Stock management of pharmaceuticals – ECJ to toughen its stance?

LAWFUEL – On 1 April 2008 the European Court of Justice released Advocate General Ruiz-Jarabo’s opinion in a case involving GlaxoSmithKline’s stock management policy of certain drugs in Greece. This creates unwelcome uncertainties about the legality of stock management systems operated by pharmaceutical companies for dominant products. The opinion of the Advocate General is not binding on the ECJ whose judgment in the case is now awaited.

GSK’s policy limited quantities of products sold to wholesalers to levels sufficient to meet the needs of the Greek market. GSK was clear that the policy was intended to limit the levels of parallel trade from Greece. Wholesalers claimed that this policy was an abuse of dominant position under Article 82 EC Treaty.

The case was prompted by a reference from the Athens court of appeal of certain questions based on those raised in the earlier Syfait case (the ECJ decided in May 2005 that it was unable to rule on the Syfait questions as the referring body was not competent to make the reference). Please click here for our earlier law nows on the Syfait case.

Advocate General Ruiz-Jarabo’s opinion takes a much tougher stance towards GSK (and towards the pharmaceutical innovator in general) than the Syfait opinion of Advocate General Jacobs.

AG Ruiz-Jarabo considers that a restriction of supply by a dominant pharmaceutical company in order to limit parallel trade can in principle be a breach of Article 82 EC Treaty. AG Jacobs took the view that given the particular characteristics of the pharmaceutical sector such a restriction could be justified as a reasonable and proportionate measure in defence of that company’s commercial interests, while AG Ruiz-Jarabo does not. AG Ruiz-Jarabo does not agree that the restriction is justified due to the negative impact of parallel trade on GSK’s incentives to innovate.

It remains to be seen whether the ECJ will follow AG Ruiz-Jarabo’s opinion.

The text of AG Ruiz-Jarabo’s opinion was not available in English at the time of writing. Please click here for the ECJ’s press release regarding the opinion and here for the language versions currently available.

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