Novartis case: is the rebranding of a generic drug in the name of the original brand authorized? – Intellectual property

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Due to the considerable variations in the prices of medicines within the EU, parallel trade – the cross-border resale of branded pharmaceutical products by a third party without the authorization of the owner of the intellectual property rights – is common in the market. pharmaceutical.

Although any restrictions on the free movement of goods are generally prohibited, certain activities of parallel traders (such as repackaging, relabelling, co-branding, etc.) may sometimes conflict with the rights of trademark owners and give rise to opposition. subsequent marketing of the product.

So what activities of parallel traders are considered permissible from a trademark protection perspective and when can a trademark holder legitimately enforce their rights?

BMS conditions and pharmaceutical repackaging

Parallel trade is closely linked to the principle of exhaustion,
that the trademark holder is no longer able to oppose or control the continued marketing of its trademarked goods once they have been placed on the market in the EEA, except if he has legitimate reasons to do so.1

In the context of parallel trade, the repackaging of pharmaceutical products can be considered such a legitimate reason. To avoid possible opposition to the continued marketing of the repackaged product, a parallel importer must be able to prove the existence of the following five conditions (the
BMS Terms2):

  • the repackaging is necessary to market the product in the import condition;

  • the original condition of the product is not affected by the repackaging;

  • the new packaging clearly identifies the manufacturer and importer;

  • the presentation of the refurbished product does not damage the reputation of the brand or its owner; and

  • the importer notifies the owner of the mark before the sale of the repackaged product and provides a sample of the repackaged product, on request.

Since the ECJ favors a broad interpretation as to when a presentation of the product could harm the reputation of the brand, parallel traders must also be careful when using methods such as “markdown” or “co-branding”. , although it is a question of fact and, ultimately, for the national courts to decide on a case-by-case basis (C‑348/04).

Rebranding of pharmaceutical products and effective market access

In practice, product manufacturers often use different packaging or different brands for the same product in different Member States. As a result, parallel importers often seek to replace the mark used by the owner in the state of export with the mark that the owner uses in the state of import.

However, the replacement of the original mark by another means that the owner of the mark has not placed or consented to the placing on the market of the goods in question under this specific mark. The CJEU has already established that in such cases the principle of exhaustion does not apply (C-379/97). Therefore, given that the trademark owner’s rights have not been exhausted, the trademark owner is then free to oppose the continued marketing of the goods in question, as long as this opposition does not lead to the artificial partitioning of the EU Member States’ markets (Article 36 TFEU).

In such cases, the national courts must assess whether it was objectively necessary for the parallel importer to replace the original mark in order to market the product in the State of importation (C-379/97). In particular, the CJEU indicated that rebranding could be allowed if effective market access was otherwise impeded.

Rebranding a Generic Drug to Originator Brand Name and Joint Novartis vs. Impexeco and PI Pharma Cases

In June this year, the Brussels Court of Appeal referred two requests for a preliminary ruling to the ECJ, both concerning the controversial question of whether a parallel importer is allowed to market a generic pharmaceutical product after having repackaged and rebranded this product with the brand name of the initiator.3

The facts of the cases revolve around two Belgian companies, which imported the generic drug (Letrozol Sandoz® 2.5 mg and Methylphenidate HCI Sandoz® 10 mg) from the Netherlands to Belgium after repackaging and rebranding the drug with the originator brand (Femara® 2.5 mg and Rilatine® 10 mg, respectively).

The CJEU’s decision will focus on whether opposing the rebranding of the generic medicine to the originator brand name could lead to an artificial partitioning of the market. If the answer is yes, the ECJ is also invited to answer whether, in such a case, the BMS conditions should be applied.

The cases are characterized by the fact that (i) the composition of the generic medicines in question is identical to that of their originator counterpart, and (ii) both – generic medicine and originator medicine – are marketed by companies belonging to of the same group.4 Although having the same therapeutic effect, the generic and original drug are distinct from the point of view of regulation, pricing, medical and public perception. What is also significant is that the generic medicine Letrozol Sandoz® 2.5 mg is marketed in the Netherlands as well as in Belgium, so that the parallel importer could have entered the market without renaming the imported generic product .

It will surely be interesting to see if and how this will impact the ECJ’s decision. As noted, however, striking the balance between the free movement of goods and the protection of intellectual property rights is not always straightforward.

Stay tuned!

Footnotes

1 Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark, article 15.

2 Developed by the CJEU in Bristol-Myers Squibb and Others, C‑427/93, C‑429/93 and C‑436/93, see also: Boehringer Ingelheim and Others, C‑348/04.

3 C-253/20 Novartis AG v Impexeco NV, C-254/20 Novartis AG v PI Pharma NV.

4 Namely the Novartis Group, to which belong the Novartis Division (sale of branded patented medicines) and the Sandoz Division (sale of generic medicines).

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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