The Pharmaceutical Journal
Vol 276 No 7406 p744
24 June 2006

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Parallel imports saved UK €237m in health care costs in 2004, says European report

Parallel importing of medicines saved the UK €237m in health care costs in 2004, according to a new report commissioned by the European Association of Euro-Pharmaceutical Companies (EAEPC).

The report (PDF 360K), by health economists at the University of Southern Denmark, supports the conclusions of an earlier report by the York Health Economics Consortium (PJ, 31 May 2003, p739). The authors say that they prefer the methodology of the York group to that used in a London School of Economics study that concluded that the purported benefits of parallel trade were not borne out by economic data (PJ, 29 November 2003, p733).

EAEPC president Hans Bøgh-Sørensen said: “In their heart of hearts everybody knows that parallel trade must deliver savings — otherwise why would it exist?”

Richard Freudenberg, secretary-general of the British Association of European Pharmaceutical Distributors, added: “Pharmaceutical manufacturers have actively sought to limit our ability to trade freely, limiting the potential savings that could be generated for the Government and the NHS. In a climate where the health system is under tremendous pressure and where NHS trusts are seeking to reduce their spending on drugs, the Government is missing out on potentially greater savings that could be generated by parallel trade.”

The author of the LSE study, Panos Kanavos, commented: “The issue is more complex than shifting medicines from lower to higher price countries and, through that process, offering some pecuniary benefits. It has been established — and the parallel traders cannot dispute it — that these benefits are small in relation to the overall size of the retail prescription drug market and, in fact, significantly smaller than the benefits parallel distributors realise, as our research has suggested.” He added that no long-term price competition effects have been observed. “As a result, it is doubtful that this process leads to optimal resource allocation and welfare in both importing and exporting countries.

I think we would need to consider the broader picture rather than focus on part of the picture.”