European Court of Justice gives opinion on parallel importing of medicines

A preliminary opinion from the European Court of Justice on parallel importing has been welcomed by GlaxoSmithKline, but has disappointed cross-border medicine wholesalers.

GSK is seeking confirmation that it was within its rights to impede parallel trade from Spain, but the final ruling is not expected for several months.

The case goes back to 2001, when the EC argued that GSK was breaching EU rules by charging Spanish wholesalers more for its products if they were to be sold on in other member states.

GSK claimed the arrangement was necessary to protect profits and the additional resources, which it obtains through the restriction of parallel trade, can be invested in r&d.

The EC rejected that argument and prohibited GSK's general sale conditions.

GSK appealed and the European Union's junior Court of First Instance (CFI) annulled it. While the CFI agreed that competition was potentially harmed, it said the EC should not have rejected GSK's request for exemption simply because there was no immediate proof of a contribution to the promotion of technical progress (through the development of new drugs).

GSK, the EC and trade associations also appealed against the CFI judgement. This case is before the ECJ and advocate general Verica Trstenjak has now given her preliminary opinion on it.

She too found that there is a prima facie breach of EU competition rules, but urged that the possible justification for such action should be further explored.

"The Commission cannot disregard the submissions of an undertaking which relies on an economic argument, and cites economic and econometric data which are relevant to it, solely because no direct link between the agreement which restricts competition and the promotion of technical progress is thereby demonstrated," she said. "A pharmaceutical undertaking which stipulates increased export prices in order to restrict parallel trade has as its object the restriction of competition."

Trstenjak proposes that the court's final ruling should require the EC to re-examine whether these restrictive sales conditions are justified because they contribute to the promotion of technical progress.

GSK said it would not comment further until the European Court of Justice has ruled on the matter.

But parallel importers were deeply disappointed. Heinz Kobelt, secretary general of the European Association of Euro-Pharmaceutical Companies, regretted the opinion's focus "on a purely procedural point". EAEPC represents some 60 parallel traders from 20 countries.

"The advocate general has failed to provide a final clear opinion," he said. "By putting an additional burden on the European Commission when dealing with the arguments put forward by GSK, the opinion suggests looking for detailed justification for an exemption, when the case is fundamentally a clear breach of competition rules. This will not help national competition authorities and the Commission."

He warned that the current opinion "could endanger savings generated by parallel trade across Europe, while a freer internal market for medicines would benefit all".