Federal Administrative Court, Decision C-634/2018 of 16 April 2019

13 May 2019 – Recently, the Federal Administrative Court had to reassess a case regarding a license for the import, export and wholesale trade with medicinal products.

In May 2013, Swissmedic initially opened administrative criminal proceedings against the plaintiff, a specialist in gynecology, on suspicion that he carried out unauthorized wholesale trade of medicinal products. In June 2013, the plaintiff applied for a license for the import, export and wholesale trade of medicinal products for his doctor’s practice, operated as a sole proprietorship. Swissmedic and, on appeal, the Federal Administrative Court refused to grant such license due to the fact that the plaintiff, in his capacity as a board member of a clinic “B AG”, carried out the wholesale trade without license for many years and, therefore, did not fulfil the prerequisite of trustworthiness within the meaning of art. 10 para. 2 (today: art. 6 para. 1) of the Ordinance on Authorizations in the Area of Medicinal Products (SR 812.212.1).

In its judgment 2C_186/2017 of 15 January 2018, the Federal Supreme Court, applying the principle of proportionality (art. 5 para. 2 of the Swiss Constitution), ruled in favor of the plaintiff that the Federal Administrative Court, when rejecting the plaintiff’s appeal, should have examined whether the plaintiff’s wholesale activities in his capacity as a board member of the clinic “B AG” could have been authorized retrospectively. The Federal Supreme Court argued that clinic “B AG”, at the relevant time, had an import license and, according to art. 28 para. 3 of the Therapeutic Products Act (SR 812.21), was therefore legally entitled to the grant of a wholesale trade license without examining whether the necessary requirements, e.g. the requirement of trustworthiness, are fulfilled. This should have been taken into account as a preliminary question when assessing the trustworthiness with regards to the grant of the license for the plaintiff’s sole proprietorship. Therefore, the Federal Supreme Court referred the case back to the Federal Administrative Court for reassessment.

The Federal Administrative Court reexamined the case and came to the conclusion that, for about 13 years (2003 to 2015), the plaintiff engaged in the wholesale trade of medicinal products in his own name, without a license and on a substantial scale by accepting payments of more than 70 million Swiss francs on his private account. The court concluded that, in fact, the wholesale trade had nothing to do with the clinic “B AG”, except that it was operated from the premises of the clinic. It was held that, by deliberately and systematically destroying all records of his wholesale trade at the end of each year, the plaintiff had repeatedly violated the applicable good distribution practice rules and endangered public order and health. Moreover, the plaintiff continued his illegal trade even after administrative criminal proceedings were initiated. Accordingly, the court ruled that a retrospective wholesale trade authorization for both the clinic “B AG” or the plaintiff’s sole proprietorship, respectively, was out of question. Due to the plaintiff’s established lack of trustworthiness, the Federal Administrative, yet again, rejected the plaintiff’s license application.