An EU Court of Justice preliminary legal opinion may result in a fall in medicine prices across Europe if it is upheld by the full Court.
On Tuesday, the Advocate General of the European Court of Justice found that GlaxoSmithKline, Europe’s biggest pharmaceutical company, had breached European competition law when it refused fully to complete l orders from a group of wholesalers in Greece because it wanted to limit the damage caused by parallel trade – i.e. re-exporting to higher priced markets.
Drug prices in Greece are among the lowest in Europe and GSK’s lawyers had claimed that wholesalers had been placing ever-larger orders for certain drugs, mainly so that they could export the products and take advantage of the benefit of higher prices in other EU states.
Parallel trade is estimated to amount to €4bn to €5bn a year, or about 3% of European pharmaceutical sales.
In 2000, GSK changed its Greek distribution system, and supplies to wholesalers were interrupted. The wholesalers claimed that this amounted to anti-competitive conduct and an abuse of a dominant position. The issue was referred to the ECJ.
The Advocate General Dámaso Ruiz-Jarabo said that the Treaty provision which prohibits abuse of dominant position does not admit of any exception. Moreover, he maintains that the Treaty does not provide a basis for attributing to undertakings in a dominant position conduct which is in itself abusive, even when the circumstances of the case leave no room for doubt as to its anti-competitive purpose or effect. On the contrary, such conduct may be objectively justified.
Source: Finfacts.com
