Legal experts have been casting an eye over the opinion issued earlier this week by a European court which accuses GlaxoSmithKline of breaking antitrust laws in Greece and they fear it represents a frightening scenario for research-based drugmakers.

Advocate General Damaso Ruiz-Jarabo at the European Court of Justice issued a non-binding opinion saying that a pharmaceutical company, ie GSK “holding a dominant position which refuses to meet the orders of wholesalers, in order to limit parallel trade, engages in abusive practice". He was referring to the long-running battle between GSK and Greek wholesalers who took the firm to court after it refused to supply them with shipments of epilepsy drug Lamictal (lamotrigine), the migraine treatment Imigran (sumatriptan) for migraine and Serevent (salmeterol) for asthma in November 2000.

The firm limited its shipment volumes to pharmacists so that there would only be enough product available for the Greek market and could not be sold on elsewhere. In September 2006, the antitrust authorities in Greece ruled that GSK had not acted unlawfully in restricting supplies of the three products.

The UK-based drugs giant says it is waiting for the European Court of Justice’s final decision for making comment and the latter’s judges are currently making deliberations in the case. However Edward Miller at London-based solicitors Reed Smith Richards Butler said that “the Advocate General was clearly not impressed with arguments that differential national reimbursement prices were imposed on the drug companies by state social security authorities”, rather than set by the drugmakers themselves.
Furthermore, it seems that Mr Ruiz-Jarabo does not believe that parallel trade “unfairly impinged on a fair return on the substantial R&D required to bring a drug to market” nor that restrictions on exports were needed “to ensure adequacy of national supply in each country,” said Mr Miller.

Court instinctively against parallel trade restriction
However there is still hope for big pharma because having poured scorn on all arguments so far raised by the latter, the Advocate General “nevertheless rejected the idea that restriction on parallel trade was always necessarily unlawful and does suggest that the court leaves the door open to see if despite all this, the drug companies can come up with any new arguments,” Mr Miller argues. He notes that “allowing powerful international groups freedom to restrict parallel trade in within Europe will clearly be counter-instinctive” for the European Court of Justice, “but leaving open the possibility that new or more compelling justifications could be advanced may prove to be a tempting way out for the Court.”

Pat Treacy head of EU and competition law at Bristows, described the opinion as “undoubtedly a blow to the pharma sector”, adding that the industry “is bedevilled by different government imposed pricing regimes across Europe”. She noted that “the ability for traders to move cheap products across borders to take advantage of those differences is perceived by industry as a real handicap to business”.

Ms Treacy concluded by saying that if the European Court for Justice follows this opinion “many pharma companies will find it more difficult to design and implement their own commercial strategies to resolve the problems they face. This is certainly not the answer that research-based pharma companies expected or wanted to hear”.