Parallel imports of pharmaceuticals in the European Union

Parallel importing has existed on a small scale in Europe for many years and has been upheld by the European Court of Justice as consistent with standard principles of free trade. However, the potential impact of parallel trade has increased significantly with the launch of the European Medicines Evaluation Agency in 1995, the accession to the European Union (EU) of countries with traditionally low prices, such as Spain, and the possible accession of Eastern European countries. This article examines the current state of parallel trade in medicines in the EU (different modalities and the medicines affected), analyses some policy implications associated with parallel trade (who gains and who loses) and explores the effects of several policy scenarios affecting parallel trade. The main conclusion is that a single European price is probably not the best solution from a European welfare point of view. A solution to the present situation could be achieved by separating the market price (at which any agent is allowed to buy a product either for consumption or for resale) and the price actually paid by a final consumer. Discounts and reference pricing may present two of the most feasible options.