COMPLAINT
Submitted by
EUROPEAN ASSOCIATION OF PHARMACEUTICAL WHOLESALERS
GROUPEMENT INTERNATIONAL DE LA REPARTITION PHARMACEUTIQUE
to
The European Commission
1. introduction and executive SUMMARY
This complaint is lodged by GIRP, the European Association of Pharmaceutical Wholesalers, in response to a supply quota system that has been imposed upon wholesalers by the pharmaceutical company GlaxoSmithKline (GSK).
GSK holds a dominant position on the markets for the supply of certain of its products to wholesalers. GSK has informed wholesalers that they shall only be entitled to purchase certain predetermined quantities of these GSK’s products, within certain limited time periods. The quantities allocated are regularly insufficient to meet demand. There is no facility for a wholesaler to exceed this quantity, even if there is clear demand and GSK has quantities available.
The purported purpose of GSK’s quota system is the efficient management of its supply chain, necessitated by ongoing integration of the GSK group. However, GSK has refused to offer any further explanation or to engage in any dialogue concerning its quota system. Therefore, GSK has failed to offer any valid or legitimate explanation. It is clear that the actual motives behind the quota system are not legitimate and are likely to include the elimination of parallel trade.
Whatever the motivations, which are for GSK to explain, the result of the quota system is that wholesalers are experiencing shortages, lost sales and increased costs. The system stagnates competition between wholesalers as, in the absence of sufficient quantities to meet demand, they are unable to increase their competitiveness and thus their market share. The quota system interferes with and endangers the core business and core competencies of pharmaceutical wholesalers: to provide efficient stock management and to guarantee the continuos supply of medicines.
In the complainant’s submission, the quota system constitutes a clear abuse of GSK’s dominant position, contrary to Article 82 EC Treaty.
For the reasons set out below, GIRP requests the Commission to direct GSK to halt its quota system forthwith and to supply wholesalers with the quantities that they require to meet demand.
2. GIRP
“Groupement International de la Répartition Pharmaceutique Européenne" or in English "European Association of Pharmaceutical Wholesalers" (hereinafter referred to as “GIRP”) is the umbrella organisation of pharmaceutical wholesalers in Europe.
Its address is
GIRP
Ave de Broqueville, 40
B-1020 Brussels.
Tel: 02 777 99 77
Fax: 02 770 3601
Contact: Monika Derecque-Pois, Secretary General
GIRP represents the national associations of over 400 pharmaceutical full-line wholesalers serving 17 European countries (i.e. the fifteen member states of the EU plus Norway and Switzerland) as well as the 3 major Pan-European pharmaceutical wholesaling companies (Gehe, Alliance UniChem, and Phoenix) and a group uniting co-operatives in 6 European countries (SECOF) as Full Members. GIRP also includes Associated Professional Members who represent the pharmaceutical full-line wholesaler associations and companies in Eastern Europe and the New Independent States, as well as Associated External Members who are companies who have an interest in the activities of GIRP.
GIRP members employ about 70,000 people and distribute medicines with an annual value of around €70 billion.
GIRP therefore exists to safeguard the wholesaling system so that it may ultimately meet the needs of patients throughout Europe.
A more complete description of the functions and activities of GIRP is set out in APPENDIX 1 and a copy of GIRP’s statutes, as published in the Moniteur Belge is attached as APPENDIX 2.
A full list of GIRP'S member organisations, together with contact details is set out below.
