The parallel import of pharmaceuticals into the UK from other European Union (EU) countries has been common practice for over 30 years. Indeed, the EU Commission regards such parallel imports as an important part of its policy for approximating the price of medicines around the EU. Innovative pharmaceutical companies generally regard such imports as not only harmful to their business models but also damaging to their relations with their customers and patients, as well as to the reputation of their brands.
The UK has generally been a ‘high cost’ jurisdiction for medicines and so parallel importers have thrived, although the extent of their success owes as much to exchange rate movements as pricing policies of other EU countries.
In fact the UK’s National Health Service has historically put in place measures that substantially assist such imports:
- By having policies in place encouraging the use of generic prescribing (ie, using the generic/International Nonproprietary Name (INN) rather than a particular brand name).
- By reimbursing pharmacists for medicines they purchase and supply to patients at a price often fixed by reference to the branded product (irrespective of whether that is the price at which they actually buy it).
As a consequence, many pharmacists will buy the cheaper parallel imports and ‘pocket the difference’.
In Speciality European Pharma v Doncaster Pharmaceuticals , the impact of these policies formed an important backdrop to the decision. But first, some background. Whilst the parallel import of medicines has been allowed for many years, the extent to which an importer could change the brand from that used in another EU country to the one used in the UK has been a source of substantial litigation, culminating in several references to the Court of Justice of the European Union (CJ). Two of these involved the same defendant, the Danish company ’Paranova’ (Bristol Myers Squibb v Paranova  and Pharmacia v Paranova ). These cases resulted in the so-called ‘BMS Conditions’ to determine the circumstances in which repackaging (which could include re-branding) was acceptable and whether re-branding was objectively necessary toallow the importer effective access to the market in the importing country.
Facts of the Speciality v Doncaster case
Doncaster had successfully (and without complaint) parallel imported the particular pharmaceutical in issue for a number of years and had simply over-stickered the existing EU boxes with an English language label using the generic name – “Trospium Chloride”. Because of the price differential between the UK and some other EU countries, these parallel imports were very successful and took a large amount of market share from the owner of the branded product (which was sold under the REGURIN mark). One of the reasons for such success was that the product was still covered by a patent, but this expired in 2009 and the market for Trospium Chloride was then substantially taken over by generics, with whom Doncaster could not compete on price.
There was, however, one market which the generics could not compete in – the market for the branded product (ie, the REGURIN branded market – to meet those prescriptions written not generically but by reference to the brand itself). The UK does not allow for generic substitution of medical products, so the ‘branded market’ could arguably be seen as a separate market. The size of that market will vary from product to product, depending (in part) on the effectiveness of the marketing of the brand owner.
In this case, the market for REGURIN prescriptions was quite small – less than 10 per cent of the total market (for one dosage strength) and about 30 per cent for the larger, slow release dosage. Nevertheless, Doncaster intended to bring in pharmaceuticals from France and Germany (where they had different brand names) and then re-box them and apply the REGURIN brand.
The judge (Mrs Justice Asplin) had to consider whether Doncaster had effective access to the market and whether the branded market was a separate market, which only the re-branding could give them access to.
She held that:
- The evidence was that Doncaster was not hindered from gaining effective access to the Trospium Chloride market – Doncaster had access to some 90 percent and 70 per cent respectively.
- To define the market by reference to the branded market alone was not appropriate, not least as to do so would essentially be self-fulfilling and contrary to EU case law which was concerned with access to the market as a whole.
- The UK medicines market is not structured in such a way as hinders effective access to parallel importers – quite the contrary given the encouragement of generic prescribing and the rules on reimbursement.
- All Doncaster was doing was to seek a ‘commercial advantage’ by piggybacking on the branded product’s marketing – Doncaster were at liberty to create their own brand and try to create their own market for that brand.
This judgment brings the UK more into line with recent decisions in other EU countries than had historically been the case. Whilst there may be some products which have a high level of branded prescribing, these are likely to be few (particularly where the product itself has come off patent or is nearing the end of its patent life) and so repackaging and applying the UK brand is likely to be increasingly difficult.