Forum. Parallel imports of medicinal products now represent up to 25 % of the market in some european countries and 5.5 billion euros in the whole of the european Union (EU). This practice, little known to the general public, means the purchase of drugs in one country and selling in another to take advantage of rate differentials within the EU. The legislation frames this type of resale, but leaves a lot of room for this practice in the aim of fostering intra-european competition.
Using data from the Norwegian market, we have tried to understand the effects of these practices on the industry, here are our main findings. The differences in the prices of medicines between countries can achieve 300 % in Europe, due to ceilings of regulatory and governmental rules strict in the matter of fixing prices. These price differences create possibilities of parallel imports.
For medicines under patent, parallel trade affects the sharing of profits between a company innovative pharmaceutical, retailers and merchants in parallel. In a new study, we show that, in a country that does not regulate the margins of pharmacies, incentives to negotiate a wholesale price lower play an important role in promoting the penetration of parallel trade and that the prohibition of parallel imports would be beneficial to the manufacturers.
A system that penalizes poor countries
Reimbursements to the patient and not dependent of the origin of the drug, because there is no price difference between local medicine and those from the sale parallel. This trade does not, therefore, to consumers, but what are the pharmacies and import-export firms, which are the main beneficiaries of this type of commerce, at the expense of the drug manufacturers.
Businesses who take care to import drugs offer lower prices than those of the producers but, in countries where pharmacy chains have a very large market share, the majority of the profits end up in the coffers of the pharmacies that do not have a reason to pass on this price difference at the consumer level.
This profit is so much higher for pharmacies that these prices advantageous purchase to enable them to better negotiate with the manufacturers and bring down the wholesale prices, threatening to turn if not to those imported drugs. All of these effects are relatively negative to the extent that they encourage drug manufacturers to not adapt their prices to different markets, thereby depriving potentially the poorest countries of certain products.
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