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Parallel Trading in Medicines: Europe's Experience and Its Implications for Commercial Drug Importation in the United States

by Panos Kanavos, London School of Economics, The University of London, David Gross, AARP Public Policy Institute, David Taylor, The School of Pharmacy, The University of London, Public Policy Institute, June 21, 2005

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While American policymakers debate the cost and safety issues associated with legalizing the importation of prescription drugs, cross-border importation has long been taking place within the European Union (EU). The EU has had three decades of experience with commercial parallel trade of pharmaceuticals (the importation by licensed drug wholesalers) between EU countries. Under this practice, pharmacies and wholesalers in countries with relatively high drug prices are allowed to purchase the identical products from EU member states with lower prices for resale in their country.

In this AARP Public Policy Institute Issue Paper, the European experience with parallel trade of pharmaceuticals is examined by Panos Kanavos, London School of Economics, University of London; David Gross, AARP Public Policy Institute, David Taylor, School of Pharmacy, University of London. Specifically, the paper focuses on:

  • the legal framework used in the EU to implement commercial drug importation and to maintain safety
  • whether there are drug safety problems among EU countries that engage in parallel importation of pharmaceuticals
  • whether there are savings from importation in the EU, and to whom savings accrue
  • whether parallel importing has an adverse effect on pharmaceutical research and development (R&D) (43 pages)