PA R A L L E LT R A D E

Par al l el tr adi ng happens when a pr oduct

on the mar ket i n one countr y i s r e-
expor ted to a second countr y. I n the
Eur opean Uni on, thi s i s qui te l egal . The
tr ade i s based on the fact that medi ci nes
ar e sol d at di ffer ent pr i ces i n di ffer ent
countr i es and that under EU r ul es, they
can be moved ar ound at wi l l .
The phar maceuti cal i ndustr y suppor ts the
concept of a si ngl e mar ket acr oss the EU,
but thi s i s not cur rentl y possi bl e, because
the phar maceuti cal mar kets i n each
countr y oper ate on a di ffer ent basi s fr om
most other pr oducts. Most countr i es i n
Eur ope contr ol the pr i ci ng of medi ci nes,
but the ways i n whi ch they do so r esul t i n
wi de var i ati ons that di stor t the mar ket.
I nstead of pr i ces bei ng set by the
phar maceuti cal compani es, i ndi vi dual
gover nments often deter mi ne them.
Par al l el tr ade actual l y i mpor ts the cost
contr ol systems fr om other countr i es.
More parallel trade in Britain
The UK has the l ar gest pr opor ti on of
par al l el tr ade of any countr y wi thi n
Eur ope, for the fol l owi ng r easons:
1. Hi gher pr i ces on sel ected pr oducts.
2. One of the easi est l i censi ng pr ocedur es
for par al l el i mpor ted pr oducts i n the EU.
3. A r ei mbur sement system i n the NHS
that gi ves an i ncenti ve to par al l el tr ade.
Par al l el tr adi ng has gr own i n r ecent year s
to a l evel that has a si gni cant i mpact on
the di str i buti on of medi ci nes i n the UK
and i s now a major dr ai n on NHS
r esour ces to over seas. Unl i ke other
pr oducts i nvol ved i n par al l el tr ade, ther e
i s l i ttl e oppor tuni ty for the NHS or
pati ents to benet fr om the l ower pr i ces
i mpl i ed by par al l el tr ade. Other than the
par al l el i mpor ter s, ver y few benet fr om
i t. I t has been esti mated that for ever y
pound that the NHS saves, the
phar maceuti cal i ndustr y l oses 6.
Par al l el tr ade of phar maceuti cal pr oducts
i nto the UK has r eached an esti mated
7
febr uar y 2001
p ha r ma ce u t i ca l i n d ust ry issu es
13 per cent of total sal es, wi th an annual
gr owth r ate of 15-20 per cent. The
vol ume of tr ade i s now at a l evel that wi l l
adver sel y affect the UK tr ade bal ance.
Research affected
The UK-based phar maceuti cal i ndustry
cur r entl y spends 7mi l l i on a day i n the
sear ch for new and better medi ci nes.
Par al l el tr ade depr i ves the UK-based
phar maceuti cal i ndustr y of much-needed
i ncome for thi s r esear ch, fr om whi ch the
NHS and i ts pati ents have tr adi ti onal l y
been beneci ar i es.
The i ndustr y i s r esponsi bl e for ensur i ng
the safety and qual i ty of the medi ci nes
that i t suppl i es. I t i s concer ned to
mai ntai n the hi ghest standar ds, not onl y
wi thi n the i ndustr y but al so i n the suppl y
chai n, to pr otect publ i c heal th and to
encour age appr opr i ate use of medi ci nes.
Repackagi ng whi ch often occur s wi th
par al l el tr aded medi ci nes r esul ts i n
i ncr eased r i sk of counter fei ti ng, and may
al so affect the safety and qual i ty of the
medi ci nes. Many packs carry i nstr ucti ons
pr i nted i n a for ei gn l anguage, whi ch can
l ead to pati ent confusi on and poor
compl i ance. Counter fei t goods enter i ng
the UK mar ket pl ace under the gui se of
par al l el i mpor ti ng may pose a ser i ous
thr eat to publ i c heal th.
The phar maceuti cal i ndustr y suppor ts the
pr i nci pl es of fr ee tr ade, but these i nvol ve
a l evel pl ayi ng el d, i ncl udi ng the
fr eedom to pr i ce goods, at the l east wi th
the agr eement of the EU member states.
Par al l el tr ade i s a pol i ti cal pr obl em that
r equi r es a pol i ti cal sol uti on. I f par al l el
tr ade conti nues unchecked, NHS funds wi l l
i ncr easi ngl y be dr ai ned over seas. Thi s
wi l l depr i ve the UK-based phar maceuti cal
i ndustr y of much needed i ncome for
potenti al r esear ch, fr om whi ch the NHS
and i ts pati ents have tr adi ti onal l y been
the beneci ar i es.