Parallel Importation of Pharmaceuticals in Finland

Effects on Markets and Expenditures

Abstract

Background: Parallel importation of pharmaceuticals is illegal in many countries. In the European Union it is allowed, as it is consistent with the principles of free trade and the community exhaustion of intellectual property rights. Parallel importation is assumed to affect pharmaceutical expenditures in two ways. First, parallel imported pharmaceuticals are typically priced lower than brand-name pharmaceuticals, which may reduce pharmaceutical expenditures. Secondly, parallel imported pharmaceuticals may trigger price competition, which might also reduce prices of brand-name products and pharmaceutical expenditures.

Objective: To measure reductions in pharmaceutical expenditures due to the entry of parallel imported pharmaceuticals in Finland.

Methods: Both realized reductions in expenditures (realized savings) and potential reductions (potential savings) were estimated. Savings were estimated using a method that measures differences in pharmaceutical expenditures when prices of pharmaceutical products differ as a result of price differences between parallel imported and brand-name pharmaceuticals (direct effect) and the effect of parallel imported products on the prices of brand-name products (competitive effect). Potential savings were estimated under different assumptions concerning the price development of pharmaceutical products. It was assumed that prices of brand-name pharmaceuticals would decrease either by 22% or 10% as a result of competition from parallel imports.

Results: Realized savings due to parallel importation were approximately €294 000 in the years 1998–2001. The savings remained low since parallel imports have not intensified price competition in Finland. Potential savings for the period between March 2000 and March 2001 were estimated to vary in the range of €3.4–10.2 million depending on the assumptions made on the price development of pharmaceutical products.

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Correspondence to Dr Ismo Linnosmaa.

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Linnosmaa, I., Karhunen, T. & Vohlonen, I. Parallel Importation of Pharmaceuticals in Finland. Pharm Dev Regul 1, 67–74 (2003). https://doi.org/10.1007/BF03257366

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Keywords

  • Pharmaceutical Product
  • Wholesale Price
  • Price Competition
  • Price Difference
  • Potential Saving