes the constitutional right to acquisition of property too, and guarantees protection of this right.

It is noteworthy that the constitutional right of persons to ownership is an essential (necessary) condition for the implementation of the freedom of individual economic activity. When the right of persons to ownership is subject to limitation, thus, freedom of individual economic activity is subject to limitation as well.

3. The right of persons to ownership, the freedom of economic activity, as most of the other rights and freedoms entrenched in the Constitution, are not absolute ones. While exercising their rights and freedoms, persons must observe the Constitution and laws, and must not impair the rights and freedoms of other people (Article 28 of the Constitution). Under Article 46 of the Constitution, the state must regulate economic activity so that it serves the general welfare of the nation, it must defend the interests of the consumers. In these provisions of the Constitution a principle is consolidated establishing the purposes and limits of regulation of economic activity.

Under the Constitution, it is permitted to limit the rights and freedoms of individuals if the following conditions are observed: this is done by law; these limitations are necessary in the democratic society in order to protect the rights and freedoms of other persons as well as the values enshrined in the Constitution together with the constitutionally important objectives; the limitations do not deny the nature and essence of the rights and freedoms; the constitutional principle of proportionality is followed.

Under the Constitution, the right to ownership may be limited due to the nature of property and/or other reasons when in case of non-limitation of this right it would be impossible to protect the values entrenched in the Constitution and damage would be inflicted on a public interest.

4. Under Paragraph 2 of Article 11 of the Law, pharmacies (save state pharmacies, state joint-stock and charity organisations’ pharmacies) may belong by right of ownership only to the natural persons who have had higher pharmaceutical education; a pharmacy may belong by right of ownership to a group of natural persons only when in such a group more than half of the authorised capital of the pharmacy (part thereof) belongs to persons who have had higher or specialised secondary pharmaceutical education. This means that the impugned article of the Law contains a limitation for natural persons or their groups on the possession of a pharmacy by right of ownership.

5. Under Article 1 of the Law on Pharmaceutical Activities, a pharmacy is an enterprise or a sub-division of an in-patient health care body which has been issued a licence for pharmaceutical activities or has been accredited for pharmaceutical activities, in which medicines and medicinal goods are kept, compounded, controlled, and sold to residents, health care (and other) institutions and enterprises; the following is categorised as belonging to pharmaceutical activities which are a part of health activities: compounder, investigation and manufacture of medicines and medicinal substances; dispensation, custody (with the intention to sell), and sale of medicines and medicinal substances; quality control over medicines and medicinal substances; forensic chemical expertise and biopharmaceutical analysis of medicines; pharmaceutical expertise in the course of registering medicines; collecting, analysis and dissemination of pharmaceutical information about medicines. Thus, under the Law, a pharmacy is an enterprise established for the purpose of accomplishment of pharmaceutical economic activity.

The specific character of medicines and medicinal substances as goods determines the fact that pharmaceutical activities are a special area of economic activity. It is an interest of every individual, of the entire society and the state that laws and other legal acts would establish such legal regulation whereby pharmaceutical activities would be conducted only by the individuals who have had special education and are of corresponding qualification. The duty of the legislature to establish such legal regulation arises out of Paragraph 1 of Article 53 of the Constitution which provides that the state shall take care of people’s health.

6. A special role of pharmacists in the area of pharmaceutical activities is underlined in various international documents. The Committee of Ministers of the Council of Europe in the Resolution concerning the pharmacist’s role in the framework of health security adopted on 21 March 2001 recommended that the governments of the member states, for the purpose of adapting their regulations, take into consideration the changing conditions of the market, the development of electronic marketing means, to reflect the pharmacist’s developing role in relation to health security as well as in the areas of the distribution of medicines and the monitoring of their records.

The World Health Organisation, various professional organisations of pharmacists emphasise in their documents the influence of distribution of medicines, as specific goods, upon public health and an important role of the pharmacist as a person possessing special knowledge and corresponding qualification in the distribution of medicines and contribution to the improvement of public health and health activities.

The Declaration adopted in the Third Annual Meeting of the European Forum of Pharmaceutical Associations and the World Health Organisation Regional Office for Europe, which took place on 30–31 May 1994, points out that in an attempt to effectively accomplish the professional duties of pharmacies as a primary link of health care in the interest of public health and in order to ensure the protection of people’s health and proper use of medicines, certain principles must be necessary, which must be reflected in laws and administrative measures in order to achieve these objectives. One of such principles is as follows: the pharmacist who is governed by strict rules of professional conduct and ethics personally has final control over supply of medicines to the public; the pharmacist must have complete managerial control over the pharmacy, free of economic influence of non-pharmacist owners.

