The Court of Justice of the European Union (CJEU) recently handed down four keenly awaited judgments that provide welcome guidance on the debated issue of repackaging of medicinal products by parallel importers within the internal market.
Three of these rulings clarify that the safety measures introduced by the Falsified Medicines Directive (i.e., unique identifier and anti-tampering device) do not justify that a parallel importer is automatically allowed to repackage a medicinal product where relabelling (instead of repackaging) such product would leave visible traces of opening of the original outer packaging. In those cases, repackaging is allowed only in the presence of certain conditions, in accordance with previous settled case-law.
The fourth ruling clarifies that only in specific circumstances a parallel importer of a generic medicinal product can legitimately repackage that product and rebrand it by affixing the trade mark of the corresponding reference medicinal product, owned by the proprietor of the trade mark of that generic medicinal product.
BMS Conditions and Falsified Medicines Directive (FMD)
Prices of medicinal and pharmaceutical products can vary significantly from one EU country to another. Because of such differences in pricing, parallel imports account to a significant share of the total market of pharmaceuticals in the EU, especially in some countries such as Denmark and Germany.
Parallel imports of medicinal products are in principle lawful, based on the fundamental principle of free movement of goods within the internal market (and the related doctrine of exhaustion of trade mark rights). However, such principle must be reconciled with the fundamental interests in protecting public health and rights accorded by trade marks.
To satisfy the market requirements of the importing country (e.g., due to the different local language), and so obtain an easier access to that market, parallel importers typically prefer to repackage (instead of relabel) imported medicinal products. However, according to settled case-law of the CJEU1, a parallel trader is not always allowed to repackage a medicinal product. In particular, a trade mark proprietor can legitimately oppose the further commercialisation of a parallel imported pharmaceutical product bearing its trade mark, where the importer has repackaged that product and reaffixed that trade mark to it, unless each of the following five conditions, known as ‘Bristol-Myers Squibb (BMS) conditions’, are met:
- the trade mark proprietor’s opposition to the repackaging would contribute to the artificial partitioning of the markets between EU countries;
- the repackaging cannot affect the original condition of the product inside the packaging;
- the new packaging states clearly who repackaged the product and the name of the manufacturer;
- the presentation of the repackaged product is not such as to be liable to damage the reputation of the trade mark and of its proprietor; and
- the importer gives notice to the trade mark proprietor before the repackaged product is put on sale, and, on demand, supplies it with a specimen of the repackaged product.
The CJEU previously held that the first BMS condition is fulfilled where the repackaging by the parallel trader is objectively necessary to enable the medicinal product imported in parallel to be marketed in the importing EU country. Conversely, that condition is not fulfilled if repackaging of the product is explicable solely by the parallel importer’s attempt to secure a commercial advantage.
In 2011, the Commission published a new directive (2011/62/EU), known as the Falsified Medicines Directive (FMD), that amended the EU Medicines Directive (2001/83/EC). The FMD, supplemented by the Delegated Regulation 2016/61, introduced new measures to prevent the entry into the legal supply chain of falsified medicinal products. These measures included the requirement for pharmaceutical companies to place the following safety features on the packaging of certain medical products offered for sale in the EU (as of February 2019):
- a unique identifier (i.e., a barcode) which enables to verify the authenticity of the medicinal product and identify individual packs throughout the supply chain; and
- an anti-tampering device (i.e., a safety seal) which allows the verification of whether the outer packaging of that medicinal product has been opened or altered.
Some parallel importers have argued that the application of the above safety measures would automatically allow them to repackage imported medicinal products with new outer packaging, especially where, to satisfy the market requirements of the importing country (e.g., to replace the package leaflet in the local language), it is necessary to open the outer packaging of the medicinal product and replace the anti-tampering device, leaving visible traces (being its function). In accordance with that argument, the presence of visible traces of opening would create resistance on the part of consumers of medicinal products, thereby reducing the possibility of access to the market of the country of importation. Pharmaceutical companies have objected to such interpretation of the application of the FMD. As a result, numerous disputes between pharmaceutical companies and parallel importers have arisen in the EU over the past few years, such as those associated with the first three of these four CJEU decisions.
