Legal Regime of Pharmacy Practice as a Public Service

 

In Decision No. U-I-166/17, dated 5 November 2020 (Official Gazette RS, No. 173/20), upon the request of the Municipality of Tolmin, the Constitutional Court reviewed the constitutionality of the transitional provision of Article 121 of the Pharmacy Practice Act. The provision regulates the harmonisation of concession decisions and contracts of indefinite duration with the fourth paragraph of Article 39 of the same law, which determines that a concession to perform a pharmacy practice may only be granted for a limited period of time.

The statutory regulation of pharmacy practice is based on Article 51 of the Constitution, which regulates the right to health care. The mentioned right requires that the state must foster human health (a legally protected value), which is one of the most important constitutional values. The right to health care is therefore granted to everyone. The right to health care is a positive human right, which requires active conduct from the state. By adopting appropriate measures, the state must ensure effective exercise of this human right. Article 51 of the Constitution requires the legislature to establish an effective system to ensure the health care protection service. In this framework, the legislature determined that pharmacy practice shall be performed as a non-economic public service, which is an original competence of municipalities on the primary level and a competence of the state on the secondary and tertiary levels.

The transitional provision of the Pharmacy Practice Act explicitly regulates only the harmonisation of concession decisions and contracts for concessions that were granted after the Public Private Partnership Act entered into force, but it does not regulate the harmonisation of concession decisions and contracts that were granted or concluded before the mentioned law entered into force, i.e. under the Pharmacy Practice Act previously in force, which allowed concessions to be granted only to natural persons and did not determine a time limit for such. The Constitutional Court thus had to answer the question of whether it is possible, by means of the methods of interpretation of legal regulations, to solve the legally unregulated case of the harmonisation of concession decisions and contracts with an indefinite duration that were concluded before the Public Private Partnership Act entered into force with the regulation under the new Pharmacy Practice Act. A question arose in particular as to what happens to those concessions that were granted without a time limit to individuals whose business later transformed into a commercial company, i.e. a legal entity.

The Constitutional Court assessed that the legislature should regulate the possibility of transferring the majority share of the share capital of a legal entity with a concession that is owned by a pharmacy practice holder. It should determine whether such transfer (which may take place multiple times) is at all admissible, and if so, under what conditions, for example, if the consent of the concession grantor is needed. It should also determine whether in the case of the stated transfer the concession relationship remains unchanged even if the pharmacy practice holder has changed and consequently the ownership structure of the legal entity with a concession has essentially changed. In regulating these issues, the legislature should take into consideration the rules that a concession may only be granted on the basis of a public tender and only for a limited period of time. The transfer of a majority share of the share capital of a legal entity (a concessionaire) and consequently the covert transfer of the concession would namely enable the transfer, without a public tender, of a concession for an unlimited period of time. Furthermore, the legislature should determine procedural rules by which concession transfers are carried out and the content of new concession decisions and contracts.

In the opinion of the Constitutional Court, the provisions of the Pharmacy Practice Act do not answer several complex legal questions raised by the potential transfer of the ownership share of a pharmacy practice holder. The Constitutional Court therefore held that the challenged transitional regulation is unconstitutional already because it contains an unconstitutional legal gap, which is as such inconsistent with the principle of legal certainty (Article 2 of the Constitution).