Over the last thirty years, there has been substantial litigation throughout the European Union in relation to the parallel import of pharmaceuticals from one EU country to another. Such parallel imports are openly encouraged by the EU Commission and are seen as a way of harmonising prices in an area where there is great difficulty in persuading national governments to give up their national health policies.
Paranova guidelines for repackaging
One particular subject of this litigation has been the necessity (or otherwise) for parallel importers to change the brand used on the product they are importing to the one used in the importing country (whether by re-packaging or over-stickering of labels).
The principles to be adopted are now well-known and are called the 'Paranova guidelines' (after the Court of Justice of the European Union (CJEU) decision in Bristol Myers Squibb v Paranova joined cases C-427/93, C-429/93 and C-436/93).
Under those guidelines there are five criteria an importer must meet to be able to repackage a product and re-affix the trade mark upon it, but the key one here was whether use of the brand was "objectively necessary in order to market the product". To answer that question, the court stated that if it would "hinder effective access to the market of the importing member state, any prohibition [on use of the brand] would be unjustified". In this context, 'market' means a 'substantial part of the market'.
Speciality European Pharma v Doncaster Pharmaceuticals and Madaus
In this recent case, the English Court of Appeal (reversing a first instance decision) decided that:
- there must be effective access to all parts of the market;
- even if the part of the market was less than 10%, it was still substantial;
- a parallel importer could not be forced to create a new brand and could use the existing brand.
The case in brief
The facts of the case are complex, but in brief, the generic name of the medicine in question was 'Tropsium Chloride' and it was a prescription only medicine for bladder control. It came in two doses – 20mg (which was no longer protected by any patent) and 60mg slow release (which still enjoyed patent protection). Whilst the 20mg was still in patent, Doncaster had had a good business in parallel importing it and over-stickering with the generic name only.
Once the 20mg dose patents expired in 2009, generic companies captured the bulk of this market as their product was much cheaper.
Generic prescribing (and generic fulfilment by pharmacists) is actively encouraged by the UK Government and nearly 90% of prescriptions for 20mg tablets of Tropsium Chloride were written generically. Only 8.6% were written with the brand name (REGURIN).
The 60mg slow release product was slightly different as it was protected by patents.
Under UK regulations slow release versions of generic medicines have to be branded (to differentiate them from non-slow release forms), although that branding does not need to feature the UK brand name of the patent owner. Generic prescribing is also still the norm despite the product being patented and branded.
In this case, generic prescriptions actually accounted for 62% of the 60mg market, with the balance being branded. Doncaster had access to all this market (as it had bought the product from, effectively, the patent owner in Europe whose trade mark rights were thereby 'exhausted' by law, meaning it would be very difficult to rely on them to prevent any re-selling of the product) – but Doncaster needed a brand to sell the product.
Decision of the Court of Appeal
The Court of Appeal held that not being able to access the 8.6% 20mg branded market was a reason why it was necessary to use a brand (as opposed to just the generic medicine name).
It then considered whether Doncaster should create its own brand or whether they could use the brand that was already in use by the patent owner's licensee in the UK (ie, REGURIN).
It was held that, given the vagaries of supply that face parallel importers, it was unrealistic to expect them to incur the costs of creating a new brand: prescribing doctors would not be persuaded to recommend a new brand where continuity of supply could not be guaranteed.
Positive news for parallel importers?
Whilst the single trade mark requirement of the European Medicines Agency's centralised procedure will mean that there will be fewer instances of different brands within the EU for certain medicines, they will not cease altogether, as it is possible to use different trade marks in 'exceptional' cases with prior approval.
This decision is of importance and will be seen as a victory for parallel importers.
However, there may be a further appeal to the Supreme Court, not least because there have been decisions in other EU countries (eg, Denmark, Sweden and Germany) which came to different conclusions as to the issue of "necessity for effective market access" (albeit based on different medicines and different national prescribing and marketing practices).
We await further developments with interest.
Case details at a glance
- Jurisdiction: England and Wales
- Court: England and Wales Court of Appeal (Civil Divisions)
- Parties: Speciality European Pharma Ltd, Doncaster Pharmaceuticals Group Ltd and Madaus GmbH
- Citation:  EWCA Civ 54
- Date: 06 February 2015
- Full decision: http://dycip.com/specialityvdoncasteranor