Philippine Supreme Court clear on support for parallel imports
This article was originally published in Scrip
The Supreme Court of the Philippines has rejected a long-running legal action against a regional drugstore for alleged contravention of a counterfeit law, ruling that its parallel importation of branded products was allowed by new legislation passed last year.
The decision sets an important precedent in the interpretation and enforcement of the 2008 Universally Accessible Cheaper and Quality Medicines Act, and suggests that multinationals may find it very difficult to prevent such imports in future.
Roma Drug, in the country's central Pampanga province, was one of several raided by authorities in 2000 at the request of then SmithKline Beecham (SKB). The drugstore had imported for sale several original branded SKB products, including the antibiotics Augmentin (amoxicillin plus clavulanate) and Ampiclox (ampicillin plus cloxacillin).
SKB had asked for action because it was the local patent and trademark owner, the products were not procured through its normal channels, and such imports could be considered unlawful under a Philippine special law on counterfeit drugs.
This prohibits the sale of counterfeits, its definition of which extends to "an unregistered imported drug product".
A complaint was subsequently filed by the National Bureau of Investigation, which led to a regional court case. During this, the owner of the drugstore argued that prohibiting the products' sale would go against aspects of the constitution, which, for example, includes statements on the country's duty to provide affordable healthcare.
The court issued a temporary restraining order preventing the authorities and SKB from proceeding with a trial or any planned prosecutions. GlaxoSmithKline, as it became, and the authorities have since opposed the petition and the defendant's arguments, leading to the new Supreme Court ruling.
In this, the court found that the issues under the counterfeit law were mooted by the new cheaper medicines act. This, it noted, amended the national intellectual property code to allow the import (under certain conditions) of locally patented products by third parties without the permission of the patent holder.
Furthermore, the right of third parties to possess "unregistered imported drugs" was confirmed in the new legislation's implementing rules. Although the provisions of the earlier counterfeit act were not specifically repealed in the 2008 law, this took precedence, it ruled.
The Supreme Court was unequivocal, noting that even medical aid agencies could be branded as criminals under the old counterfeit law. "For a law that is intended to save lives, the SLCD [counterfeit law] has revealed itself as a heartless, soulless legislative piece," it commented.
The Philippine government has, in fact, itself been parallel importing selected branded drugs for several years, in a programme designed to reduce prices at state-run regional hospitals and drugstores. Whether the ruling will pave the way for private sellers to do the same remains to be seen.
The judgement was welcomed by Mar Roxas, a prominent Philippine senator. But the Liberal Party president, who is seen as a future presidential candidate, again attacked the department of health for failing to implement the cheaper medicines law quickly enough. A list of common drugs to which maximum retail prices would be applied (as provided for by the law) had still not been drawn up, he said.
Although it may have suffered in the public eye from its involvement in the case, GSK has recently taken some positive steps with regard to pricing in the Philippines.
In line with its new global policy, it recently cut the prices of many of its major products by 30-50%, and the local price of its cervical cancer vaccine Cervarix was reduced by 60% last November. The firm has also been expanding patient schemes offering discounted products for chronic diseases.