AUSTRIA
ARGE Pharmazeutika
Arbeitsgemeinschaft des pharmazeutischen
Mr. Heinz Kramer
Garnisongasse 1/20 a
A - 1090 WIEN
Phone: +43/ 1-409 44 86
Fax: +43/ 1-409 44 87 /40
EMail:
http://www.argepgh.at
BELGIUM
Association Nationale des Grossistes-Répartiteursen Spécialités Pharmaceutiques NVGV - ANGR
Mr. Marc de Colvenaer
Sint-Bernardusstraat 60
B - 1060 BRUSSELS
Phone: +32/ 2-537 30 60
Fax: +32/ 2-539 40 26
EMail:
DENMARK
MEGROS Foreningen af medicingrossister
Association of Pharmaceutical Wholesalers
Mr. Svend Pedersen
Amagertorv 11
DK - 1160 COPENHAGEN K Phone: +45/ 33-12 60 40
Fax: +45/ 33-14 19 33 EMail:
FINLAND
APTEEKKITAVARATUKKUKAUPPIAAT r.y. (ATY)
Association of Pharmaceutical Distributors
Mr. Antti Vatanen
P.O.Box 1 50
SF - 00251 HELSINKI
Phone: +358/ 9 431 561 01
Fax: +358/ 9 431 561 05
EMail:
FRANCE
Chambre Syndicale de la Répartition Pharmaceutique (CSRP)
Mr. Olivier Le Guisquet
47 Rue de Liége
F - 75008 PARIS
Phone: +33/ 1-42 94 01 25
Fax: +33/ 1-42 94 19 84
EMail:
http://www.csrp.fr
GERMANY
Bundesverband des pharmazeutischen
Großhandels - PHAGRO - e.V.
Mr Hermann Ringenaldus
P.O. Box 17 01 50
D - 60075 FRANKFURT a. M
Phone: +49/ 69-975 87 60
Fax: +49 /69-975 87 6 33
EMail:
http://www.phagro.de
GREECE
Panhellenic Association of Pharmaceutical
Wholesalers and Qualified Pharmacists (PAPW)
Mr. Euripides Adamou
34 Beranzerou Street
GR - 104 32 ATHENS
Phone: +30/ 1-522 75 19
Fax: +30/ 1-522 17 62
EMail:
IRELAND
PDF Pharmaceutical Distributors Federation
Mr. Kieran O'Broin
5 Fitzwilliam Place
IRL - Dublin 2
Phone: +353/ 1-6761802
Fax: +353/ 1-6761803
EMail:
ITALY
Associazione Distributori Farmaceutici (ADF)
Mr. Giuseppe Scrofina
Via Milano, 58
I - 00184 ROMA
Phone: +39/ 06-487 01 48
Fax: +39/ 06-478 249 43
EMail:
http://www.adfsalute.it
LUXEMBOURG Groupement des Grossistes Répartiteurs
Luxembourgois en Produits Pharmaceutiques
Mr. Jules Clement
60, Rue de la Vallée
L - 2661 LUXEMBOURG Phone: +352/ 45 07 07
Fax: +352/ 45 63 46
EMail:
NETHERLANDS Bond van Groothandelaren in het
Pharmaceutische Bedrijf (BG Pharma)
Mr. Louis Antonini
Adriaan Goekooplaan 5
Postbus 29822
NL- 2502 LV 's-Gravenhage Phone: +31/ 70-358 98 48
Fax: +31/ 70-351 27 77
EMail:
NORWAY Norwegian Association of Pharmaceutical Wholesalers
Mr. Arne Øverby
P.O. Box 100 Veitvet
N - 0518 OSLO Phone: +47/ 22-16 96 00
Fax: +47/ 22-16 98 75
EMail:
PORTUGAL GROQUIFAR
Associação de Grossistas de Produtos Químicos e Farmacêuticos
Mrs. Teresa Correia
Av. António Augusto de Aguiar, 118, 1º Andar
P - 1050 - 019 Lisboa Phone: + 351/ 21-3172676
Fax: + 351/ 21-3544510
Email:
SPAIN Federación Nacional de Asociaciones de Mayoristas Distribuidores de Especialidades Farmacéuticas y Productos Parafarmacéuticas (FEDIFAR)
Mr. Antonio Peleteiro
General Oràa, 70
E - 28006 MADRID Phone: +34/ 91-562 40 25
Fax: +34/ 91-563 59 76
EMail:
SWEDEN Läkemedelsgrossistföreningen
Swedish Association of Pharmaceutical Wholesalers
Mr. Ralph Nilsson
P.O. Box 252
S - 435 25 MÖLNLYNCKE
Phone: +46/ 31-88 70 50
Fax: +46/ 31-338 51 00
EMail:
SWITZERLAND Verband Schweizerischer
Spezialitäten Grossisten (VSSG)
Mr. Jean-Yves Hauser
Avenue de Tivoli 3
