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European Court sides with drug companies over pricing matter

October 07, 2009
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The New York Times reports that Europe’s highest court has handed the pharmaceutical industry a victory, saying that regulators should reconsider whether efforts by drug makers to prevent traders from exploiting price differences across Europe should be allowed. The decision, in a case involving GlaxoSmithKline, is a blow to governments in northern Europe that like the discount trade, which allows them to cut the price of medicines they buy in bulk for their national health services. The case concerned discounters who buy bulk batches of medicines in southern European countries like Spain and sell surpluses in northern nations like Britain, where drugs generally command higher prices. To combat the discounters, Glaxo introduced a policy in the late 1990s to put higher prices on dozens of drugs sold in the Spanish market, but which it had determined were destined for export. Shortly after, the European Commission ruled that the company was restricting competition within the European Union. The commission has long favored building a seamless single market for goods, including prescription drugs, with the aim of lowering prices. A lower court overturned the decision in 2006, saying that the commission had failed to consider Glaxo’s evidence properly. On Tuesday, the European Court of Justice upheld that ruling. Trade in discounted medicines is one of the most fiercely contested practices within the pharmaceutical industry in Europe. The pharmaceutical industry has long complained that the practice undermines its ability to recoup the costs of developing drugs, and a final victory for Glaxo could be significant at a time when big drug companies are facing stiff price competition.
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