On 2 March 2007, the High Court rejected an application for an interim injunction which, if granted, would have seriously disrupted Pfizer’s implementation on 5 March of a new Direct to Pharmacy model for distribution of its pharmaceutical products. Under the new system, pharmacies and dispensing doctors are buying Pfizer prescription medicines directly from Pfizer and not (as before) through third party wholesalers. Delivery of the products is made by UniChem, a former Pfizer wholesaler customer now providing a logistics service to Pfizer.
The application was made by eight wholesalers whose main arguments were that the new arrangement breached competition rules and that there was an immediate risk that pharmacies would switch their non-Pfizer business to UniChem, causing irreparable harm to the affected wholesalers. The application for an interim injunction was heard on the last business day before the 5 March go-live date.
The wholesalers had been aware of the go-live date since September 2006 and had chosen to complain to the OFT. The OFT had received evidence from all parties on whether the scheme warranted any investigation on competition law grounds. However, by February 2007, the OFT had not been persuaded that there were grounds to commence an investigation or to stop Pfizer’s implementation of the Direct to Pharmacy model before its go-live date. The claimants therefore decided to commence proceedings and request that the court grant an interim injunction.
The court criticised the wholesalers’ delay in making this application. This was not however the only reason for rejecting it. The court found that the wholesalers had not provided sufficient evidence to persuade the court that pharmacies would switch their non-Pfizer business to UniChem and also that, on the evidence before it, the disruption and damage to Pfizer (and to the market generally) by the court ordering the interim injunction would be greater. No substantive view was given on the core competition issues.
The Pfizer Direct to Pharmacy model is an important development for the pharmaceutical market – there has been speculation in the press regarding other suppliers pursuing similar models. The model is now operational and UniChem are now making deliveries under the new model.
The court’s decision is of more general significance for the crossover between litigation and competition procedure, in particular where parallel jurisdictions are being required to investigate the same matter. Pfizer and UniChem have been given one month in which to apply for a stay in the court proceedings, pending resolution of the competition procedure. There is no clear guidance in the law on the interaction between the two procedures and this case could lead to clarification on the issue.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 07/03/2007.