7. It needs to be noted that European Union law does not regulate particular issues of ownership of pharmacies and permits the member states to decide by themselves the questions concerning regulation of relations of ownership of pharmacies. As regards regulation of pharmaceutical activities, it is established in many states of the European Union that only individuals who have had pharmaceutical education may found pharmacies and that they may belong by right of ownership to such individuals only. In some states of the European Union pharmacies may belong by right of ownership not only to individuals who have had pharmaceutical education but to other natural persons as well.

8. In the context of the case at issue, one must emphasise that the provision “the State shall take care of people’s health” of Paragraph 1 of Article 53 of the Constitution implies that laws and other legal acts must establish such legal regulation of pharmaceutical activities which would make pre-conditions for creating a wide network of pharmacies, also that pharmacies would have sufficient stock of high quality, effective and safe medicines, that the system of medicines’ supply would operate smoothly, that the prices of medicines would be regulated, that the acquisition of medicines would not be inconvenienced, that the information about medicines and their use would be easily accessible and properly published etc. Under the Constitution, pharmaceutical activities must be regulated so that the freedom of individual economic activity and initiative as well as fair competition would not be restricted. The state must exercise control so that pharmaceutical activities would be conducted for the good of people’s health and public health activities.

9. While considering whether Paragraph 2 of Article 11 of the Law is in compliance with the Constitution, the fact is of essential importance that the right to ownership is a constitutional right of persons and that the legislature, when imposing limitations on this right, is bound by the norms and principles of the Constitution: this right may not be limited more than it is necessary in a democratic society, when one has to protect the values entrenched in the Constitution as well as the public interest.

10. It follows from the provision “the State shall take care of people’s health” of Paragraph 1 of Article 53 of the Constitution that the protection of people’s health is a constitutionally important objective and a public interest. When one decides whether Paragraph 2 of Article 11 of the Law establishes the limitations on an individual’s right to ownership which are indispensable in an attempt to ensure people’s health care, the fact is of essential importance that, under the Constitution, the presence of a public interest (constitutionally important objective) may serve the grounds for limitation on persons’ right to ownership only in such a case when due to the nature of property and/or other reasons when in case of non-limitation of this right it would be impossible to protect the values entrenched in the Constitution and damage would be inflicted on a public interest.

11. It should be noted that after the Law had established that pharmacies (save state pharmacies, state joint-stock and charity organisations’ pharmacies) may belong by right of ownership only to the natural persons who have had higher pharmaceutical education or the groups of natural persons in which more than half of the authorised capital of the pharmacy (part thereof) belongs to persons who have had higher or specialised secondary pharmaceutical education, the right of other natural persons to possess pharmacies by right of ownership is limited without taking into consideration the fact that a mere being the owner of a pharmacy does not mean that the owner has the right to conduct the activities which, under the Law on Pharmaceutical Activities, may be conducted only by a person who has had an established pharmaceutical education and possessing necessary qualification.

The owner of an enterprise licensed for pharmaceutical activities (i.e. a pharmacy) may not be identified, of its own accord, with pharmacists or other persons conducting pharmaceutical activities. As it has been mentioned, only the persons who have had pharmaceutical education and who possess necessary qualification may conduct pharmaceutical activities. The laws may also establish additional requirements for the persons linked with compounder, custody, control and sale of medicines, which would ensure the security of people’s health.

12. One must emphasise a social function of ownership. Ownership includes obligations (the Constitutional Court’s ruling of 21 December 2000). The owner, while enjoying the right to possess, use and dispose of his property, may not violate laws as well as the rights of other persons. The pharmacy is an enterprise licensed for pharmaceutical activities, i.e. activities which are part of public health activities and which are related to goods of a specific character—medicines and medicinal substances, therefore, the laws may and must establish such limitations on the subjective rights of pharmacies’ owners so that in the pharmacies belonging by right of ownership to the latter only the individuals who possess pharmaceutical education and necessary qualification might be able to control the professional activities of the pharmacists working in such pharmacies, might be able to head such pharmacies and might be able to conduct managerial control in the same. Under the Constitution, the laws must establish such regulation of pharmaceutical activities so that the economic interests of pharmacies’ owners would not cast into the shade the activities of pharmacies conducted in the interest of people’s health and of public health activities.

