C-328/92

1. In these proceedings for infringement of the Treaty, the Commission is seeking a dec- laration from the Court that, by requiring in the legislation concerning social security that 3. Article 2, points 3 and 8 of the LCE, the administration award public contracts for which were already the subject of the judg- the supply of pharmaceutical products and ment in Case C-71/92, 4 read as follows: specialities to social security institutions by a direct procedure, and with the social security administration deciding to award nearly all supply contracts directly, the Kingdom of Spain has failed to fulfil its obligations under Directive 77/62/EEC · coordinating proce- dures for the award of public supply con- tracts. Thus the public supply contracts to be awarded were not published in the Official 'Notwithstanding the provisions of the pre- Journal as required by Article 9 of Direc- vious article, this Law shall not apply to the tive 77/62.

2 — As amended by the Real Decreto Legislativo N o 931/86 of 2 May 1986 (BOE N o 114 of 13 May 1986, p. 16920) and the * Original language: German. Real Decreto N o 2528/86 of 28 November 1986 (BOE 1 — Council Directive 77/62/EEC of 21 December 1976 N o 297 of 12 December 1986, p. 40546) for the purpose of (OJ 1977 L 13, p. 1), as most recently amended by Council complying with the directives of the European Economic Directive 88/295/EEC of 22 March 1988 (OJ 1988 L 127, p. Community. 1), which pursuant to Article 20 thereof applies to Spain only 3 — Real Decreto Legislativo N o 931/86 and Real Decreto from 1 March 1992; the whole of the pre-litigation proce- No 2528/86. dure prior to the present proceedings for infringement of the 4 — Judgment in Case C-71/92 Commission v Spain [1993] ECR Treaty took place before that date. I-5923.

5. There was in force until the end of 1990 an agreement concluded between the State 4. The purchase of pharmaceutical products administration and Farmaindustria, the and specialities by hospitals within the social national association of the pharmaceutical security system is governed by Article 107 of industry, under Article 107(4) of the LGSS the Ley General de la Seguridad Social 5 fixing prices and laying down other financial (General Law on Social Security, hereinafter conditions applying to the purchase and dis- referred to as 'the LGSS')· That provision, tribution of the pharmaceutical products and specialities in question. While the agreement was in force, and even afterwards, the social 5 — As amended by Decree N o 2065/74 of 30 May 1974 on the security institutions did not normally, with approval of the consolidated text of the general law on social few exceptions, as in the case of vaccines, security (BOE N o 174 of 20 July 1974, p . 1482).

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publish the supply contracts in the Official award public contracts for the sup- Journal of the European Communities. ply of pharmaceutical products and specialities to social security institu- tions by a direct procedure; and

6. The Commission considers the above- mentioned provisions and the practice of — by awarding nearly all of those awarding supply contracts on that basis to be supply contracts directly, so that no contrary to Community law. contract notices were published in the Official Journal of the European Communities,

7. The Spanish Government, on the other hand, takes the view that the relevant provi- the Kingdom of Spain.has failed to fulfil sions are compatible with Community law. its obligations under Council Direc- It contends that the market in pharmaceuti- tive 77/62/EEC of 21 December 1976; cal products and specialities constitutes, like- wise in accordance with Community law, a highly regulated market in respect of pro- duction, the fixing of prices and the obser- vance of industrial property rights. Further- more, neither the relevant provisions nor the (ii) order the Kingdom of Spain to pay the agreement made on the basis thereof pre- costs. clude observance of the provisions of Com- munity law on publication.

B — Analysis 12. The reference for a preliminary ruling did not proceed to judgment since the plain- tiff in the main proceedings withdrew the action. 9 Nevertheless the Commission pur- 1. Definition of the dispute sued the question of the legal position which it considered to be contrary to Community law.

10. The Commission submits that its atten- tion was first drawn to the problem by a ref- erence for a preliminary ruling 6 from the 13. O n 6 July 1990 the Commission sent a Audiencia Territorial de Sevilla. 7 The main letter of formal notice to the Spanish Gov- proceedings were between the Farmaindus- ernment pursuant to Article 169 of the EEC tria and the Ministry for Health of the Junta Treaty. O n 18 March 1991 it sent a reasoned de Andalucía concerning an invitation to opinion setting a time-limit of one month for tender issued by the Ministry in relation to adopting remedial measures, which was the purchase of medicinal products in disre- extended to 18 June 1991. Finally, on 27 gard of the said agreement. July 1992, it brought the present action for infringement of the Treaty, which was received at the Court on 30 July 1992.

