Parallel trade (import) in pharmaceuticals in the UK Dissertation

Parallel trade (import) in pharmaceuticals in the UK - Dissertation Example One of the most common problems of these practices is their failure to fully meet the standards related to the relevant activity. Furthermore, it seems that the willingness of the state to support business initiatives in various industrial sectors is not standardized. The above problem has resulted to the development of practices, which can help businesses to minimize the risks of loss and increase their competitiveness; parallel trade is such practice. Despite its value in increasing business performance, mostly through decreasing prices while the quality of offered products is not affected, parallel trade has been often negatively criticized as of its effects on the economy. On the other hand, there are industries more appropriate for parallel trade and others where parallel trade practices are difficult to be established. In the pharmaceutical industry of Britain, parallel import was used in order to control prices, which are already at a high level – compared to the averag e prices of similar products in other EU countries. The use of parallel trade in the pharmaceutical industry has been initially related to the reduced prices for patients; however, through the years, the specific activity has been also found to help towards ‘the reduction of costs for the social security system of the importing countries’.1 In practice, it has been proved that the use of parallel trade in the specific case did not manage to significantly support the particular industry – at least, not at the level expected by its initiators. However, important benefits were resulted for the British economy. The effects of parallel trade on the British pharmaceutical industry are examined in this paper. Emphasis is given on the policies used by the British legislators to control parallel trade regarding the pharmaceutical products and minimize relevant risks. It is concluded that parallel trade in the British pharmaceutical industry has helped the industry in incr ease its competitiveness against its rivals – referring mostly to the pharmaceutical industries of other member states; however, in terms of the performance of British pharmaceutical firms, the benefits of parallel trade are not clear, a fact indicating that additional measures need to be taken in order for the parallel trade in the specific industry to be more effectively controlled. 2. Parallel trade – description, characteristics and benefits Due to its nature, parallel import cannot be clearly defined; rather, reference could be made to its characteristics, as identified in the literature published in the particular field. In accordance with Cheng et al. (1995) the key characteristics of the parallel import are the following ones: ‘a) it relates to goods protected by trademark/ patent or copyright and b) the importer is not the rightholder of the said right but obtained and exported’.2 In terms of their legal status, parallel import goods have been cha racterized as ‘greymarket goods’, meaning that they are not fully legal;3 this issue is judged each time by reviewing the conditions of the local market but also the economic benefits to which parallel import is related in a particular market.4 In practice, this means that in countries where parallel import highly supports the national economy, its potential alignment with the law (referring to the legal status of the parallel