Can parallel importers (re)brand generic medicines? The CJEU limits the ‘room for manoeuvre’
If a branded medicine and its generic version are put on the EEA market by economically-linked undertakings, is a parallel importer then allowed to rebrand and repackage the imported generic version as the branded reference medicine? After the Brussels Court of Appeal had referred questions on this issue for a preliminary ruling two years ago, the CJEU has now clarified the limits.
The trade mark proprietors of the reference medicine and of the generic medicine may in principle oppose the rebranding of the parallel imported generic medicine into the reference medicine. Parallel importers may only rebrand if (i) the two medicines are identical in all respects (for which bioequivalence is not sufficient) and (ii) the medicine concerned cannot be marketed in the Member State of destination under its trade mark in the Member State of origin (i.e. objective necessity).
Trade mark holders in the EU have the exclusive right to control when and where their goods are first placed on the EU market. However, rights holders cannot control the subsequent distribution of the goods once the goods have been placed on the EU market as their rights have been exhausted.
This situation has led to a particular business of parallel trade in which parallel traders buy medicines placed on the market in EU Member State X and sell them in EU Member State Y. By doing so, they benefit from the price difference for the medicine in the market of origin compared with the market of destination.
Some parallel traders have sought additional benefit by buying the even cheaper generic medicine in the market of origin and selling it as the branded reference medicine in the market of destination.
In May 2020, the Brussels Court of Appeal (‘CoA’) referred three questions for a preliminary ruling to the Court of Justice of the European Union (‘CJEU’) on such parallel importing into Belgium of generic medicines rebranded into reference medicines. Both the cases concerned the parallel import and rebranding of generic products from the Netherlands of Novartis’ generic division, Sandoz, into the branded products of Novartis itself.
Therefore, the background was very similar in both cases. The reference medicine and generic version were bio-equivalent, shared the same therapeutic indications and were commercialised in both Belgium and the Netherlands. The parallel importers had obtained a parallel import authorisation from the Belgian Federal Agency for Medicines and Health Products. The crux was that the parallel importers also sought to affix Novartis’ respective trade marks (for Femara® and Rilatine®) on the generic products that had not been marketed with those trade marks.
In an earlier blogpost, we discussed the Brussels CoA’s questions for the preliminary ruling reference to the CJEU regarding the question of whether parallel importers can rebrand and repackage the imported generic version as the branded reference medicine (C-253/20 and C-254/20), and discussed (contradictory) Belgian case law at the first instance level.
The CJEU’s decision – a new key chapter in EU parallel trade
In its decision of 17 November 2022, and in line with its own Advocate-General Szpunar’s Opinion from earlier this year, the CJEU has now decided that the trade mark proprietors of the reference medicine and of the generic medicine may in principle oppose the rebranding of the parallel imported generic medicine to the reference medicine.
An exception applies and the parallel importer is thus free to rebrand only if two cumulative conditions are met: (i) the two medicines are identical in all respects and (ii) the rebranding meets the so-called BMS-conditions, including that of objective necessity. We will consider each condition in turn.
- (i) Identical medicinal products
The CJEU has held that, although generic medicines are bioequivalent to the reference medicine, they are not necessarily identical. They may indeed be different in terms ofcomposition as regards the pharmaceutical form, the chemical form of the active substance and its excipients. Additionally, medicines may be contraindicated to be replaced during treatment with an equivalent medicinal product, which particularly applies to medicines with a so-called ‘narrow therapeutic margin’.
According to the CJEU, considering medicines as identical solely given their bioequivalence, and allowing rebranding in such cases, could thus mislead health professionals and patients, with potentially serious consequences for the health of those patients.
Therefore, the CJEU has considered that only generic medicines that are identical ‘in all respects’ to the reference medicine can be eligible for rebranding. The CJEU has added that this could be the case for medicines that are manufactured by the same entity or by economically-linked entities and that, in actual fact, constitute one and the same product marketed under two different sets of rules.
- (ii) Objective necessity
However, even if the two medicinal products are indeed identical in all respects, that is not sufficient, and rebranding is still only allowed if the so-called BMS-conditions, such as the condition of objective necessity, are met. These conditions were established by the CJEU in its benchmark decision of 11 July 1996 in the Bristol-Myers Squibb (“BMS”) case.
Of particular importance is the first BMS-condition of objective necessity. When applied to rebranding, this condition is met if the medicine concerned cannot be marketed in the Member State of destination under its trade mark in the Member State of origin. In such a case, rebranding is objectively necessary to market that medicine in the Member State of destination.
By contrast, there is no objective necessity if the parallel importer is able to market the medicine under its trade mark of origin and the rebranding is explicable solely by the parallel importer’s attempt to secure a commercial advantage, particularly by seeking to take advantage of the reputation of the trade mark of a reference medicinal product or to place a product in a more profitable category.
- Proprietors of the trade marks of the reference medicine and of the generic medicine may in principle oppose the rebranding of the parallel imported generic medicine into the reference medicine.
- Parallel importers are only allowed to rebrand if (i) the two medicines are identical in all respects and (ii) rebranding is objectively necessary.
- For condition (i), first, while a generic medicine is bioequivalent to the reference medicine it is not necessarily identical.
- Also for condition (i), second, generic medicines and reference medicines manufactured by the same entity or by economically-linked entities and which, in actual fact, constitute one and the same product marketed under two different sets of rules, can be considered as identical.
- Even if condition (i) is met, rebranding is only possible if condition (ii) is also met, and thus if the medicine concerned cannot be marketed in the Member State of destination under its trade mark in the Member State of origin (i.e. objective necessity).
For further questions, contact the Life & Health team.
EU harmonizes THC limits in hemp seed (food) as from 1 January 2023 – Update Belgium
The EU regulator has harmonized the maximum levels for tetrahydrocannabinol (THC) in hemp seeds throughout the Union within the food contaminants framework.Read on
The recent tax and social security reforms on copyright income: what employers need to know
Following an intense debate, the legislator introduced a new tax scheme applicable to copyright income. Main raison for this initiative is the assumed abuse of the until then beneficial tax regime. Under the amended tax rules, employees still qualify for the special tax scheme, but with a stricter legal framework.Read on
European Parliament passes sweeping due diligence rules on deforestation-free supply chains for products such as cocoa, coffee and soy
An EU Regulation on the making available on the Union market as well as export from the Union of certain commodities and products associated with deforestation and forest degradation (“Deforestation Regulation”) was agreed upon by the EU legislators in December 2022. The European Parliament has now green-lighted the Provisional Agreement at this month’s plenary session.Read on