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Intecare Direct Ltd v Pfizer Ltd - High Court upholds Pfizer's stock control policy in interim injunction decision

13/07/2010

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In Intecare Direct Ltd v Pfizer Ltd [2010] EWHC 600 (Ch) the High Court dismissed Intecare Direct Limited's (IDL) application for a mandatory injunction requiring Pfizer Limited (Pfizer) to supply IDL the prescription drug Sutent. IDL had taken issue with Pfizer's stock control policy, whereby it would supply Sutent only to customers possessing a hospital prescription or, exceptionally, in emergency situations. IDL refused to provide any prescriptions and alleged that Pfizer was dominant in the supply of Sutent and that its stock control policy was discriminatory and amounted to an abusive refusal to supply. For the purposes of the interim application only, Pfizer accepted it held a dominant market position with Sutent but denied its policy was abusive; Pfizer argued the policy was necessary to prevent stock shortages within the UK and that the policy did not distort competition because it applied equally to all its customers. Pfizer also denied an allegation that it would use the information garnered through the prescriptions to favour its approved suppliers of Sutent; Pfizer denied it had any approved suppliers of Sutent at all.

At this interim stage, the court agreed that Pfizer's policy appeared necessary to prevent UK supply shortages: the evidence indicated that a fourfold spike in orders had occurred without clinical explanation. Further, the policy did not distort competition since it applied equally to all customers. Pfizer did not operate on the downstream market so could not gain an advantage for itself by refusing to supply IDL. The court also chose to rely on Pfizer's assurance that it had no approved suppliers of Sutent because the assurance would be rapidly exposed on disclosure if it were false. Finally, the court found that there was a greater risk of irreparable harm to Pfizer than to IDL if the court made a wrong decision at this interim stage: IDL could be compensated with money if the interim injunction were wrongly refused, whereas Pfizer faced more serious consequences, including possible sanctions for breach of its statutory obligations, if the injunction were wrongly granted. Having found that IDL was unlikely to succeed at trial and that Pfizer faced a greater risk of irreparable harm if the court made a wrong decision, the court refused to grant the application for an interim injunction.

This High Court decision provides originator companies a degree of comfort that certain stock control policies will survive attack under competition rules. The decision is most pertinent to the pharmaceutical sector where producers are required by law to maintain sufficient stocks of drugs for patients, but is relevant to all genuinely necessary stock control policies. Some doubt remains as to how well this decision fits with ECJ case law on abuse by restriction of parallel trade. IDL denied it intended export Sutent, so the court did not examine this issue. The ECJ has generally viewed restrictions on parallel imports with suspicion, despite holding that a dominant supplier may take steps that are reasonable and in proportion to the need to protect its own commercial interests.


[1] Based on an article by for Competition Law Insight, published June 2010.

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