Brussels, 28/09/2006 (Agence Europe) - The attempt by laboratories - British group Glaxo (GSK) and more recently Pfizer of the United States - to limit parallel trade in medicines on the internal market must go no further, even though the Commission feels it is being criticised for failing to examine adequately the request for an exemption submitted to it. In a ruling delivered in Luxemburg on Wednesday, the Court of First Instance, to the great satisfaction of the parallel distributors of the EAEPC (European Association of Euro-Pharmaceutical Companies), said that dual pricing instituted by these two companies was anti-competitive and is contrary to the free movement of goods in the internal market.
To limit parallel trade, Glaxo implemented a system of dual pricing in Spain: the same medicine manufactured in Spain was sold at a much lower price on the Spanish market than in the rest of Europe. In 2001, the European Commission decided that this system ran counter to Community competition law. The laboratory took the case to the Court of First Instance, which has just found (partially) for the Commission. In its ruling, the Court says that parallel trade permits a limited but real reduction in the price and the cost of medicines to the benefit of the final consumer. It also considers that, even on the pharmaceutical market which continues to be regulated at national level, companies cannot segment the market and employ anti-competitive means to protect their own interests.
The EAEPC welcomes this and, in a press release, highlights a recent study by a Danish university that found that parallel trade generates substantial savings for governments and patients in Europe. According to the study, in 2004, direct savings of €441.5 million were made in just four countries: Denmark, Germany, Sweden and the United Kingdom.
The Commission should have examined GSK's request for an exemption, so the
Court has partially annulled its decision
The Court says also, however, that the Commission did not adequately examine GSK's request for an exemption. In particular, the question of whether general sales conditions might give rise to an economic advantage by contributing to innovation, which plays a central role in the pharmaceutical sector, was not examined with sufficient thoroughness. The Commission did not validly take into account all the factual arguments and the relevant economic evidence and did not sufficiently substantiate its conclusion. As the Commission did not further justify its position concerning the other conditions which an agreement must satisfy on order to be eligible for an exemption, the decision is annulled in that it rejects GSK's request for an exemption. It is therefore incumbent on the Commission, the Court says, to reconsider the request, insofar as it remains before it.