European Court threat to parallel importing
Parallel importing is likely to be dealt a heavy blow in the European Court following the release of an advocate
general’s legal opinion that companies can limit supplies to countries where governments keep prices artificially low.
The opinion was put forward to the European Court last week after a group
of Greek wholesalers challenged the refusal in November 2000 of GlaxoSmithKline’s
Greek subsidiary to meet orders for Imigran, Lamictal and Serevent. GSK
said that exports by the wholesalers were causing shortages and started
to supply the products direct to pharmacies and hospitals. It subsequently
reinstated supplies to wholesalers, but refused to meet orders in full.
The wholesalers claimed that this was an abuse of a dominant position
and breached competition law.
Advocate general Jacobs concluded that a breach of competition law did
not necessarily occur if the only reason for refusing to supply a product
was to limit parallel trade. He further concluded that such a refusal
could be objectively justified if the price differential that gives rise
to parallel trade is the result of state intervention.
The opinions of advocate generals are not binding on the court, but they
are rarely rejected. Their role is to present reasoned opinions on the
cases being heard by the court. Wholesale drug prices in Greece are the
lowest in the European Union.
Pat Treacy, a competition expert at UK law firm Bristows, said: “State
intervention in pricing across the European Union, which leads to widely
varying prices, together with the rules on the distribution of pharmaceutical
products mean that pharmaceutical companies may legitimately try to protect
themselves against cheap imports. All the more so, since the price reductions
are often not passed on to consumers.”
The president of the European Association of Euro-Pharmaceutical Companies,
Hans Bøgh-Sørensen, disagreed, saying: “Parallel
trade is the only form of price competition to monopolistic patent-protected
brands, and Europe’s already financially stretched public health
care systems and patients will be the main losers if big multinationals
can continue unabated to artificially limit supplies to wholesalers and
partition the EU single
market.”
The EAEPC also believes that counterfeiting will increase if the advocate
general’s opinion is accepted by the court and companies are allowed
to restrict supplies.
“The situation with product shortages, an inevitable and demonstrable
side effect resulting from the imposition of supply quotas, would be
expected to worsen, threatening patient health and increasing the workload
of doctors and pharmacists,” it said. “Market shortages may
also attract the attention of counterfeiters, whereas up to now the frequency
of counterfeit medicines found in the supply chain in Europe has been
remarkably rare.” |
The
Pharmaceutical Journal
Acrobat
Reader