Healing with Bananas – How Should Community Competition Law Deal with Restraints on Parallel Trade in Pharmaceuticals?

TECHNOLOGY AND COMPETITION: CONTRIBUTIONS IN HONOUR OF HANNS ULLRICH, pp. 571-599, Josef Drexl, Reto M. Hilty, Laurence Boy, Christine Godt, Bernard Remiche, eds., Larcier, Bruxelles, 2009

Max Planck Institute for Intellectual Property & Competition Law Research Paper No. 11-13

30 Pages Posted: 19 Oct 2011

See all articles by Josef Drexl

Josef Drexl

Max Planck Institute for Innovation and Competition; Ludwig Maximilian University of Munich (LMU)

Date Written: July 1, 2009

Abstract

The freedom of parallel trade belongs to the most fundamental principles of European law. In recent years, however, the European courts have been requested to decide whether this principle should also be maintained for the application of EU competition law to attempts of GlaxoSmithKline to restrict parallel trade in pharmaceuticals from Greece and Spain to other Member States based on the argument that parallel trade would otherwise restrict the company’s ability to invest in the development of new drugs. The unilateral refusal of GlaxoSmithKline to fulfill all orders by Greek wholesalers produced two referrals for preliminary judgment and two dissenting opinions of the General Advocates Jacobs and Ruiz-Jarabo Colomer. The article criticizes the ECJ in Sot. Lélos kai Sia for missing the innovation dimension of the Greek GSK case by relying on its earlier decision on refusal to supply in United Brands. In the Spanish GlaxoSmithKline case, however, where the Commission refused to grant an individual exemption to the GSK’s dual pricing scheme which would have required Spanish wholesalers to charge higher prices for drugs sold to other Member States, the former European Court of Justice could not avoid addressing the conflict between the interest in low drug prices and the one in promoting the development of new drugs. In the light of the uncertainties concerning future investment decisions of pharmaceutical companies and the later results of innovation efforts, the article criticizes both the position of Advocate General Jacobs and the CFI for accepting the innovation argument too readily. Rather, it argues that EU competition law enforcers should rely on a concept of protection of the process of dynamic competition and the openness of markets.

Keywords: EU competition law, parallel trade, pharamceuticals, innovation

Suggested Citation

Drexl, Josef, Healing with Bananas – How Should Community Competition Law Deal with Restraints on Parallel Trade in Pharmaceuticals? (July 1, 2009). TECHNOLOGY AND COMPETITION: CONTRIBUTIONS IN HONOUR OF HANNS ULLRICH, pp. 571-599, Josef Drexl, Reto M. Hilty, Laurence Boy, Christine Godt, Bernard Remiche, eds., Larcier, Bruxelles, 2009; Max Planck Institute for Intellectual Property & Competition Law Research Paper No. 11-13 . Available at SSRN: https://ssrn.com/abstract=1935285

Josef Drexl (Contact Author)

Max Planck Institute for Innovation and Competition ( email )

Marstallplatz 1
Munich, Bayern 80539
Germany

HOME PAGE: http://www.ip.mpg.de

Ludwig Maximilian University of Munich (LMU)

Munich, 80539
Germany

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