In March 1998, the pharmaceuticals manufacturer GlaxoSmithKline Unlimited (‘GSK’) entered into an agreement with 75 Spanish wholesalers establishing a two tier price structure for medicinal products sold in Spain or exported from Spain.  The purpose of this differentiated pricing structure was to discourage parallel market sales of pharmaceuticals.

GSK submitted its price conditions to the European Commission seeking a ruling that they did not violate European rules against competitive restrictions. On May 8, 2001, the Commission decided that GSK’s general sales conditions were prohibited by Community competition law, because they constituted an agreement restricting competition and because GSK had not proved that the agreement met a recognized exception.

GSK brought suit seeking to overturn the Commission’s ruling.  On September 27, 2006 the court of first instance upheld the Commission’s finding principal finding but required the Commission to do further investigation regarding GSK’s claim of exemption.  Both GSK and the Commission appealed.

On October 6, 2009, the European Court of Justice, in its appellate capacity, affirmed the lower court’s ruling that GSK’s agreement violates European rules against competitive restrictions.  The Court also found that in order to be subject to an exemption, an agreement must contribute to improving the production or distribution of goods or to promoting technical or economic progress.  The Court affirmed the Court of the First Instance’s ruling that the Commission had not conducted an adequate review of the claim of exemption.

According the the MHRA the counterfeit product entered the British market through parallel market imports from France. The MHRA noted in its alert that the European Medicines Agency (EMEA) has allowed 40 UK parallel market distributors to supply this product to the British market but did not clarify if this counterfeit product entered the market through one of these parallel market distributors.

Parallel medicines and health care products may legally be sold in the parallel market within the European Union. Britain recognizes two forms of parallel trade in such products based on the authorizing agency. Parallel distributed products have a marketing authorization issued by the EMEA and parallel imported products have a marketing authorization issued by the MHRA. In both cases the repacking and relabelling are inspected by the MHRA but the importation and/or distribution takes place outside the original manufacturer’s supply chain.