Repackaging of medicine is a hotly debated issue between pharmaceutical companies and parallel traders. Last week the CJEU published its keenly awaited judgments concerning several well-known pharmaceutical companies which provide guidance for parallel traders of medicines.
- Opening a medicine’s packaging in order to comply with EU regulations in the import country can leave visible traces. Such traces are not themselves sufficient to justify the parallel trader replacing this outer packaging, the CJEU rules.
- The exception to that rule is a strong consumer resistance (to the point it’s a hindrance to effective market access) to purchasing either relabelled medicines or medicines with visible traces of opening and resealing on their packaging. Parallel importers cannot rely on a general presumption of consumer resistance – they should prove it in practice.
- The CJEU also declares national rules that require parallel traders to repackage imported medicines, rather than relabel them, contrary to EU law.
When can a trademark owner oppose the repackaging of parallel imported medicines? It is a hotly debated issue between pharmaceutical companies and parallel traders, which has led to a series of cases before the Court of Justice of the European Union (the “CJEU”). The resulting set of rules is commonly referred to as the “BMS conditions”.
Last Thursday’s CJEU judgments are the latest addition to the series (CJEU, 17 November 2022, Novartis, Bayer IP, MSD, Ferring and Lundbeck vs. Abacus Medicine, Kohlpharma, Paranova and 2CARE4, C‑147/20, C‑204/20 and C‑224/20).
Commission Delegated Regulation
An EU Regulation on the packaging of medicinal products has been the trigger for these new judgments. The Commission Delegated Regulation (no. 2016/161) of 2 October 2015 (the “Regulation”) sets out the safety requirements for medicinal products for human use. This Regulation supplements the Falsified Medicines Directive (EU Directive no. 2001/83) of 6 November 2001 and was implemented in 2019.
In a nutshell, since 2019, all medicines sold in the EU must have a unique identifier (a barcode) and an anti-tampering device (a safety seal):
- The unique identifier ensures that the medicinal product originates from the legitimate manufacturer.
- The anti-tampering device is there to verify whether the packaging of a medicinal product has been opened or altered. This ensures that its contents are authentic.
First, we will have a brief look at the facts of the cases to properly understand the background of these judgments. Next, we will recap the BMS criteria. Finally, we will examine the CJEU’s decisions and provide some initial comments on the outcome.
Background of the cases
In practice, parallel traders of medicinal products may be compelled to open the packaging (e.g., to add a new notice) to comply with the local regulations in the import market. Since the implementation of the Regulation in 2019, these manipulations would cause damage to the safety seal and/or barcode on the packaging.
Arguments of the parties
- The parallel traders in the cases (Abacus Medicine, Kohlpharma, Paranova and 2CARE4) argued that a replacement of the outer packaging of the medicines is necessary since the visible and irreversible traces of opening of the original packaging cast a doubt on the integrity of the medicinal products. They found support for this position in guidelines from national authorities.
- The pharmaceutical companies (Novartis, Bayer, MSD, Ferring and Lundbeck), argued that the Regulation is complied with when parallel traders attach a barcode with the unique identifier to the original outer packaging (using a sticker for example) and add a new anti-tampering device covering the traces of the opening of the original packaging – albeit with some indication that this new safety seal was affixed during a lawful repackaging. They argue that such measures would be sufficient to guarantee access to the market.
The BMS conditions for opposing repackaging
In principle, a trademark holder cannot oppose the parallel import of medicines resold within the EEA (CJEU, Centrafarm, 1974, C-16/74). That changes when the parallel trader repackages the goods (CJEU, Hoffmann-La Roche, 1978, C-85/76).
In that situation, the trademark owner can oppose the parallel import unless five conditions are met (CJEU, Bristol-Myers Squibb, 1996, C-427/93, Boehringer Ingelheim, 2002, C-143/00 – see also our previous post on the BMS conditions for medical devices here) These conditions are:
- Repackaging is necessary for commercialising the goods in the import market, for example because of national legislation or national practice. Repackaging can also be necessary because of a strong resistance by a significant part of the public against medicines that were merely relabelled instead of repackaged. If repackaging is necessary for trade within the EU, a trademark holder’s opposition to it would mean artificially partitioning EU markets;
- The product is in its unaltered original state;
- The parallel trader has given prior notice to the trademark holder of the repackaging;
- The new packaging contains an indication of the entity responsible for the repackaging; and
- The new presentation does not cause damage to the reputation of the trademark (e.g., because of a defect or bad quality packaging).
CJEU’s latest judgments: no obligation to repackage
The CJEU considers that the mere presence of traces on the outer packaging of a medicinal product of it having been opened by a parallel trader is not, in itself, sufficient to justify a replacement of this outer packaging. So, parallel traders cannot merely rely on the fact that their manipulations to comply with local regulations in the import market have left traces on the outer packaging of a medicinal product, to completely repackage it.
Indeed, the EU legislator has expressly provided for the possibility of replacing the two safety features. The CJEU therefore deduces from this wording that the legislator did not intend to prevent the reuse of the original outer packaging by any means. But, the CJEU makes it conditional on the possibility that the original safety features can be replaced by equally effective features for enabling identification of the authenticity and verification of the integrity of the medicinal products.
The CJEU also points out that wholesalers and pharmacists should have no doubt that the traces of opening are attributable to a lawful action by a parallel importer. This means that the packaging of the medicinal product should clearly mention the repackager, providing information to downstream actors in the supply chain on the possible origin of those traces.
The CJEU also gives some practical guidance on the replacement of the barcode. It can be attached to the outer packaging using an adhesive label (so the importer does not necessarily have to print it on the outer packaging). This is as long as this label cannot be removed without being damaged and that the barcode remains perfectly readable at all relevant times.
CJEU’ s latest judgments: exceptions
The CJEU provides for two exceptions to this principle of relabelling rather than repackaging where there is strong resistance from a significant proportion of consumers in the import market to acquiring:
- relabelled medicinal products, to the extent that it would constitute a hindrance to effective market access; or
- medicinal products for which the outer packaging bears visible traces of being opened, caused by the replacement of the original safety features.
However, the CJEU downplays the scope of these exceptions to the extent that parallel importers cannot rely on a general presumption of consumer resistance to such medicinal products. The parallel importer must show that these exceptions exist taking into account the circumstances in the import market, and whether traces are visible or, on the contrary, can be detected only after a thorough verification by wholesalers or pharmacists.
CJEU’ s latest judgments: consequence for national legislations
The CJEU rules that Member States have no discretion to impose that parallel imported medicinal products must, as a general rule, be repackaged instead of relabelled. This was the situation for the German and Danish guidelines in these cases. Member States cannot require parallel importers, by default, to repackage in new packaging rather than to relabel the medicinal products which they import.
Since the implementation of the Regulation, all medicinal products sold within the EU must have a unique identifier (a barcode) and an anti-tampering device (a safety seal). The parallel traders’ position that these safety features must necessarily be included on new packaging once the original packaging has been opened, would have entailed an automatic right to repackage all parallel traded medicines in the EU. In other words, effectively putting aside the first key BMS condition (that repackaging be necessary). The CJEU’s decision not to follow this position is in line with previous case-law, but still a welcome confirmation for pharmaceutical companies. It logically follows from the general legal developments on parallel import of repackaged medicines and trademark law.
It is undeniable, however, that the current decision leaves some uncertainty for parallel traders – and therefore, potential litigation. For example, it will be up to national courts to decide, when traces left by the original safety seal provoke such a strong reaction from consumers towards the medicines that they constitute an obstacle to market access.