CH - 1701 Freiburg Phone: +41/ 26-347 41 58
Fax: +41/ 26-347 41 40
EMail:
UNITED KINGDOM British Association of Pharmaceutical
Wholesalers (BAPW)
Mr. Michael Watts
19 A South Street
UK - GU9 7QU FARNHAM/SURREY Phone: +44/ 1252-71 14 12
Fax: +44/ 1252.62 65 61 EMail:
http://www.bapw.co.uk
GEHE AG
Dr. Fritz Oesterle
Neckartalstraße 155
D- 70376 Stuttgart
Phone : + 49 711 5001 00
Fax : + 49 711 5001 500
http://www.gehe.de
PHOENIX Pharmahandel Aktiengesellschaft & Co. KG
Dr. Bernd Scheifele
Pfingstweidstraße 10-12
D- 68199 Mannheim
Phone :+ 49 621 85050
Fax :+ 49 621 8505295
http://www.phoenix-ag.de/
ALLIANCE UNICHEM Plc
Mr. Jeffery Harris
Alliance House
2 Heath Road
UK - Weybridge / Surrey KT13 8AP
Phone : + 44 1932 87 05 50
Fax : + 44 1932 87 05 55
http://www.alliance-unichem.com
SECOF (Sociedad Europea de Cooperacion Farmaceutica, s.a.)
Santa Engracia 31
E - 28010 Madrid
3. GlaxOSmithkline
GlaxoSmithKline plc (GSK) is an international pharmaceutical company, having its headquarters and registered office at
GlaxoSmithKline plc
980 Great West Road
Brentford
Middlesex TW8 9GS
Tel: +44 (0)20 8047 5000
GSK was formed on 27 Dec 2000 after the completion of the merger of Glaxo Wellcome and SmithKline Beecham[1]. It is now the largest pharmaceutical company in Europe and the world’s second largest pharmaceutical company. It claims to have an overall “market share” of 7%.
GSK has sectoral leadership in four major therapeutic areas - anti-infectives, central nervous system (CNS), respiratory and gastro-intestinal/metabolic. In addition, it is a leader in the area of vaccines and has a growing portfolio of oncology products.
The company also has a Consumer Healthcare portfolio comprising over-the-counter (OTC) medicines, oral care products and nutritional healthcare drinks, all of which are among the market leaders.
GSK has 107 manufacturing sites in 40 countries with over 42,000 employees. The sites within the GSK manufacturing network:
· supply products to 191 global markets for GSK
· produce over 1,200 different brands
· manufacture almost 4 billion packs per year
· produce over 28,000 different finished packs per year
· supply around 6,000 tonnes of bulk active each year
GSK has over 100,000 employees worldwide. Of these, over 40,000 are in sales and marketing. Over 42,000 employees work at 107 manufacturing sites in 40 countries and over 16,000 are in R&D. GSK R&D is based at 24 sites in seven countries. The company has a leading position in genomics/genetics and new drug discovery technologies. The GSK R&D budget is about £2.4bn/$4bn.
Based on 2001 Annual Results, GSK had sales of £20.5 billion ($29.5 billion) and profit before tax of £6.2 billion ($8.8 billion). Pharmaceutical sales accounted for £17.2 billion ($ 24.8 billion) with new products representing 22% of total pharmaceutical sales. Based on 2001 revenues of $29.5 billion and profit of $8.8 billion, GSK’s profit margin was 29.83%.
GSK’s prescription pharmaceuticals product range (which is the subject matter of this complaint) includes antibiotic, antidepressant, gastrointestinal, dermatological, respiratory, cancer and cardiovascular medications.
