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Parallel Trade Series 1: What is parallel trade?

Parallel Trade Series 1: What is parallel trade?

In this Parallel Trade Series composed of four articles, we would like to clarify basics and the necessity of parallel trade in pharmaceutical and healthcare products. In this first article, we focused on the definition of parallel trade in pharmaceutical markets.

Parallel trade is nothing new; it has been applied between different economies where significant price differences of often the same commodities exist. In other words, main raison d’être (reason of existence) for such form of trade is important price divergences of usually the same products across different markets. In addition to pharmaceutical markets, parallel trade has been observable in other industries as well; automotive, food, clothing etc.

Parallel trade or sometimes referred as parallel import or parallel distribution in pharmaceutical market simply refers to buy medicinal products in a country that sells them at a reasonable price and then to distribute such products outside the distribution channels set up by the drug manufacturer or its recognized distributor in one’s own country of origin. It is named ‘parallel’ as it takes place alongside and usually in parallel to the producer’s distribution networks.

Preferred to use “parallel import”, the European Commission has adopted similar definition for the European Economic Area (EEA) or the EU; “The parallel import of a medicinal product involves importing the product into one Member State from another and then distributing it outside the distribution network set up by the manufacturer or his/her authorised distributor.”[1] Likewise, the European Medicines Agency (EMA) responsible for the scientific evaluation, supervision and safety monitoring of medicines in the EU has defined the business area alike; “Parallel distribution is the distribution of a centrally authorised medicinal product from one Member State to another by a pharmaceutical company independent of the marketing-authorisation holder [authorized distributor].”[2] Accordingly, such form of a trade is a natural implication of the principle of free movement of goods within the European Economic Area (EEA) or the EU.

To simply put, parallel trade in medicines and healthcare products means utilizing different distribution channels. It is a by-product of price divergence of the same pharmaceutical product as national governments set or control the price of medicinal products in their respective markets. The European Commission has recognized parallel trade of pharmaceuticals as a lawful form of trade within the Internal Market of the EU.[3]

To explore current state of parallel trade in medicines within the EU, please continue reading on [Link]: Parallel Trade Series 2: Parallel Trade of Pharmaceuticals in Europe

 


 

[1] The European Union, “Parallel imports of proprietary medicinal products,” eur-lex.europa.eu.

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM%3Al23110 (accessed 5 July 2018)

[2] The European Medicines Agency (EMA), “Parallel distribution,” ema.europa.eu.http://www.ema.europa.eu/ema/index.jsp?curl=pages/regulation/general/general_content_000067.jsp&mid=WC0b01ac0580024594 (accessed 5 July 2018)

[3] European Union: European Commission, Commission Communication on parallel imports of proprietary medicinal products for which marketing authorisations have already been granted, 30 December 2003, COM(2003) 839 final, available at: https://ec.europa.eu/health/sites/health/files/files/eudralex/vol-1/com_2003_839/com_2003_839_en.pdf (accessed 5 July 2018)

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