EU Players Expect Parallel Trade to Decline

The CEO of French drug major sanofi-aventis, Jean-Francois Dehecq, and European research-based sector association EFPIA have claimed that the European Union's (EU) parallel trade is set to decline this year. EFPIA has estimated that the practice amounts to 5% of all European drug sales, and is currently worth EUR4bn (US$4.9bn) per year.

Dehecq and others base their optimism on likely law reforms that would allow firms to exercise more flexibility over pricing. These would potentially enable drugmakers to establish prices of drugs destined for export at different levels than those for the domestic market.

In the meantime, drug firms are expected to continue to restrict supplies of certain drugs to combat the parallel trade. This strategy has received support from a European Court of Justice (ECoJ) ruling, which permits this course of action on the basis that pricing differentials effectively result from state intervention in the pharmaceuticals market.

Earlier, the ECoJ decided that it was ineligible to rule on the case involving UK drugmaker GlaxoSmithKline and a Greek wholesaling firm. The decision has created widespread doubt as to the EU's ability -- or desire -- to curb the parallel trade in pharmaceuticals. In another ominous move, EU industrial policy officials have pledged only to re-examine pricing issues "without sacrificing any capacity of member states to protect their healthcare budgets."