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Parallel Trade Series 3: Benefits of Pharmaceutical Parallel Trade

Parallel Trade Series 3: Benefits of Pharmaceutical Parallel Trade

In this third article of our Parallel Trade Series, we explored different benefits brought by the parallel trade in pharmaceutical markets.

The European Commission clearly acknowledges that “parallel trade brings free competition into the pharmaceutical sector in accordance with the principles of the internal market.”[1] This means that it ensures healthy competition and thus prevents creation of monopolies over the markets. Increased competitiveness in the pharmaceutical industry in turn results in direct and indirect savings.

Savings

Through bringing competition to the market, parallel trade of pharmaceutical products generates direct savings since parallel-imported products are cheaper than the local products in the market. In other words, parallel-imported products are sold at more affordable prices than the local products of the same brand in the market.[2] Moreover, as a consequential effect of competitiveness, parallel trade exerts downward pressures on the originator prices. Therefore, it contributes to price decreases or slowdown of price increases applied by the manufacturers, which can be interpreted as indirect savings.[3]

To clearly illustrate the stance above in numbers, amounts of such savings for selected European countries were shown in the table below; [4]

Turkish Pharmaceutical Wholesaler

It suggests that the amounts of such savings are considerable and at nonnegligible levels as the figures in total exceeds 440 million Euros in 2004.

Welfare effect

The competition brought by parallel trade in the pharmaceutical markets enables individual consumers and/or patients and national healthcare systems to access more affordable pharmaceutical and healthcare products. Consequently, easy access to medicines at competitive prices translated into a “welfare effect” on both consumers and societies.[1] Regarding the fact procurement of medicinal and healthcare products are made either by out-of-pocket payments or public funds collected by various statutory social security systems or a combination of the two, reduction in the prices means lower total private and public drug expenditures. Therefore, it would be safe to conclude that the pharmaceutical parallel trade industry contributes to the welfare of both societies and individuals by lowering the expenditures.

But, how have quality and legality been assured in the industry? To learn the answer, please continue reading on our fourth article in this series; Parallel Trade Series 4: Quality and Legality of Parallel Trade in Pharmaceuticals. (Coming Soon)

 


 

[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 July 10, 2018)

[2] The EAEPC, Parallel Distribution: Making modern medicines more affordable for European citizens:6. Available at: http://www.eaepc.org/images/pdf/factbook-draft.pdf (accessed July 10,2018)

[3] Ulrika Enemark et. al, Parallel imports of pharmaceuticals in Denmark Germany Sweden and the UK 2004-2009: An analysis of savings, CAST-Centre for Applied Health Services Research and Technology Assessment, University of Southern Denmark, June 2006:66. Available at:

http://www.eaepc.org/images/pdf/An_analysis_of_savings_Prof_Pedersen_Report.pdf (accessed July 10,2018)

[4] Ibid.,48.

[5] Ibid.,14

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