Drug giant to crack down on trade deals between EU states

Date: 06/06/02

By Laurence Frost

DRUG company Pfizer has given wholesalers 30 days to provide information on their medicine sales or face additional bills, in a move designed to reduce trade in its products between EU countries.

The Viagra maker's latest bid to cut out the parallel traders who exploit differences between official prices in EU states has raised the stakes in the European Commission's probe into its controversial pricing scheme in Spain.

Spanish wholesalers' association Fedifar last year complained to Mario Monti, the competition commissioner, about Pfizer's demands that it pay higher rates for drugs destined for export (European Voice, 6 September 2001).

Under the pricing system unveiled four months earlier, Pfizer warned wholesalers on their invoices that the rates charged were 'Spanish prices', applicable only to drugs resold within the country.

Wholesalers failing to provide proof of resale in Spain within six months would be invoiced for the difference between the original rate and the higher'free price' set by Pfizer for international sales.

Now the drugs giant has written to wholesalers informing them that bills will soon be sent out to those who 'persist in refusing to provide Pfizer with the information necessary' to prove that supplies were resold in Spain.

Pfizer maintains the conditions it imposes on wholesalers comply with a 1999 Spanish law restricting the lower drug prices negotiated by the government to sales within the state healthcare system.

'We gave them the six months during which they have a right according to Spanish law to the intervention price set by the Spanish government,' said Vicente Morales, legal director of Pfizer Spain, who signed the letter to wholesalers.

But the wholesalers - including some parallel traders - insist the regime breaks EU competition laws, and are calling on the Commission to intervene.

'I hope that it speeds up the case,' said a spokesman for Fedifar.

'A dispute over payments could lead to supplies being cut off,' he said, 'and that will create competition problems for drug distribution in Spain.'

Fedifar has asked the Commission to issue an interim order banning the scheme during its investigation, and lift the immunity from fines that Pfizer automatically secured by notifying the executive of the scheme. Even a remote prospect of competition fines - up to 10 of turnover under EU law - could be enough to force Pfizer to withdraw its scheme.

The wholesalers also say Commission officials told them in January that Pfizer had pledged not to implement the pricing system while investigations were under way - a claim the company denies.

'The scheme is going ahead,' said Pfizer spokeswoman Colette Graham. 'There was never any requirement or discussion about not going ahead with it.'

Monti's spokeswoman Amelia Torres refused to say whether the drug firm had given such an undertaking.

'It's not our policy to comment on details of cases under review,' she said.

Drug company Pfizer has asked wholesalers to provide information on their medicine sales in a move designed to reduce trade in its products between EU countries, despite a European Commission probe into its controversial drug pricing scheme in Spain.