Court Upholds Pfizer’s Exclusive Distribution in UK
Posted Oct 28 2008 9:57pm
This has been story I’ve been following for a while. Pfizer recently named Alliance Boots in the UK as its exclusive distributor in that country. Pfizer contends the move was prompted by counterfeit Lipitor showing up in the UK pharmaceutical market. Opponents of Pfizer’s move contend that this designed to fight parallel importation—a practice in Europe where products are initially sold in one country with very tight price controls and then resold in more expensive/lucrative markets like the UK. Parallel importation is a way for wholesalers to maximize profits by shifting drugs to countries with the highest selling price.
Today, Ben Hirschler at Reuters is reporting that the high court in London dismissed a challenge by the British Association of Pharmaceutical Wholesalers (BAPW) to block the move.
This move has several implications for the U.S. market. First, it shows a company willing to take initiative against counterfeit medications in the developed world (see previous posts on counterfeit drugs and the UN report on drugs in the developing world). It also shows how and advanced country like the UK is vulnerable to the importation of fake medicines through legitimate channels. As organizations like AARP continue to lobby for importation, we should look to the countries of Europe to see how well such a program works (or does not work).
Second, it could signal a broader strategy for Pfizer in other parts of the world, including the U.S. Pfizer, the largest drug company in the U.S., has experience running its own distribution networks. For years, Pfizer Animal Health has maintained its own distribution infrastructure, including regional warehouses. It would be possible over time for Pfizer to scale this business and accommodate human pharmaceuticals. This would be a monumental undertaking, but could ultimately result in higher profits for the company, cheaper prices for consumers and a more secure distribution network of products.
Excerpts from the Reuters article: Drug wholesalers failed on Friday to block a controversial arrangement making Alliance Boots Plc the exclusive distributor of medicines from Pfizer Inc, the world's biggest drugmaker.
The high court in London dismissed their application for an injunction to stop the deal coming effect on March 5.
Pfizer says it needs the new system to stamp out counterfeiting, following three cases of bogus versions of its top-selling cholesterol fighter Lipitor turning up in the British distribution chain since mid-2005.
Critics believe Pfizer's real aim is to fight parallel trade, the legal practice in Europe whereby medicines are imported for resale into places like Britain from countries in southern Europe, where prices are lower.
The success of its new arrangement with Alliance Boots is expected to be monitored closely by other big drugmakers, some of which are considering similar exclusive deals.