Pharmaceutical Technologist - November 2007 - (Page 11)

// Morpheus This may make little sense to the average person, but it creates enough legal ambiguity for those involved in parallel trade to see a business opportunity. Parallel traders actively seek out a significant price difference for the same product in different markets. They then buy the product in a lower-price market to sell it on in a higher-priced market at a more attractive price to the buyer. In Europe, countries in the north have traditionally been seen as higher-priced pharmaceutical markets compared with those in the south. Uncertain future The truth is that the pharmaceutical industry is in an awkward position regarding parallel trade and will continue to revert to the law courts to block such activity where possible. The arguments concerning whether parallel traders have the rights to resell products that have appeared on a national market are ongoing and have resulted in many legal cases. None of these cases has either completely blocked parallel trade or given it the green light to continue unchecked, and so we are in for an uncertain future that will be dictated by lawyers and judges. So far, this situation has mainly centred on the EU, but the issue of parallel trade is beginning to surface in markets such as North America, leaving pharmaceutical companies uncomfortable about the future. Demand for parallel trade Pharmaceutical companies often complain about parallel traders in derogatory terms, but they cannot be brushed off lightly. First, whether the industry likes it or not, there is a demand for their services. With people becoming increasingly conscious about pharma prices, parallel traded products have become highly attractive. Despite occasional industry cited concerns regarding safety aspects of parallel traded products, and a tenuous link to counterfeiting, there seems to be little evidence that consumers are being put at any significant risk. After all, if parallel traded products did cause major health concerns, the market would fold in a matter of days as the media would jump on the story. Consumers would be up in arms against the organizations concerned and the politicians would outlaw parallel trade to safeguard their voters’ health. Second, parallel traders are not shifty individuals operating in the shadows; they are becoming increasingly outspoken about their activities. In Europe, they even have a trade organization to represent them and regularly deal with the media. Parallel traders believe that their business is a natural phenomenon that will exist wherever price differences occur between countries. In their view, parallel trade increases the effectiveness of the pharmaceutical market. Furthermore, they believe the practice helps restrain costs in a market that is not very price-sensitive. Some optimists among the parallel traders have even suggested that some sort of co-habitation might be possible with the pharmaceutical industry, although this appears most unlikely. The claim that particularly angers parallel traders is any supposed link to substandard products that might endanger patients. They believe that parallel trade is a mature business with a good track record and suitable safeguards to prevent potential counterfeiting. The fate of parallel trade lies with the legal profession, but it’s fairly clear that even us ordinary folk in the industry need to take notice. The fate of parallel trade lies with the legal profession, but it’s fairly clear that even us ordinary folk in the industry need to take notice. Often we are so preoccupied with the activities in our home market that we ignore what is going on elsewhere. Yet, if a product from your company is priced lower in a foreign market and can be parallel traded, you can bet that someone is looking at it as a business opportunity. Parallel trade is perceived as a threat to the profits of the pharmaceutical industry, and we all know how senior executives react in such situations — through job cuts. We may never understand the legal intricacies of the parallel trade cases appearing in the media, and we may not support some of the decisions that arising from them, but all of us should look ahead to see what this means for us. If not, one of those boring legal stories that you flick past in a magazine may dictate how long you get to stay in a job. PT www.ptemagazine.com 11 http://www.ptemagazine.com

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Pharmaceutical Technologist Contents Editor's Comment News Morpheus Feeling the Pressure Legal Crusaders The Holy-Grail of Start-Up Biotech Special Feature Q&A

Pharmaceutical Technologist - November 2007

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