The parallel trade in medicines offers significant savings for both governments and patients, according a report unveiled yesterday by health economists from the University of Southern Denmark, which they say offers the most complete picture of the trade ever seen. The total direct savings resulting from the competition of parallel imports in only 4 countries in 2004 amounted to 441.5 million euros ($557 million), they note, while the direct savings from the UK alone were £162 million ($298 million).
Hans Bøgh-Sørensen, President of the European Association of Euro-Pharmaceutical Companies, which represents companies involved in parallel trade, perhaps unsurprisingly found in favour of the report, saying: “In their heart of hearts everyone knows that parallel trade must deliver savings – otherwise why would it exist? This report puts a number on those savings. It is a serious piece of research that also shows parallel trade adds significant value to the European pharmaceutical market.”
This latest offering turns on its head the findings of a 2003 study conducted by the London School of Economics, which concluded that the parallel trade of pharmaceuticals within the European Union does not offer direct savings to patients and said that, in fact, stakeholders are realising few of the expected savings, with the majority of benefits falling on the shoulders of parallel traders.
The Danish study, however, contradicts these findings and says that the basic approach used in the LSE study was “not optimal.” Instead, they found that “profit margins for some products in the parallel trade business are surprisingly small,” and – importantly – that there is no empirical evidence of link between parallel trade and the pharmaceutical industry’s ability to invest in research and development.
This latter statement is likely to be hotly contested. The Association of the British Pharmaceutical Industry has previously said that the parallel trade of medicines costs the UK sector alone some £1.4 billion a year.
