The European Court of Justice may soon give a ruling on two long-running cases concerning the actions taken by GlaxoSmithKline to counter parallel importing of its products by wholesalers in Greece and Spain, according to Pat Treacy and Helen Hopson at London-based law firm Bristows.
The Greek case goes back to 2000, when GSK halted supplies of some of
its products to a Greek wholesaler because it was then exporting them
to other European Union nations, where medicine prices are much higher than they are in Greece. Wholesalers and pharmacy groups in the country brought a complaint against GSK’s actions to the Greek competition commission, the HCC, which in turn asked the ECJ in 2003 for a ruling on whether the drug major’s actions were legal. However, in May 2005 the European Court replied that it could not hear the case because the HCC was not a national court as is required under EU law.
To complicate matters, an Opinion was given in October 2004 by the ECJ’s Advocate General which backed GSK’s actions, stating that all refusals to supply by a dominant pharmaceutical company were not necessarily an “abuse of dominance.”
In the absence of a formal ruling from the ECJ, the HCC followed the Advocate-General’s Opinion. Nevertheless, industry groups expressed frustration that the ECJ did not follow the Advocate-General’s Opinion and that, as a result, the legal position remained unclear.
Crucial importance to pharma
Now, however, the Greek Court has asked the ECJ the same questions
which were put to it by the HCC in 2003. As this request has come from
a national court, the European Court will provide guidance, and this
will be “of crucial importance to the pharmaceutical sector in particular,” say Bristows' experts.
New moves are also expected in the Spanish case, which dates from May
2001, when the European Commission ruled that GSK’s subsidiary in the
country had contravened EU law by setting lower prices for its products
to Spanish wholesalers which sold them in the country and higher ones
to those which obtained the medicines for export. However, last September, the European Court of First Instance partially annulled this decision, backing the Commission in some respects but also criticising it for failing to take sufficient account of “the specific nature of the pharmaceutical sector” and agreeing with GSK that "it cannot be presumed that parallel trade tends to reduce prices.”
The Commission and GSK each lodged an appeal with the ECJ against the
CFI’s decision, and its ruling is awaited.
“The ECJ’s findings in these two cases could have wide ranging implications for application of the competition rules in the pharmaceutical sector,” say Bristows' experts, adding: “they could finally provide some legal certainty for pharmaceutical companies when designing and implementing their distribution practices.”