15. Since the agreement represented a sub- stantial p a n of the subject-matter of the dis- pute in the pre-litigation procedure, the question arises as to how far the subject- 17. Finally in the reasoned opinion the matter of the proceedings for infringement alleged infringement of the Treaty is also of the Treaty, H already defined in the pre- worded in general terms: by requiring in the litigation procedure, agreed with that of the legislation on social security that the admin- application. If the subject-matter of the istration award public contracts for the sup- application were even partially new, that ply of pharmaceutical specialities to social could render the application inadmissible. 12 security institutions by a direct procedure, and with the social security administration deciding to award all such supplies to the National Association of Pharmaceutical Undertakings directly, and by failing to pub- lish the contract notices in the Official Jour- nal of the European Communities, the King- 16. The legal basis of the agreement in Arti- dom of Spain has failed to fulfil its cle 107(4) and (5) of the LGSS, the agree- obligations under Directive 77/62 and Arti- ment itself and its alleged incompatibility cle 30 of the EEC Treaty. That wording is with Directive 77/62 and Article 30 of the basically the same as that of the application. EEC Treaty were essential elements of the letter of formal notice. Those aspects are also to be encountered in the reasoned opinion. It is true that the reasoned opinion also objects to Article 107(2) and (3) of the LGSS which, as interpreted by the Commission, lays down that supply contracts are to be awarded directly. O n page 9 of that opinion 18. The Commission did not make the there is a general complaint that the system agreement a central issue in its application of supplying pharmaceutical products to and failed to mention it at all in the form of order sought. There is no reference to Arti- cle 30 of the EEC Treaty in the application, which in that respect causes no problem ió — For the consequences of termination of the infringement of the Treaty before the expiry of the period laid down in the since the omission constitutes a restriction of reasoned opinion, see my Opinion of 26 February 1992 in the subject-matter. In its reply, u the Com- Case C-362/90 Commission v Italy [1992] ECR 1-2353, paragraph 10 et seq. 11 — See the judgment in Case C-296/92 Commission v Italy [1994] ECR I-1, paragraph 11. 12 — See Case C-296/92 Commission v Italy, cited above. 13 — P. 2 of the reply.

22. Even if, in the absence of concrete evi- dence of individual contracts, the volume of contracts for the supply of pharmaceutical products and specialities to social security 20. It is necessary to start from the premise institutions can only be estimated, it must be that since 1 January 1991, that is the period assumed that in view of the spread of social after the expiry of the agreement which gave security institutions in Spain the volume of rise to the proceedings, all public contracts contracts is considerable. In view of the sys- for the supply of pharmaceutical products tematic failure to publish the contract notices and specialities were awarded (with few in accordance with Article 9 of Direc- exceptions 14) to social security institutions tive 77/62, it must be assumed a contrario by the direct procedure. As a rule the supply that supply contracts, which by reason of contracts were not published in the Official their value fall within the scope of the direc- Journal of the European Communities. The tive, were also awarded by the direct proce- period monitored by the Commission covers dure. more than one and a half years, namely from 1 January 1991 to the end of July 1992 when the action was brought. 15 — See Article 1(a) of Directive 77/62. 16 — See Article 5(l)(a) of Directive 77/62. 17 — See Article 20(2) of Directive 88/295. 18 — See the second subparagraph of Article 5(l)(a) of Direc- 14 — Mainly vaccines. tive 77/62, as amended by Directive 88/295.

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19 — See p. 5 of the defence; Council Directive 65/65/EEC of 26 January 1965 on the approximation of provisions laid down by law, regulation or administrative action relating to pro- prietary medicinal products (OJ, English Special Edi- tion 1965-1966, p. 20); Council Directive 75/318/EEC of 20 May 1975 on the approximation of the laws of Member States relating to analytical, pharmaco-toxicological and clinical standards and protocols in respect of the testing of proprietary medicinal products (OJ 1975 L 147, p . 1); Sec- 25. The Spanish Government contended that ond Council Directive 75/319ÆEC of 20 May 1975 on the the pharmaceutical market was highly regu- approximation of provisions laid down by law, regulation or administrative action relating to proprietary medicinal lated and that price controls were acceptable, products (OJ 1975 L 147, p. 13) and the later amending directives: Directive 87/19/EEC (OJ 1987 L 15, p. 31), if not mandatory, in the interests of public Directive 87/21/EEC (OJ 1987 L 15, p. 36) and Direc- health care. The Spanish Government refers tive 89/341/EEC (OJ 1989 L 142, p. 11).

to the Community legislation on the approx- 20 — Council Directive of 21 December 1988 (OJ 1989 L 40, p . 8). imation of provisions laid down by law, reg- 21 — See the fifth recital in the preamble to Directive 89/105.

