Placeholder Banner

Parallel Importation: A Disincentive for Developing World Access to Medicines

February 19, 2013
Parallel importation serves as a challenge to improving access to medicines in the developing world.  Parallel importation occurs when a country imports a product from a 3rd country to take advantage of a cheaper price than what is present for the same product in-country.  The imports then directly and unfairly competes with the same product sold by the rights holder on the local market.

Unfortunately for those most in need of special access to medicine programs, parallel imports have several negative consequences.  With increased demand for the product in the least developed country caused by a desire to export to a 3rd country (presumably an emerging market), the price of the product may well go up for those in the poorer country.  A second negative consequence may occur as black markets seek to take advantage of the outside demand and divert medicine away from the intended population in the poorer country, leading to drug shortages.  Finally, parallel imports may create a huge disincentive for the innovator to develop special access programs for poorer countries.  As parallel import sales undercut legitimate sales of the same good in more wealthier markets, companies may lose their incentive to treat different markets differently.

Pricing and other access models will always differ based on individual company/product factors, and depending on local market circumstances.  However, a basic understanding of the consequences of parallel importation makes it clear that it hurts least developed countries and their patient populations most, while creating disincentives for new access programs for the developing and least developed world.