European Drug Industry Calls on EU to Curb Parallel Trading of PharmaceuticalsOctober 22, 2008
Earlier this month, European drug makers called on the European Union (“EU”) to act on the issue of parallel trading of pharmaceuticals by confining prices for drugs to the specific EU member country they are initially sold. Drug makers argue that some form of price control is necessary to prevent such a practice, yet was missing from recently endorsed recommendations by the EU. This issue is not unique to Europe. In the United States, the debate continues as to whether Americans should be allowed to re-import prescription drugs from Canada or Europe at lower prices than they may be purchased domestically.
As European law currently stands, suppliers in a lower priced country may purchase excess of a drug product from the drug maker and then re-sell that excess for a higher price in another country without the authorization of the drug company, which results in depriving the original manufacturer of a substantial amount of potential profit. European drug makers argue that they recognize the problems associated with the rising cost of pharmaceuticals and would like to voluntarily offer different price points to different countries based on their financial capacity. However, without legal protection from parallel trading, they are reluctant to do so.
European drug makers’ renewed calls for the EU to step in and reduce or eliminate parallel trading came after a recent ruling by the European Court of Justice which permits drug companies to reduce trading in their own products only if they receive orders for larger than ordinary requirements. This result has left drug makers seeking greater rights against parallel traders.
By Bill T. Koustas