REFUSING TO SUPPLY IN CHEAP JURISDICTIONS MAY BE OKAY, SAYS AG

Yesterday in Case C-53/03 Synetairismos Farmakopoion Aitolias & Akarnanias (Syfait) and Others v Glaxosmithkline AEVE Advocate General Francis Jacobs gave his Opinion as to whether a drug company may plead the threat of parallel trade as an excuse for limiting the amount of IMIGRAN, LAMICTAL and SEREVENTIT it sends to pharma wholesalers in "cheapo" regimes. In his conclusion he recommends that the European Court of Justice rule as follows:

"(1) A pharmaceutical undertaking holding a dominant position does not necessarily abuse that position by refusing to meet in full the orders sent to it by pharmaceutical wholesalers only by reason of the fact that it aims thereby to limit parallel trade.
(2) Such a refusal is capable of objective justification, and thus of not constituting an abuse, where the price differential giving rise to the parallel trade is the result of State intervention in the Member State of export to fix the price there at a level lower than that which prevails elsewhere in the Community, given the combined circumstances of the European pharmaceutical sector at the current stage of its development, and in particular:
–- the pervasive and diverse State intervention in the pricing of pharmaceutical products, which is responsible for price differentials between the Member States;
–- the regulation by the Community and the Member States of the distribution of pharmaceutical products, which establishes nationally demarcated obligations upon pharmaceutical undertakings and wholesalers to ensure the availability of adequate stocks of those products;
–- the potentially negative consequences of parallel trade for competition, the common market, and incentives to innovate, given the economic characteristics of the pharmaceutical industry;
–- the fact that end consumers of pharmaceutical products may not in all cases benefit from parallel trade and that public authorities in the Member States, as the main purchasers of such products, cannot be assumed to benefit from lower prices, given that they are themselves responsible for fixing prices within their territories".

The IPKat expects that the ECJ will accept this brand owner-friendly position, which appears to fit in with Joined Cases C-2/01 P and C-3/01 P Bundesverband der Arzneimittel-Importeure eV and others v Bayer AG, in which a pharma company which told its national distributing subsidiaries not to fulfill all orders placed by potential grey-goods dealers for its ADALAT/ADALATE products was held not to be an unlawful agreement under Art.82 EC Treaty.