In its four preliminary rulings the CJEU answered a number of questions that had been referred to it by the national courts of Germany (Cases C-147/20 and C-204/20), Denmark (Case C-224/20), and Belgium (Joined Cases C-253/20 and C-254/20).
When is a parallel importer allowed to repackage a medicinal product?
The questions referred by the German and Danish courts touched on very similar issues and centred on the interpretation of EU law in relation to the issue of whether a parallel importer is legitimately allowed to repackage a medicinal product where relabelling that product would leave visible traces of opening of the original outer packaging. The CJEU answered to those questions in its first three rulings.
The two disputes in the main proceedings before the German court concerned the marketing in Germany of medicinal products manufactured by, respectively, Novartis (under the mark ‘Votrient’) and Bayer (under the mark ‘Androcur’). These products were imported in parallel from other EU countries by Abacus Medicine A/S and kohlpharma GmbH, respectively.
The case before the Danish court involved seven sets of proceedings between several manufacturers of medicinal products (including MSD and Novartis) and several importers of those products (including Abacus Medicine A/S and Paranova Denmark A/S). Each of those proceedings related to the importation into Denmark of medicinal products placed on the market in other EU countries by those manufacturers. In some of the disputes, the trade mark of the manufacturer was affixed to that new outer packaging, whereas, in other of those disputes, that mark was replaced by a new product name (however with the indication, both on the new outer packaging and the new package leaflet, that the product corresponded to the medicinal product sold under the manufacturer’s trade mark).
In each of these three rulings, the CJEU held that a trade mark owner is entitled to oppose the marketing, by a parallel importer, of a repackaged medicinal product where replacing the anti-tampering device of the original outer packaging would leave visible traces of opening of the original outer packaging, provided that:
- those traces are clearly attributable to the repackaging by that parallel importer; and
- those traces do not give rise, on the market of the EU country of importation (or on a substantial part of it), to such strong resistance from a significant proportion of consumers to the medicinal products repackaged in that way that it would constitute a barrier to effective access to that market (the CJEU added that the possible existence of such resistance and its extent must be assessed on a case-by-case basis - a parallel importer therefore cannot rely on a general presumption of consumer resistance in the presence of those visible traces).
The CJEU considered that, in principle, repackaging in new packaging and relabelling of medicinal products imported in parallel constitute equivalent forms of repackaging as regards the efficacy of the safety features introduced by the FMD, without one prevailing over the other. Accordingly, a national rule (such as the one existing in Denmark) requiring that medicinal products imported in parallel must, in principle, be repackaged in new packaging is to be considered contrary to EU law. Repackaging in new packaging must be regarded as objectively necessary only where the anti-tampering device cannot objectively be replaced by an equivalent device.
The CJEU clarified that a trade mark owner is entitled to oppose the marketing of the repackaged medicinal product also in those scenarios (such as in some of the Danish disputes) where the manufacturer’s trade mark which appeared on the original outer packaging of that medicinal product has been replaced by a different product name on the new outer packaging, provided that the immediate packaging of that product bears that trade mark and/or that new outer packaging refers to that mark.
In addition, the CJEU ruled that, if a parallel trader has only reaffixed the trade mark of the manufacturer specific to the repackaged medicinal product, but not the other trade marks and/or other distinctive signs which appeared on the original outer packaging of that medicinal product (i.e., de-branding), a trade mark owner may oppose the marketing of such repackaged product, where the presentation of that new outer packaging is liable to damage the reputation of the manufacturer’s trade mark and/or where it adversely affects the function of indicating the origin of the mark.
Lastly, the CJEU clarified that the unique identifier required by the FMD can consist of an adhesive label, provided it cannot be removed without being damaged and that, in particular, the barcode remains perfectly readable throughout the supply chain.
