Supreme Court Rules Neighboring Pharmacists Have Standing in Lawsuit to Cancel New Pharmacy Registration

Court: "Comprehensive Consideration Needed for Location, Size, and Operations of New and Existing Pharmacies"
Supreme Court Sets First Criteria for Recognizing Standing of Existing Pharmacy Operators

The Supreme Court has overturned a lower court's decision that refused to recognize neighboring pharmacists as plaintiffs in a lawsuit seeking to cancel the registration of a newly opened pharmacy. This marks the first time the Supreme Court has presented criteria for determining whether existing pharmacy operators near a new establishment have legal standing as plaintiffs in lawsuits seeking to revoke pharmacy registration approvals.

The Supreme Court found that, unless there are special circumstances, existing pharmacy operators who lose opportunities for prescription dispensing due to a new pharmacy have a legal interest in filing a lawsuit to request the cancellation of the registration.

On September 11, the First Division of the Supreme Court, presided over by Justice Noh Taeak, overturned the appellate court’s decision that denied the plaintiffs’ standing in a lawsuit to cancel a pharmacy registration, and remanded the case to the Seoul High Court.

Pharmacist A applied to the head of the Yeongdeungpo District Health Center for pharmacy registration in a unit adjacent to a women’s clinic located in a commercial building in Yeouido-dong, Yeongdeungpo-gu, Seoul. The application was approved.

However, pharmacists B and C, who operated pharmacies in a nearby building, filed a lawsuit seeking to cancel the pharmacy registration, arguing that if a pharmacy were to open on the same floor of the same building as the women’s clinic, it would monopolize prescriptions from that clinic. They cited provisions of the Pharmaceutical Affairs Act that prohibit the opening of a pharmacy when there is a certain spatial relationship between a medical institution and a pharmacy.

The court of first instance ruled in favor of the plaintiffs, citing that the opening of a pharmacy in the unit immediately adjacent to the clinic led to a significant decrease in the plaintiffs’ pharmacy sales based on prescriptions from that clinic. However, the appellate court reached a different conclusion. The appellate court found that the plaintiffs did not have standing to seek cancellation of the decision in question and deemed their lawsuit inappropriate.

The appellate panel stated, "The plaintiffs’ pharmacies and the pharmacy in question are located in different buildings, and there are other pharmacies in buildings near the plaintiffs’ pharmacies. It cannot be said that the main sales of the plaintiffs’ pharmacies are based on dispensing medications from prescriptions issued by the clinic in question. Therefore, it is difficult to consider the decrease in sales based on such prescriptions, due to the opening of the new pharmacy, as significant."

However, the Supreme Court overturned this judgment. The Supreme Court found that the appellate court failed to comprehensively consider factors such as the location and size of the pharmacies in determining whether the interests of existing pharmacies, which are entitled to a fair share of prescription dispensing opportunities from medical institutions, would be harmed by the opening of a new pharmacy.

The panel stated, "Whether there is a risk of harm to the interests of an existing pharmacy should be determined by comprehensively considering factors such as the location, size, and operating methods of the new and existing pharmacies with respect to each medical institution, the distance and accessibility between the medical institution and each pharmacy, and the distribution of nearby pharmacies. If an existing pharmacy has previously dispensed medications based on prescriptions issued by a particular medical institution, it is reasonable to expect that the opening of a new pharmacy will reduce such opportunities. Therefore, the existing pharmacy has standing to seek cancellation of the registration decision."

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