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EUROPE: Bayer, Other Drugmakers Face Price Pressure on Ruling (Update1) Last Updated: April 1, 2004 06:40 EST April 1 (Bloomberg) -- Bayer AG, GlaxoSmithKline Plc and other drugmakers may face more price pressure from discount drug importers after the European Union's highest court backed easing restrictions on some drug approvals. The ruling from the Luxembourg-based European Court of Justice benefits companies that profit from importing drugs from southern European markets, where prices are lower because of state regulation, into more expensive northern countries such as Germany and the U.K. The drug manufacturers have fought to overturn the practice, saying the trade eats into their sales and hurts their ability to control how their products are sold. The court said Germany was wrong to require licensing agreements between drug suppliers in one country and companies seeking sales approvals in another. Authorities should instead consider whether the drugs sold in both markets have the same active ingredients and are essentially similar, it said. ``It's yet another dagger in the bull,'' said Louis van Lennep, a lawyer at Linklaters in Brussels. ``The ruling makes it easier for discount traders and more difficult for the pharmaceutical industry.'' The EU court has ruled several times in favor of parallel drug traders, which according to the consultant IMS Health generate total sales of as much as 5 billion euros ($6.1 billion) a year in Europe. The trade is legal under EU rules that allow the free movement of goods in the 15-member bloc. ``The court is taking a further step to enlarging the scope of parallel trade,'' Marlene Van Kerckhove, a partner at law firm Arnold & Porter in Brussels, said before the ruling. The trade costs the drug industry about 1 billion euros a year in lost profits, said Christophe de Callatay, a spokesman at the Brussels-based European Federation of Pharmaceutical Industries and Associations, whose members include Bayer, GlaxoSmithKline and Merck & Co. Inc. Case Origins The case was brought to court by Kohlpharma GmbH, Germany's largest parallel drug trader with sales last year of more than 700 million euros. ``This ruling will make it much easier to get a sales license,'' Thilo Bauroth, head of Merzig, Germany-based Kohlpharma's legal department, said before the decision. The case stems from a dispute over Germany's rejection in 1994 of Kohlpharma's request to sell the drug Jumex, made by Italy's Chiesi Farmaceutici SpA, to treat Parkinson's disease. Kohlpharma sued the German government, saying the rejection was unjustified. Kohlpharma's application was based on the German authorities' previous approval of Orion Pharma GmbH's Movergan, a drug that contains the same active ingredient found in the Italian company's product. Orion Pharma is the German unit of Finland's Orion-Yhtymae Oy, the third-largest drug company in the Nordic region. German Appeal The German authorities refused. They argued that both products had to have the same manufacturer or be bound by a license agreement regarding the product at stake. While the drugs do contain the same active ingredients, the terms of the supplier and license agreements differ. The dispute reached a German appeals court. National judges asked the Court of Justice to rule whether the German authorities broke EU rules by focusing on the license agreement. The EU judgment will now be sent to the German tribunal, which will take up to a year to make its final ruling. ``The ruling makes it very easy to bring in every product under the rule of parallel trade with the same active ingredient,'' said Helmut Karsten, head of regulatory affairs at Orion Pharma. The case is C-112/02 Kohlpharma v Germany. To contact the reporter on this story: Matthew Newman in Brussels [log in to unmask] To contact the editor of this story: Eamonn Sullivan at [log in to unmask] SOURCE: Bloomberg http://tinyurl.com/2scl2 * * * ---------------------------------------------------------------------- To sign-off Parkinsn send a message to: mailto:[log in to unmask] In the body of the message put: signoff parkinsn