BRUSSELS (AFX) - The EU's second-highest court has partly annulled a European Commission decision from 2001 that banned GlaxoSmithKline from selling its medicines to different wholesalers at different prices -- a ruling that could impact on future cases in the sector.
The European Court of First Instance (CFI) said the Commission must revisit its competition ruling against the UK pharmaceutical giant, which it said had impeded the cost of medicines from falling in the EU.
The court said that the commission was correct to state that GSK's sales conditions restrict competition by preventing the price and the cost of medicines from falling -- restricting 'parallel trading' between member states -- but it did 'not sufficiently examine' whether they might give rise to an economic advantage by contributing to the financing of pharmaceutical research.
GSK's Spanish unit adopted new sales conditions in March 1998, which stipulated that its medicines would be sold to Spanish wholesalers at varied prices based on reimbursement from the national sickness insurance scheme.
In practice, medicines intended to be exported and reimbursed in other member states were sold at a higher price than those intended to be reimbursed in Spain.
GSK notified the conditions to the commission in order to obtain either an exemption or a decision declaring they were not prohibited by competition law.
It said the different pricing for its drugs Beconase, Lamictal, Imigran, Becloforte, Becotide, Flixotide, Serevent and Ventolin reflected the fact that Spanish prices were effectively set by domestic law.
Secretary-General of the European Association of Euro-Pharmaceutical Companies (EAEPC), Dr Heinz Kobelt, said the ruling was a 'fudge' and provided 'no clarity' to the issue of dual pricing.
He said that the link made between innovation and dual pricing in the ruling, used by the court to bring down part of the commission's decision in the case, is an 'open field' and is 'unproven and untested'.
Sources said the ruling is significant and could impact on further commission and court analyses of potential future dual pricing cases, including one involving US pharmaceutical peer Pfizer Inc.
Traders profit by exporting branded drugs from countries where prices are kept lower, such as Spain or Greece, to countries like the UK, where prices are typically higher.
Through dual pricing, companies can maximise revenue from each market. Wholesalers are dissuaded from exporting products cross-border, given the impact on profits.
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