OFT market study on pharmaceutical wholesaling

OFT grounds (5 pages, PDF) for initiating a market study into UK pharmaceutical wholesaling and distribution arrangements. This follows from wholesalers' complaints back in November 2006 alleging that Pfizer's decision to distribute all its drugs in the UK through an exclusive distribution contract with Alliance Boots (Unichem) and to refuse to supply wholesalers was in breach of Article 82 and the Competition Act 1998. OFT also states that other pharmaceutical manufacturers are considering similar exclusive agency distribution arrangements.

Whilst other matters may arise in the course of the investigation, the OFT proposes to direct its initial focus on examining the motivation for and impact of the direct-to-pharmacy model and of exclusive distribution arrangements. The impact on competition and choice in wholesaling, on the discounts granted to pharmacies and the NHS, and on the service levels will be considered.

The OFT study is expected to be completed in late 2007, at which point OFT may consider the competition law enforcement action requested by the complainants in the Pfizer case.

The OFT's ground for not considering enforcement now is that:

The OFT does not consider a Competition Act 1998 investigation to be appropriate at this stage given the market wide concerns that have been raised.

Submissions to the OFT by Friday 1 June 2007.

Comment: Taken together with the March 2007 High Court judgment rejecting an application by wholesalers for an injunction to prevent implementation of the new Pfizer distribution arrangements, on the grounds of delay in bringing the matter to the court, the OFT's decision and timetable suggests that, even in cases involving the OFT's priority areas, victims of alleged anti-competitive conduct cannot rely on the OFT to protect their rights in a timely manner, and may need to institute litigation in parallel with any complaint to the competition authority. Franck

For further information or advice please contact Franck Latrémolière.

Filed under Article 82, Healthcare, OFT, Pharmaceuticals.

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