Genri Goto, CEO of Kenko.com Inc. (TOKYO:3325), Japan’s largest online drug store, has reacted with shock and anger to the March 30 decision by Tokyo District Court to reject his firm’s suit alleging Ministry of Health, Labor & Welfare bureaucrats abused their power in enacting regulations that effectively ban online sales of non-prescription pharmaceuticals.
Comments on the ruling against Kenko.com
“We are shocked and angry that the court has turned a blind eye to the blatant abuse of bureaucratic power by Ministry officials,” Goto said. “With this decision, the court has turned a deaf ear to the legitimate concerns of both online merchants and consumers. It is deeply shocking to see a Japanese court endorse the flagrant efforts of bureaucrats to favor entrenched business interests.”
“By endorsing the bureaucrats’ ridiculous contentionthat face-to-face contact at point of sale is necessary to ensure consumer safety,” Goto continued, “the court has ignored the clear intent of the relevant legislation. The Revised Pharmaceutical Affairs Law, enacted in 2006, required only that consumers be notified in writingof side-effect risks, and only for the most risk-prone products. Going against accepted best practices in all other advanced nations, Ministry officials introduced the face-to-face requirement for a broad range of products. This was done for one reason only: to benefit incumbent retailers favored by the bureaucracy.”
Kenko.com is extremely concerned that this case will serve as a bad precedent that encourages the nation’s elected leaders, and even the courts, to neglect their responsibility to ensure that the bureaucracy functions both lawfully and transparently.
If Japanese citizens cannot count on their government to provide a level and transparent playing field for business; if our economy is distorted in order to favor entrenched interests; Japan will not be able to grow the new businesses and new industries we need in order to revive our declining economy. Foreign investors and Japanese entrepreneurs will focus their efforts on other countries that encourage innovation.
We regard the court’s verdict as completely unjust. Therefore, Kenko.com Inc. will move immediately to appeal this decision and persist in our efforts to restart online OTC (“over-the-counter”) pharmaceutical product sales.
Basic details of the lawsuit
Tokyo District Court: 2009 (Gu) No. 256, in charge: Civil Affairs Department No. 2
Plaintiffs: Kenko.com Inc. and Wellnet Corp.
Suit filed: May 25, 2009
Decision: March 30, 2010
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Content of the suit
(１) Outline of claim
a. We seek to confirm our right (legal standing) to engage in sales of Class 1 and Class 2 pharmaceutical products using methods such as mail order sales.
b. With regard to the ministerial ordinance (Ministerial Ordinance No. 10 of the Ministry of Health, Labor & Welfare, enacted on February 6, 2009) that revised various enforcement rules of the Pharmaceutical Affairs Law, we seek to confirm the invalidity of the revision provisions that added the following provisions: Article 15, Part 4, Paragraph 1, No. 1 (prohibition of sales by mail order, etc.); Article 159, Part 14; Article 159, Part 15, Paragraph 1, No. 1; Article 159, Part 16, No. 1; and Article 159, Part 17, No. 1 and No. 2 (the portion requiring so-called "face-to-face sales").
c. We seek revocation of the revision provisions of "b" above.
(２) Decision content
1. "The demands in both Paragraph “b” and Paragraph “c” in the outline of claim of this lawsuit are rejected." (Remainder omitted)
2. The other demands of the plaintiffs (Paragraph “a” in the outline of claim) are rejected.
*Reference: Our May 25, 2009 press release concerning the filing of the lawsuit.
Kenko.com profile （http://en.kenko.com/company/index.html）
Established in May 2000, Kenko.com, Japan’s largest online drug store, offers more than 120,000 health-related products, including nutritional supplements, cosmetics, personal items, healthcare equipment, etc.). Since June 2004, Kenko.com Inc. has been listed on the Tokyo Stock Exchange (Mothers Section) under the stock code 3325.
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