Parallel distribution of pharmaceuticals, as well as for other goods, stems from price differentials between different national markets within the European Economic Area (EEA). Parallel distributors buy products marketed by the original manufacturer at a lower price in one country and sell them at a higher price in another country. Such a form of trade is legal by virtue of the rule of regional exhaustion of trademark rights applied in the EU and the EEA.
How does parallel distribution work?
For an introduction to parallel distribution and to discover more about why parallel distribution occurs and how it works, we invite you to take a look at the section:
What are the benefits?
Parallel distribution of medicines provides significant savings to governments, health insurers and patients by making original, innovative medicines available at a lower cost.
A 2005 study of only four EU countries found that parallel distribution generated direct savings to patients and social health insurance systems in excess of €440 million in 2004. It also found that there are significant indirect savings through the competitive effect of parallel distribution.
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How safe is it?
Parallel distribution in Europe is 100% safe. Parallel distributors are subject to the same regulatory requirements as the original manufacturers and undergo frequent controls by the competent national and European regulatory authorities. Parallel distributors perform product recalls as quickly and effectively as any other participant in the medicines supply chain.
The EAEPC has long standing good practice guidelines for parallel distribution to which all members have to adhere. The EAEPC is dedicated to ensuring the European supply chain remains free of counterfeit medicines and is actively engaged in the on-going debate.
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What are the challenges?
Parallel distributors are the only competitors in the market for branded innovative drugs. Pharmaceutical companies, who base their business model on differentiating prices across Europe, therefore attempt to limit the possibilities for parallel distribution. One of the most common tricks is to unilaterally impose supply-restrictions on wholesalers to limit supplies. They hope these anti-competitive measures will make the redistribution of their products across the EU more difficult.
In order to raise awareness of and contribute to the debate on supply-restrictions, the EAEPC has recently published a comprehensive legal and economic study on competition in the distribution of pharmaceutical products in Europe.
>> More information on supply-restrictions and other challenges to parallel distribution