Smith & Nephew and Primecrown: products made under licence from the same licensor have a common origin

What was decided

Smith & Nephew sold Ditropan, an oxybutynin tablet for urinary incontinence, in the United Kingdom under an agreement made in 1982 with Marion Merrell Dow, an American company. The UK authorisation took until January 1991 to obtain: the Medicines Control Agency found Marion Merrell Dow’s data insufficient, required further clinical studies, and, according to the High Court, required the formulation to be changed from the American one. Primecrown, a parallel importer, first applied in October 1992 to import a French Ditropan sold by Laboratoires Debat, and was refused because there was no link between Smith & Nephew and Debat. In February 1993 it applied again, this time for the Belgian Ditropan sold by Marion Merrell Dow’s own Belgian company. The MCA’s assessor found the Belgian product identical in formulation to the UK one, and the MCA granted the licence on 24 August 1993, believing the two companies were linked in the way its parallel import notes, MAL 2 (PI), required. When Marion Merrell Dow wrote that Smith & Nephew was a separate company it merely supplied with the active ingredient, the MCA withdrew the licence. Smith & Nephew sought judicial review of the grant; Primecrown challenged the withdrawal; the High Court referred four questions.

The Court of Justice first restated De Peijper: the Directive’s full authorisation procedure exists for products being put on the market for the first time, and does not apply to a product already authorised in the importing state that is being imported in parallel. In De Peijper the two products came from the same group. The Court extended that to products made by independent companies “pursuant to agreements concluded with the same licensor”, which it said have a common origin by virtue of those agreements; otherwise licensing arrangements could be used to partition national markets. The authority must also verify that the two products, “if not identical in all respects, have at least been manufactured according to the same formulation, using the same active ingredient, and that they also have the same therapeutic effects”. To do that it can compel the manufacturer, its representative or the licensee to supply information, consult the existing authorisation file, and cooperate with the authorities of other member states. If every criterion is met, the import must be treated as covered by the existing authorisation, unless there are countervailing considerations of health. If not, a new marketing authorisation is needed and can only be granted on a full dossier; the authority cannot use one company’s data to authorise another company’s product without consent.

Two further answers matter in practice. The licensor being outside the Community, as Marion Merrell Dow was, makes no difference. And the holder of the original authorisation can rely on the Directive in a national court to challenge an authorisation granted to a competitor for a product of the same name, including one granted under a national simplified procedure that should have gone through the full route.

Timeline

Date	Event
1982	Smith & Nephew’s agreement with Marion Merrell Dow; UK application lodged
January 1991	UK marketing authorisation for Ditropan granted to Smith & Nephew
8 October 1992	Primecrown applies to import French Ditropan (Laboratoires Debat); refused for lack of any link with Smith & Nephew
22 February 1993	Primecrown applies to import Belgian Ditropan sold by Marion Merrell Dow Belgium
8 July 1993	MCA assessor finds the Belgian and UK products identical in formulation
24 August 1993	MCA grants Primecrown’s parallel import licence
7 September 1993	Marion Merrell Dow tells the MCA that Smith & Nephew is a separate legal entity; the MCA later withdraws the licence
26 January 1994	High Court grants Smith & Nephew leave for judicial review of the grant; Primecrown challenges the withdrawal
4 May 1994	High Court refers four questions to the Court of Justice (received 11 July 1994)
12 November 1996	Judgment

What it means if you are…

A parallel trader. This is the origin of the “simple” application in the UK. If the UK product and the one you want to import come from the same group, or from companies licensed by the same licensor, and share formulation, active ingredient and therapeutic effect, the regulator must treat your import as covered by the UK licence. Where the licensor is outside Europe, as here, that does not matter. What Smith & Nephew did not decide is what happens when there is no common origin at all; the Court answered that eight years later in Kohlpharma.

An originator or UK licence holder. You have standing to challenge a parallel import licence granted against your product, and the regulator cannot use your dossier to authorise a product that fails the similarity test. But a licensing agreement with the same licensor gives the imported product a common origin with yours, even if you have never dealt with the exporting-country company.

A wholesaler or buyer. A parallel-imported product under a simple licence has been found by the regulator to share the UK product’s formulation, active ingredient and therapeutic effect. The regulator’s finding here, that the Belgian and UK Ditropan were identical in formulation, is the kind of check that lies behind the licence.

Status and what to watch

Good law. The test the Court stated, same formulation, same active ingredient, same therapeutic effect, is now written into regulation 48(3) of the Human Medicines Regulations 2012 as the definition of “essentially similar”, and the common-origin element is the dividing line between the simple category and the standard and complex categories in the UK fees rules; the explainer sets out how they fit together. Kohlpharma in 2004 held that the absence of a common origin is not in itself a ground for refusal, which the German authority had read Smith & Nephew as implying. In the United Kingdom the judgment is assimilated case law, open to departure by the Court of Appeal and the Supreme Court; neither has departed from it.

This note is a summary for commercial readers and is not legal advice.