A small victory for Pharma in EU parallel trade war

Pharma recently won a small battle in the long-running war over parallel trade in Europe, when Europe’s highest court said regulators need to reconsider GlaxoSmithKline’s request for an exemption allowing it to apply different pricing to drugs destined for export from some EU countries.

Resellers have exploited the differences in pricing between different EU countries by buying drugs in southern European countries where prices are lower, such as Spain or Greece, and selling them in Northern Europe where prices are higher. This reimportatation is legal in Europe, unlike the US. In 1998, GSK attempted to squash that practice by slapping higher prices on drugs sold in Spain that were being purchased for export.

That kicked off a lengthy legal battle: First the European Commission ruled that the company’s practice was restricting competition, then a lower court overturned the decision in 2006, saying the commission had failed to consider Glaxo’s evidence properly. In the latest development, the European Court of Justice upheld that ruling, saying that “The commission must reconsider whether GlaxoSmithKline’s general sales conditions in Spain may be exempted from the community competition rules.”

The latest ruling doesn’t by any means mark the end of the war; however a legal expert says that it means EU regulators now need to carry out a more detailed analysis of the evidence required by the courts.

The growth in legitimate parallel trade doesn’t directly affect US sales unless the domestic political tide turns in favor of reimportation. However, it’s another reason for accelerating the introduction of drug tracing technologies, which can be used not only to identify whether a drug is counterfeit, but also where it was first sold.