ECONOMY

EU court says it has no power in drug feud

LUXEMBOURG/LONDON – The EU’s highest court said yesterday it lacked the jurisdiction to rule on whether GlaxoSmithKline Plc (GSK) was allowed to restrict supplies of its medicines to traders reselling them abroad. The move leaves in limbo the legality of attempts by drug firms to block so-called parallel trade, where medicines are shipped around Europe to exploit national price differences. The Greek competition authority had asked the European Court of Justice for legal advice after Greek wholesalers complained that GSK had restricted supplies of three drugs in 2000 to stop them being exported to more expensive markets. Greek drug prices are among the lowest in Europe. A spokesman for GSK said Europe’s biggest drugmaker would continue with current supply arrangements in Greece, under which drugs are sent directly to hospitals and pharmacies, with wholesalers getting only limited quantities. Lawyers for the wholesalers said this behavior defied an interim ruling in 2001 from the Greek authority, requiring GSK to provide unlimited supplies of Imigran for migraines, Lamictal for epilepsy and the asthma treatment Serevent. «It is high time manufacturers finally got the message and ceased their practice of restricting supplies,» said Heinz Kobelt, secretary-general of the European Association of Euro-Pharmaceutical Companies, representing parallel traders. His association says that parallel trade promotes competition and helps governments curb runaway medicine costs. But the business has long been a thorn in the side of the pharmaceutical industry, which says it undermines incentives for innovation and saves little money for patients or payers. Market abuse? The Greek case was the first time the European Court of Justice had been asked to rule whether a dominant pharmaceutical company which refused to supply wholesalers in order to stop parallel trade was guilty of market abuse. But it decided the Greek Competition Commission did «not have certain characteristics of a court or tribunal» that were necessary in order for it to deal with the case. In making its decision, the court ignored the advice of its own advocate general, which it follows in four cases out of five. The advocate general had sided with GSK. Pat Treacy, head of competition at London law firm Bristows, said the drug industry had been hoping for certainty but it was not all bad news for manufacturers. «The advocate general’s opinion will now remain the last word on the subject, at least until another case reaches the European courts,» she said. «In fact, the advocate general’s opinion is very favorable to the pharmaceutical industry.» A spokesman for the European Commission, which has supported parallel importers for helping promote the 25-state bloc’s free internal market, said it was studying the decision. One of the EU high court’s duties is to advise national courts on how to interpret European Union law. Its preliminary rulings must be followed by courts throughout the EU. But the court noted that the Greek authority, unlike a court, lacks independence because it is subject to the supervision of the Ministry for Development, which it said implied that the minister can review the decisions.