The Healthcare Industry: A New Era in Drug Distribution

MAY-JUNE 2018|BY IRENE KYRIAKIDES, KYRIAKIDES GEORGOPOULOS LAW FIRM PARTNER, HEAD OF THE LIFE SCIENCES/PHARMACEUTICAL PRACTICE GROUP
It is common knowledge that the healthcare industry in Greece is facing an increased need to optimize the efficiency of the supply chain of medicinal products, which is partially undermined by the fragmentation of the current distribution network.

The recent oncological drugs scandal drew attention to a reality already known to the market. As such, the industry is searching for efficient options to address this challenge in a manner that removes inefficiency from the system, ensures the smooth provision of adequate treatment to the patients, and preserves the same level of service and product availability, despite the application of new distribution models. The adoption of new technologies and digital solutions is inevitable.

Within this context, a leading marketing authorization holder (MAH) recently decided to take the first step and pioneer in restructuring its wholesale network, by reducing its members and enhancing the use of digital means in supplying its products to the market. This decision was amplified by the fact that the traditional distribution markets are being transformed in most EU countries. Following this pan-European market trend, and by way of applying the best practices of other markets, the MAH proceeded with the re-mapping of its entire distribution network.

With an optimal number of remaining distributors selected—following the application of objective, transparent and non-discriminatory criteria—the departing wholesalers were notified of the termination of their contractual relationships. Whist Greek and EU legislation does not oblige pharmaceutical companies to supply products to every licensed wholesaler and therefore allows the companies to organize their distribution models according to their own needs, it was more than certain that, given the innate Greek propensity for litigation, reactions would emerge. And so it happened.

Several wholesalers raised claims both with lawsuits, requesting compensation, and with petitions for injunction, seeking the continuation of the terminated distributorships. The terminated distributors focused their supporting allegations on the fact that their contracts with the MAH were long-standing and of a mandatory nature. Furthermore, they insisted that they would suffer substantial damages as a result of the allegedly abusive and sudden termination. All petitions for injunctions filed by the wholesalers have been rejected by the courts. Three different judges, in eight judgments, ruled that the petitions were unlawful, as the contracts in question were ones of simple distribution, bearing as only consequence of termination the rise to damages (if the termination were deemed abusive) and stipulating no obligation for the continuation of the relationship.

Our experience from this multi-dimensional project, which extended from designing the selection procedure of the terminated distributors to representing the MAH before the courts, confirmed our initial estimation that a new era of better, more effective drug distribution is rising. The acknowledgment that this need is not only understood but also supported and encouraged by the Greek courts is one of the most auspicious signs the market has received lately.

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