Six of its products Seroxat/Paxil for depression, Flixotide/Flovent for asthma, Avandia for diabetes, Seretide/Advair for asthma, Imigran/Imitrex for migraine and the antibiotic Augmentin, exceed sales of $ 1 billion each.
A copy of GSK’s 2001 annual review is attached as APPENDIX 3. Further information about GSK can be obtained from www.gsk.com or from the company itself.
4. representation
The complainant GIRP is represented in this matter by
HERBERT SMITH,
Rue Guimard, 15,
B-1040 Brussels
Tel: 02 511 7450
Fax: 02 511 7772
The authority of Herbert Smith to submit this complaint is attached as APPENDIX 4.
All enquiries and correspondence may be addressed to Stephen Kinsella, Managing Partner () or Ken Daly, Solicitor ().
5. Pharmaceutical distribution in the EU
Overview
As the Commission is aware from a number of previous cases, prescription pharmaceutical distribution in the EU is characterised by a number of unusual factors and complexities. In particular, the distribution chain has different characteristics in each of the EEA member states.
The route through which the manufacturer delivers its products to the end consumer is particularly complex, with a number of decision making “actors” playing a role in that distribution.
Actors within the pharmaceutical supply industry
(a) Patients/consumers represent the final demand and are the users of pharmaceutical products. However, they have only a very remote ability to actually choose which product they will use or which price they will pay. As products must be prescribed by doctors and as the end users normally do not themselves pay for the products (which are paid for via social reimbursement schemes and/or private insurance) they are unusually “dis-empowered” consumers.
(b) Prescribing physicians make decisions on behalf of their patients, since the latter have neither the knowledge nor the information to decide which is the most suitable medicine for their condition. Physicians take decisions on the Anatomical Therapeutic Chemical level (ATC) and then decide between the different products on offer for the treatment in the specific anatomic or diagnostic area. They direct the dosage, the pharmaceutical form (e.g. pill, injection, etc), quantity (package size) and in all ways which exact product, identified by brand name[2], should be purchased. In special cases, especially when generics are available, the physician prescribes by using the substance name (INN), thus giving the choice between different manufacturers’ products with these ingredients to the pharmacist. In some countries the same choice is allowed if the physician prescribes using the brand name but adding the acronym a.i. for aut idem. In any case the other criteria like dosage, quantity and form are defined by the physician.
Physicians operate under two legal regimes. The choice of the correct medication is, on one hand, part of their therapeutic freedom and professional responsibility. They are - in a limited way - liable for their decision. This includes side effects, unintended effects and interactions with other medicines. On the other hand, doctors’ prescription behaviour is controlled in most countries by cost containment measures such as budgets or formularies (positive or negative lists of products which doctors may prescribe and which the national government will pay for). If he exceeds his budget or prescribes products not on the reimbursement list, in many cases he has to pay compensation and/or fines. For both reasons it is essential that the product issued to the patient is the same as the prescribed one, once the physician has taken his decision.
(c) Dispensing pharmacies - generally pharmacists must follow the prescribing physicians instructions on what to prescribe. For patented products, pharmacists must dispense exactly what is prescribed and they can make no therapeutic substitution. Only a substitution with a parallel traded product is possible. A parallel trade product is a medicine from the prescribed manufacturer, of identical specification, but sourced from another country within the EU rather than being bought in the country in which it is being dispensed. While a pharmacist may make this substitution (in accordance with the legal criteria applicable in each Member State[3]), wholesalers may not make such substitutions. For “off-patent”, generic products a substitution by pharmacists for products with the same active substances is possible in some Member States.
The pharmacist is a qualified person with an academic education, harmonised by directives 433/EWG. He underlies specific professional requirements, regulated on national level. One of his main professional duties is to guarantee that the medicinal product dispensed is identical with the one prescribed. If there are doubts on whether the correct medicine is prescribed, interaction with other drugs could occur, or misuse of the medicine is obvious, the pharmacist has to contact the physician or in special cases the authorities to clarify the situation.