Originally published as Covington E-Alert on October 9, 2009

May a pharmaceutical company charge its wholesalers one price for products to be resold under the national healthcare reimbursement rules, and another, higher price for products to be resold in another EU member state? This was the question addressed by the European Court of Justice (ECJ) in its much-anticipated 5 October 2009 judgment in GSK v Commission. In a favourable ruling for the pharmaceutical industry, the ECJ largely upheld the 2006 judgment of the European Court of First Instance (CFI) finding that these dual pricing systems are not necessarily incompatible with the EC competition rules, but rather must be judged on a case-by-case basis in the light of the specific structural features of the pharmaceutical sector and the impact of parallel trade on the ability of pharmaceutical companies to fund R&D. The ruling also has favourable implications for other strategies used by pharmaceutical companies to control parallel trade, such as supply chain management systems.

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