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April 28, 2003
Competition Bureau will not challenge drug export ban on Canadian Internet pharmacies
Vicky Eatrides

On March 21, 2003, the Competition Bureau (the "Bureau") announced that it would not proceed against GlaxoSmithKline (GSK) for blocking Canadian-based Internet pharmacies from exporting its drugs to the United States. The Bureau examined potential violations to both the criminal and civil provisions of the Competition Act (the "Act").

The complaints arose from GSK's notification to Internet-based pharmacies and wholesalers in January 2003 that it would not allow its products to be exported to the United States. GSK argued that the export of Canadian medicines to the United States presented serious issues for the Canadian health care system, placed a strain on the supply of medicines for Canadians and posed a safety risk for patients in the United States accessing unregulated Canadian medicines.

From a civil perspective, the Bureau examined whether GSK's behaviour violated the refusal to supply (section 75) or market restriction (section 77) provisions of the Act. These provisions, the Bureau noted, generally recognize that suppliers may set the terms and conditions of sales, provided that they have a reasonable business justification for doing so. In this regard, the U.S. Food and Drug Administration informed the Bureau that the exports in question contravene U.S. law, which the Bureau regarded as sufficient basis for it to conclude that GSK had a reasonable business justification for blocking the exports while continuing to supply the Canadian market.

From a criminal perspective, the Bureau examined whether GSK's behaviour violated the price maintenance provision (section 61) of the Act and found no evidence to suggest "that a violation had occurred."

Finally, the Bureau concluded that there was "no appreciable impact" on Canadian consumers resulting from the export ban. Given its limited resources, the Bureau considers a variety of factors when determining which cases to pursue. Following a consideration of the facts, the Bureau determined that the complaint against GSK warranted no further attention on its part, although it also noted that private parties can pursue "private legal actions" and that "some complainants have already announced their intention to do so."



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