GSK welcomes EU court ruling

GlaxoSmithKline (GSK) has welcomed the Court of First Instance of the European Communities’ decision to overturn accusations made by the European Commission regarding its Spanish pricing scheme.

The UK’s largest pharmaceutical company was accused of engaging in anticompetitive practices when GSK attempted to stop Spanish wholesalers from engaging in a parallel trade with Britain, where they could profit from the UK’s higher drug prices.

GSK argued that parallel trade practices are uniquely harmful to the pharmaceutical industry because it means companies lose revenue which would otherwise be used to encourage research.

In response, court recognised that the pharmaceutical sector was unique and that the situation arose because it is member states that set the price of drugs, rather than supply and demand market forces.

A statement from GSK read: “GSK continues to believe that parallel trade in the context of the pharmaceutical industry, where prices are directly or indirectly controlled by EU Governments, serves only to benefit parallel traders.”

The company said the judgement would have “no immediate effect” on its operations in Europe because its Spanish pricing scheme was only in force for a short time.

The court’s ruling has also been of interest to other pharmaceutical companies. Pfizer, which is dealing with a similar complaint about its pricing structure in Spain, said it does not expect the GSK ruling to affect its own proceedings.

AFX quotes the company as saying that its policy in Spain is “different” from the system GSK employed in the late 90s.