GLAXOSMITHKLINE vowed to continue its fight against parallel traders after Europe’s highest court said that it could not rule on whether the drug maker’s efforts to stamp out the practice were legal.

GSK said that it would pursue a second case in European courts to set a legal precedent in its war against what it sees as drug profiteering. The case, which could be heard later this year, centres on a dispute with Spanish wholesalers who are resisting a two-tier pricing structure requiring them to pay a premium for drugs destined for resale in other countries in Europe.

The promise came as the European Court of Justice (ECJ) said that it could not rule in a dispute between GSK and drug suppliers in Greece because it did not have jurisdiction over the matter. Greece’s competition commission had asked the ECJ to hand down a ruling after local wholesalers complained that GSK was abusing its position as Europe’s biggest drug maker by restricting supplies of some drugs.

GSK said that it had acted to stem the flow of three medicines from Greece to other countries in the EU.

The Greek case marked the first time that the ECJ had been asked to decide whether a drug company could legally restrict supplies to distributors it suspected of parallel trading.

Parallel trading is estimated to cost European drug companies more than €2.5 billion (£1.7 billion) a year and is growing as more suppliers seek to exploit a loophole that allows them to buy drugs cheaply in one country and sell them at inflated prices elsewhere in Europe.

Governments in Europe still set their own prices for drugs, and at the same time rules supporting the single market dictate that goods must be allowed to flow freely between member countries. The result is that wholesalers can legally buy drugs cheaply in Spain and Greece and resell them for big profits in other countries.

It is estimated that up to 5 per cent of drug sales in Europe are made to parallel traders.

The European Commission supports the principle of parallel trade, arguing that it encourages competition and benefits the consumer by bringing prices down.

However, an advocate-general, one of the ECJ’s top lawyers, ruled last October that normal competition rules should not apply to the drug industry because state intervention effectively skewed the market.

Analysts had expected the ECJ to follow the advice of its advocate-general, but the dispute will go back to Greece’s competition commission. GSK said that its supply arrangements in Greece would not be affected by the ECJ’s decision.

Gavin Robert, a partner at Linklaters, the law firm, was disappointed that the ECJ had declined to rule. He noted that the advocate-general’s opinion would support GSK’s case until it was challenged in court.

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