13. It has been mentioned that under the Constitution, the right to ownership may be subject to limitation due to the nature of property and/or other reasons when in case of non-limitation of this right it would be impossible to protect the values entrenched in the Constitution and damage would be inflicted on a public interest. Under the Constitution, it is prohibited to limit the right of ownership of a person on the basis of the person’s education. The requirements for pharmaceutical education and necessary qualification must be imposed on the persons conducting pharmaceutical activities in pharmacies. It is not permitted to impose requirements for education on the persons who attempt to possess pharmacies by right of ownership.

Paragraph 2 of Article 11 of the Law to the extent that it provides that pharmacies may belong by right of ownership only to the natural persons who have had higher pharmaceutical education or the groups of natural persons in which more than half of the authorised capital of the pharmacy (part thereof) belongs to persons who have had higher or specialised secondary pharmaceutical education limits the right of other natural persons to possess pharmacies by right of ownership.

On the grounds of the arguments set forth, the conclusion should be drawn that Paragraph 2 of Article 11 of the Law on Pharmaceutical Activities to the extent that it limits the right of natural persons without higher pharmaceutical education and that of groups of natural persons to possess pharmacies by right of ownership conflicts with Paragraphs 1 and 2 of Article 23 of the Constitution.

14. It has been mentioned that the freedom of individual economic activity and initiative entrenched in Paragraph 1 of Article 46 of the Constitution is based upon the right of persons to ownership. It has already been held in this Ruling that Paragraph 2 of Article 11 of the Law to the above-mentioned extent limits the constitutional right of persons to ownership and is in conflict with Paragraphs 1 and 2 of Article 23 of the Constitution. It needs to be noted that when the right of persons to ownership is limited, the freedom of individual economic activity becomes limited, too. Such limitations should be deemed to be disproportionate.

On the grounds of the arguments set forth, the conclusion should be drawn that Paragraph 2 of Article 11 of the Law to the extent that it limits the right of natural persons without higher pharmaceutical education and that of groups of natural persons to possess pharmacies by right of ownership conflicts with Paragraph 1 of Article 46 of the Constitution.

III

On the compliance of Paragraph 2 of Article 11 of the Law on Pharmaceutical Activities with the provision of Paragraph 1 of Article 48 of the Constitution that every person may freely choose business.

1. The provision of Paragraph 1 of Article 48 of the Constitution that every person may freely choose business means that every individual has a constitutional right to decide by himself as to what business to choose. The right to freely choose business is one of necessary conditions in order to satisfy the vital needs of an individual and to occupy a proper place in the society. The constitutional provision that every person may freely choose business is based on a generally recognised concept of the freedom of a human being. On the other hand, the said constitutional right of every person to freely choose business implies that the state has a duty to create corresponding legal pre-conditions for the implementation of this right. The provision of Paragraph 1 of Article 48 of the Constitution that every person may freely choose business is related to the provision “Lithuania’s economy shall be based on the right to private ownership, freedom of individual economic activity, and initiative” of Paragraph 1 of Article 46 of the Constitution.

2. It has already been held in this ruling of the Constitutional Court that Paragraph 2 of Article 11 of the Law to the extent that it limits the right of natural persons without higher pharmaceutical education and that of groups of natural persons to possess pharmacies by right of ownership conflicts with Paragraphs 1 and 2 of Article 23 and Paragraph 1 of Article 46 of the Constitution. Having held this, one is also to hold that Paragraph 2 of Article 11 of the Law to the above-mentioned extent restricts the constitutional right of persons to freely choose business.

On the grounds of the arguments set forth, the conclusion should be drawn that Paragraph 2 of Article 11 of the Law to the extent that it limits the right of natural persons without higher pharmaceutical education and that of groups of natural persons to possess pharmacies by right of ownership conflicts with the provision of Paragraph 1 of Article 48 of the Constitution that every person may freely choose business.

Conforming to Article 102 of the Constitution of the Republic of Lithuania and Articles 53, 54, 55 and 56 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania gives the following

ruling:

To recognise that Paragraph 2 of Article 11 of the Republic of Lithuania’s Law on Pharmaceutical Activities to the extent that it limits the right of natural persons without higher pharmaceutical education and that of groups of natural persons to possess pharmacies by right of ownership conflicts with Paragraphs 1 and 2 of Article 23, Paragraph 1 of Article 46 and Paragraph 1 of Article 48 of the Constitution of the Republic of Lithuania.

This ruling of the Constitutional Court is final and not subject to appeal.

The ruling pronounced in the name of the Republic of Lithuania.

Justices of the Constitutional Court:                                                   Egidijus Jarašiūnas

Egidijus Kūris

Zigmas Levickis

Augustinas Normantas

Vladas Pavilonis

Jonas Prapiestis

Vytautas Sinkevičius

Stasys Stačiokas

Teodora Staugaitienė