Court tells E.U. to rethink pharma trade

The highest court in Europe sided with pharma today, ruling that regulators should reconsider their stand for discount drug traders. The court's decision comes in a case filed by GlaxoSmithKline (GSK), but affects the entire industry and its efforts to combat so-called "parallel trading."

Here's the background. Faced with the knowledge that discounters were buying meds in bulk in Spain--where prices tended to be lower--and reselling them in higher-priced markets in northern Europe, GSK hiked its Spanish prices on drugs destined for the export market. The European Commission decided that was a no-no, saying it violated antitrust rules.

A lower court overturned that EC decision in 2006, and now the European Court of Justice has upheld that ruling, saying that the EC has to reconsider whether that two-tiered pricing policy can be exempted from antitrust rules. GSK told Bloomberg that it doesn't currently charge different prices in Spain, but "we are pleased with the outcome of the judgment."

The industry as a whole should be pleased, a legal expert told the New York Times. "[T]oday's judgment is good news for pharma companies," said David Hull, who heads up the E.U. competition practices at Covington & Burling. Still, that doesn't mean that two-tiered pricing will fly, however.

- see the statement from the court (pdf)
- read the NYT story
- get more from Bloomberg

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