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procedure for the award of public contracts. the object of the directive, namely to coordi- Even if all those provisions are intended to nate procedures for the award of supply con- encourage the free movement of goods in the tracts by introducing equal conditions of broadest sense, that does not mean that competition and ensuring transparency, 24 observance of the one exonerates from com- would be jeopardized. pliance with the other. The aim of the rules and their addressees are different. It is pre- cisely because those different rules ultimately serve the same purpose that they are not mutually exclusive. 30. The ninth recital in the preamble to Directive 77/62 reads as follows:

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European Communities by reference to the cases a medicinal product is prescribed protection of exclusive rights. That is not in which is not in stock, there are usually rea- keeping with the actual facts, since the mar- sons of extreme urgency within the meaning ket in pharmaceutical products is very much of Anicie 6(l)(d) of the directive. a competitive market.

40. Article 6(l)(d) of the directive allows the award of contracts by the direct procedure 'in so far as is strictly necessary when, for reasons of extreme urgency brought about 37. The extent to which medicinal products by events unforeseeable by the contracting may, on account of the protection of exclu- authorities, the time-limit laid down in the sive rights, be obtained only from one manu- procedures covered by Article 4(1) and (2) 3 5 facturer in relation to the total needs of the cannot be kept'. social security institutions cannot be deter- mined here in the absence of specific data. It is clear, however, that it cannot cover all pharmaceutical products and specialities and that it is for the Member State which relies on the exception to adduce grounds. 41. All the conditions laid down in the pro- vision must be met cumulatively in order to justify an exception. That was decided by the Court in relation to the corresponding pro- vision in Directive 71/305/EEC 3 6 on the coordination of procedures for the award for public works contracts. 37

38. In the result, Article 6(1 )(b) may be relied on for at most only a part of the sup- ply contracts for pharmaceutical products, to be specified by the Member State concerned. 42. In cases in which a medical prescription cannot be satisfied at once because the pre- scribed medicinal product is not in stock in the pharmacy concerned, the contracting authority can no doubt rely on Arti- cle 6(l)(d). In the case of such individual

orders, the value of the supply contract is menting regulation have already been dis- generally so small that it will not fall within cussed in Case C-71/92. In its judgment the scope of the directive. Article 6(1 )(d) of 17 November 1993, the Court held that cannot therefore normally be relied upon to by maintaining those provisions in force the justify the procedure for the award of public Kingdom of Spain had failed to fulfil its obli- contracts for the supply of pharmaceutical gations under Directive 77/62, which is at products, to which the Commission has issue in this case, and under Direc- objected. tive 71/305. In the grounds of the judgment, the Court refers to the fact that Articles 2(2) and 3 of Directive 77/62, which hst the pub- lic supply contracts exempted from the directive, did not define the exceptions with regard to the legal nature of the products in 4. The legal position in Spain in relation to question, as the Spanish Government has the award of public supply contracts for phar- done. 38 maceutical products and specialities by social security institutions

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contracts exclude from their scope the mar- 48. Article 107(2) of the LGSS, which lays ket for medicinal products. down that 'the social security authority shall purchase directly from the centres of pro- duction those pharmaceutical products which are to be used in its institutions, whether open or closed, ...', is contrary to Community law even if it imposes no obli- gation, but merely makes it possible, to award a contract by the direct procedure. 47. Finally it need not be decided whether the statutory rules of the Member State man- datorily exclude the general provisions on the publication of invitations to tender and, Costs consequently, Directive 77/62, or whether they offer only the possibility of a divergent procedure beyond the exceptions provided for in Directive 77/62, since any exceptions, 49. Pursuant to Article 69(2) of the Rules of including those of an optional nature, which Procedure of the Court of Justice, the unsuc- are not covered by the directive are incom- cessful party is to be ordered to pay the costs patible with it. if they have been applied for.

C — Conclusion

50. In the light of the foregoing considerations, I propose that the Court:

(1) Declare that,