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

IPKat – fishing for IP stories for YOU: “Friday, October 29, 2004
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, “

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