EU court declines ruling in Glaxo case

The British pharmaceutical company sought to restrict supplies of its patented medicines to third-party distributors, requesting quotas to be imposed to prevent traders purchasing their medicines in lower-cost European countries to be re-sold for greater profit in higher-cost countries.

A final ruling would have ended the long-running legal battle between Glaxo and the pharmaceutical wholesalers. Instead, the EU court has suggested the issue could be a matter for the European Commission.

The case was presented to the European court as a request for a preliminary ruling by Greece’s competition commission following refusal by Glaxo to meet product orders placed Greek wholesalers. The court decided that as the competition commission is not a court or tribunal it does not have the authority to refer questions to the Court of Justice and lacks the independence to decide the case.

The decision leaves open the legality of attempts by drug firms to block such trading practices. Glaxo has said it will continue with current supply arrangements in Greece, sending drugs directly to hospitals and pharmacies, with wholesalers receiving only limited quantities.

This type of selling, often known as parallel trading, is thought to be worth roughly $5.6 billion a year. Countries such as Greece are particularly receptive to this practice as drug prices are at a state-maintained low. Pharmaceuticals can be purchased in Greece to be re-sold in more expensive markets such as the UK or Germany. At present the parallel drug trade is legal under EU law.