School of Business

Gray Marketing of Pharmaceuticals

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Description: Parallel imports are ethical drugs purchased in the low-price market, repackaged, and diverted to other markets by means of a distribution systems not authorized by the manufacturer, i.e., a gray market. The question of the legitimacy of gray marketing does not involve the legality of the products, but the legality of the means by which they are distributed. The current difficulties experienced by pharmaceutical manufacturers that attempt to restrict gray marketing of their products can be traced directly to the landmark case of Centrafarm BV v. Sterling Drug Inc., decided in 1974 by the ECJ. Sterling Drug, a New York corporation, held patents on a drug sold in the EU under the trademark Negram. Without obtaining Sterling Drug's permission, Centrafarm, a parallel importer incorporated under the laws of Holland, imported the drug into the Netherlands from the UK. The ECJ ruled that the holder of a patent cannot control the distribution or marketing of that product once it markets the product in another EU Member State.
Language: English
Format: Article