| Author (Person) | Carstens, Karen |
|---|---|
| Series Title | European Voice |
| Series Details | Vol.9, No.42, 11.12.03, p26 |
| Publication Date | 11/12/2003 |
| Content Type | News |
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By Karen Carstens Date: 11/12/03 PARALLEL trade in medicines does not benefit national health budgets and patients, but only those who are in the business, a new study by the London School of Economics (LSE) suggests. It challenges the increasingly accepted view that pharmaceutical parallel trade opens up medicine provision and lowers costs. The incentive for parallel traders is clear. EU laws allow them to sell drugs anywhere in the single market of 15 member states. If they find a country where prices for a certain drug are higher, they can make a profit on their sales there. An oft-cited example is the Spain-to-UK parallel trade market, whereby cheaper drugs are purchased down south, repackaged and resold for a profit up north - albeit usually at a lower price for the end consumer. According to the LSE study, which analyzes the impact of cross-border brand-name prescription medicine trade within the European Union, most member states have legislation in place to encourage the use of such parallel-trade medicines. The study, launched on 26 November by LSE international health policy lecturer Panos Kanavos at an event hosted by the Madariaga Foundation, found that although the overall number of parallel imports is on the rise, health care stakeholders are realizing few of the expected savings. In addition, it determined that profits from parallel imports accrue mostly to the benefit of the third-party companies that buy and resell these medicines. "A key driver behind the study was the lack of official data on pharmaceutical parallel imports or exports from the majority of EU countries, making informed debate on the pros and cons of the practice impossible," the LSE stated. The study, partially funded by Johnson & Johnson, refutes a series of widely held hypotheses on the benefits of parallel trade. These include: price equalization across countries; an overall reduction in prices; overall welfare improvements; improved patient access to innovative medicines; and minimal impact on the pharmaceutical industry as a whole (profitability and potential to innovate). Taking the same sample of products across all countries studied, for instance, revealed that parallel imports for 2002 to six major destination countries accounted for a mere 0.3-2% of national medical budgets. This represents total savings of €43.1 million - or €99.2 million if a so-called claw-back is included - over locally developed and manufactured products. By contrast, the parallel importers who bought these same medicines from across the EU made profits of €622 million. In the UK, the National Health Service saved €55.9 million (if the 'claw-back' is included), or 2.4% of the medicines budget from parallel imports in 2002, versus a mark-up of 49% and profits of €469 million made by the parallel importers who sold the products. "The study clearly makes the case for urgent further debate before any additional legislation in support of parallel trade is passed, at EU or country level," said Kanavos. "There is no evidence of sustainable dynamic price competition in destination countries, with no corresponding indirect cost savings. The supposed benefits of this system need to be reviewed," he added. EU drugs lobby the European Federation of Pharmaceutical Industries and Associations (Efpia) has argued that all member states feed parallel trade because they intervene in their pharmaceutical markets in different ways to keep prices down. Efpia Director-General Brian Ager has pointed out that regimes change almost daily, meaning today's target for the traders may be replaced by another the day after. "We are staring at a moving target," he said. "They cherry pick, then they may come in and decimate a particular product line." The LSE study will be accessible on the university's website in January. A study launched by the London School of Economics on 26 November 2003 challenges the accepted view that pharmaceutical parallel trade benefits healthcare stakeholders and patients through opening up medicine provision and lowering costs. |
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