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THE NATURE OF EUROPEAN UNION ALLOWS PARALLEL IMPORTS IN THE PHARMACEUTICAL MARKET

Differences in economic, social, legal or regulatory regimes of countries create varying prices around the world for the same drug. This discrepancy often leads to parallel trade, which had a strong impact on European pharmaceutical market since 1970s. The global squeeze on national healthcare budgets as a result of the financial downturn and the aging population has provided another opportunity for parallel importers.

Due to the nature of the European Union, parallel importing is not prohibited. The legal framework behind parallel trade dates back to the 1957 Treaty of Rome. While patents protect against parallel trade in other markets, it cannot be forbidden within the EU.

One of the main goals of EU legislation has been the harmonization of laws and the creation of a single market to permit the EU to compete at a global level comparable to the United States.

Once a firm has put the drug on the market in any EU country, it may not prevent the sale of that drug within the EU by any other firm by claiming a violation of patent rights or trademarks, under most circumstances. Parallel imports are allowed if the importing countries verify that the medicinal imports are authorized within their borders and comply with EU guidelines. This creates price equalization across the European Community, promoting a greater sense of a single market across Europe.

Traditionally the source countries were those with the lowest prices, like Greece and Spain, but there was an increase in the share of parallel imports in Denmark, Ireland, Netherlands, and Sweden between 2009 and 2011 and a decrease in Latvia and the United Kingdom. Finland, Norway, and Germany remained stable.

At the SMi Group’s 8th Parallel Trade conference, held in London in February 2014, the debate on this issue was quite lively and the issue was considered from both the trader’s and the pharmaceutical company’s perspective.

From the pharmaceutical firms’ point of view, parallel trade decreases their income and cuts their return on investment, which instead would be completely refunded under the patent’s rules. The conference has been an high quality practical event with plenty of opportunity for debate and step-by-step guidance on the complex issue of parallel trade.

The gLAWcal Team

Thursday, May 15, 2014

(Source: Life Science Leader)

This news has been realized by gLAWcal—Global Law Initiatives for Sustainable Development in collaboration with the University Institute of European Studies (IUSE) in Turin, Italy and the University of Piemonte Orientale, Novara, Italy which are both beneficiaries of the European Union Research Executive Agency IRSES Project “Liberalism in Between Europe And China” (LIBEAC) coordinated by Aix-Marseille University (CEPERC). This work has been realized in the framework of Workpackages 4, coordinated by University Institute of European Studies (IUSE) in Turin, Italy.