When is a parallel importer allowed to repackage a generic medicinal product and rebrand it?
In its fourth decision, the CJEU responded to a request for a preliminary ruling made by the Brussels Court of Appeal in two sets of proceedings brought by two parallel traders, Imprexeco NV and PI Pharma NV, respectively, against Novartis. The proceedings concerned the appeals filed by those importers to the respective judgments of the Brussels Court that had upheld Novartis’ actions for trade mark infringement against those traders. The judgments found that, by repackaging generic medicinal products (manufactured by Novartis through its Sandoz division, under the names ‘Letrozol Sandoz’ and ‘Methylphenidate HC1 Sandoz’ respectively), imported from the Netherlands, and by affixing to the new outer packaging of those products the trade marks of Novartis’ corresponding reference medicinal products (i.e., ‘Femara’ and ‘Rilatine’ respectively) in Belgium, the parallel importers had infringed Novartis’ rights in those marks.
In its preliminary ruling, the CJEU held that the proprietor of the trade mark of a reference medicinal product and the trade mark of a generic medicinal product may oppose the placing on the market of a EU country, by a parallel importer, of that generic medicinal product imported from another EU country, where that medicinal product has been repackaged in new outer packaging to which the trade mark of the corresponding reference medicinal product has been affixed, unless:
- the two medicinal products are identical in all respects; and
- the replacement of the trade mark satisfies the BMS conditions.
Regarding the first condition (i.e., identity of the products “in all respects”), the CJEU considered that, for medical reasons, it may be contraindicated to replace, during treatment, a medicinal product (especially if it has a “narrow therapeutic margin”) with an equivalent medicinal product, as its composition may differ as regards the pharmaceutical form, the chemical form of the active substance and its excipients. In the cases concerned, however, the respective products (manufactured by the same entity/group) were considered identical by the referring court.
Regarding the second condition, the CJEU considered that, in accordance with the first of the BMS conditions, a trade mark proprietor’s opposition to repackaging of pharmaceutical products contributes to artificial partitioning of the markets between EU countries where the repackaging is necessary in order to enable the product imported in parallel to be marketed in the importing EU country. However, where the parallel importer is able to market that product under its trade mark of origin by adapting, where appropriate, the packaging in order to satisfy the market requirements of the importing EU country, such condition of necessity is not satisfied. In this regard, the CJEU noted that an EU country cannot, in principle, refuse to grant a parallel import licence for a generic medicinal product where the corresponding reference medicinal product has marketing authorisation in that EU country, unless such a refusal is justified by considerations relating to the protection of health and life of humans. Conversely, there is no objective necessity to rebrand where the replacement of the trade mark of a generic medicinal product with the proprietor’s trade mark of the corresponding reference medicinal product is exclusively motivated by the parallel trader’s pursuit of an economic advantage (in particular where the parallel trader seeks to take advantage of the reputation of the trade mark of the reference medicinal product or to place a product in a more profitable category).
These four decisions are overall favourable to pharmaceutical companies, as the CJEU has clarified that only in limited circumstances parallel traders are allowed to legitimately repackage (and rebrand) imported medicines within the internal market. Parallel traders must therefore carefully consider the findings of these decisions, particularly when deciding whether relabelling or repackaging imported medicines. However, it remains unclear how national courts will examine and assess “in concreto” (as per the CJEU ruling) the possible existence of “strong” consumer resistance in the importing EU country, where traces of opening of the outer package of the relabelled medicinal product would be visible to consumers, which could justify repackaging instead of relabelling.
Furthermore, it remains to be seen if national courts will consider that, to be found identical “in all respects”, in addition of having identical chemical compositions, a generic medicinal product and a corresponding reference medicinal product must be manufactured by the same company/group, (like in the case of Novartis/Sandoz at issue), as suggested - but not explicitly confirmed - by the findings of the CJEU.
CMS will continue to monitor developments.