## Facts

- Hiroshima Prefecture administered pharmacy licensing under the Pharmaceutical Affairs Law, which authorized the prefecture to refuse a license for a new pharmacy when the proposed location was too near an existing pharmacy.
- Kabushiki Kaisha Sumiyoshi (Sumiyoshi), a corporation, sought a license to open and operate a new pharmacy in Hiroshima Prefecture.
- The Governor of Hiroshima Prefecture denied the license application on the ground that the proposed pharmacy would be located within the prohibited proximity to an existing pharmacy.
- Sumiyoshi challenged the denial, arguing that a distance-based restriction on entering the pharmacy business violated Article 22 of the Constitution of Japan, which protects freedom of occupation subject to the “public welfare.”
- On appeal, the prefectural government defended the licensing restriction by pointing to conditions before the rule: pharmacies were not evenly distributed geographically, with some areas crowded with pharmacies and other areas lacking access.
- The government also argued that excessive crowding and competition could destabilize the pharmaceutical business and lead to unsafe outcomes, including the dispensing of substandard drugs.
- Lower courts rejected Sumiyoshi’s constitutional challenge, and the case reached the Supreme Court of Japan.

## Issues

1. Whether a licensing rule allowing Hiroshima Prefecture to deny a new pharmacy license based on proximity to existing pharmacies violates Article 22 of the Constitution of Japan (freedom of occupation), or is justified as a public-welfare restriction.

## Decision

- The Supreme Court of Japan upheld the pharmacy-location restriction and affirmed the government’s authority to deny a license when the proposed pharmacy was too close to an existing one.
- The Court treated Article 22’s freedom of occupation as subject to regulation for public welfare and accepted pharmacy-location controls as within that regulatory space.
- The Court credited the government’s stated aims as related to public welfare, including correcting geographic maldistribution of pharmacies and avoiding harms associated with destabilizing competition in the drug market.
- The Court concluded the distance-based limitation was not unconstitutional because it was directed at public-welfare objectives and operated as a regulatory condition on licensing rather than a complete bar on the occupation.

## Legal Principles

- Article 22’s freedom of occupation is not absolute; restrictions may be sustained when tied to public welfare.
- In the area of social and economic regulation, courts generally give the political branches and licensing authorities broad discretion; a measure is likely to be upheld if it bears a reasonable relation to a legitimate public-welfare aim.
- Public welfare in occupational licensing may include public-health and safety concerns in the distribution and dispensing of medicines, as well as concerns about maintaining stable conditions for safe pharmaceutical services.
- A location-based licensing condition may be constitutional when it functions as a structured limit on entry in a particular area, rather than eliminating the ability to engage in the occupation altogether.

## Conclusion

Kabushiki Kaisha Sumiyoshi v. Governor of Hiroshima Prefecture upheld Hiroshima’s distance-based pharmacy licensing restriction against an Article 22 challenge, finding that the proximity rule served public-welfare objectives such as better geographic distribution of pharmacies and reducing risks to safe drug dispensing associated with overcrowded competition.


Kabushiki Kaisha Sumiyoshi v. Governor of Hiroshima Prefecture (Japanese Drug Store Case), 29 Minshu 572 (1975)