Parallel imports of medicines are, in principle, permitted within the EU. In particular, the price differences in different countries for medicines are the economic driver of parallel imports. For instance, Germany, Great Britain and Switzerland regularly are regarded as countries that charge a high-price for medicines, whereas e.g. Greece, Spain, Italy, Bulgaria and Romania are regarded as countries that charge a low-price for medicines. National authorities may only prohibit or restrict parallel imports if it is justified in order to protect either public health and safety or the IP rights (patents, trademarks) of the right holder and the measures to be implemented are reasonable and necessary.
The Higher Administrative Court of North Rhine-Westphalia ruled, on 2 February 2016, in a landmark decision that the placing of medicines by a German parallel importer on the German market can be prohibited by the competent authority if the wholesale and distribution of the products has been operated without a (wholesale) trading licence at any point in the products’ supply chain, even in another member state.
A German parallel importer imported certain medicines from Romania between January and May 2014. The parallel importer purchased the products from various Romanian wholesalers who had local wholesale trading licences for the relevant products. The Romanian wholesalers however sourced the products in question from a Romanian pharmacy, which was not permitted to undertake any wholesale activities.
Following the discovery of three instances of counterfeit products within this supply chain, the Romanian competent drug authority ordered the compulsory recall of all products within the supply chain and informed the competent European authorities via the European rapid alert system. The German parallel importer took all medicines affected by the recall into quarantine in order to verify whether the products were counterfeits or not. The inspection of the products by the German parallel importer did not reveal any (further) counterfeits in the batch that they had been supplied. The German parallel importer applied for an approval to place the products on the market with the competent German drug authority. The application was rejected. The German parallel importer commenced legal action with the competent court in interim proceedings in order to obtain court approval to place the products on the German market.
Following the rejection of the application by the German parallel importer by the Administrative Court of Cologne, the Higher Administrative Court of North Rhine-Westphalia confirmed the judgment: the German parallel importer was not allowed to place the products in question on the German market, irrespective of whether the products were counterfeits or not. According to the Higher Administrative Court of North Rhine-Westphalia, placing the products on the German market was prohibited if there had been a breach of the applicable law at any point in the products’ supply chain, even if such breach took place in another EU Member State.
The court referred to sec. 69 subsec. 1 sentence 2 no. 7 of the German Medicinal Products Act(Arzneimittelgesetz – AMG), which reads as follows:
The competent authorities shall issue the necessary directives to rectify any offences which have been identified and to prevent offences in the future. They may, in particular, prohibit the marketing of medicinal products or active substances and order their recall from the market and seize them if[...] the authorisation required to engage in wholesale trading under Section 52a has not been granted or a reason for the withdrawal or the revocation of the authorisation pursuant to Section 52a sub-section 5 exists.
According to the Court, these requirements were met, even though the concerned German parallel importer purchased the medicines from Romanian wholesalers, which were in possession of effective wholesale licences for the products and only the Romanian pharmacy, with whom the German parallel importer had no contractual relationship, was not permitted to undertake any wholesale activities. The Court held that drug safety is already impaired if anyone in the supply chain acted against the applicable (local) law as this infers the possibility of other violations of statutory obligations in respect of drug safety within the entire supply chain.
The consequence of this landmark decision is that German parallel importers are responsible for a violation of (local) distribution laws by a pharmaceutical wholesaler at any point in the products’ supply chain even if that violation took place in another EU Member State.
The judgment therefore now also gives pharmaceutical companies good argument to successfully file for a preliminary injunction against German parallel importers to stop the import of medicines into the German market if there has been a breach of local law in another EU Member State at any point in the products’ supply chain. As German parallel importers often source products from EU countries where medicine is sold cheaply e.g. from Romania, Bulgaria and Italy, this has become an important practical issue and the decision will provide welcome clarity in what was previously a “grey area”.