Overview of parallel importing

The “Center for the New Europe(link to CNE website)”:http://www.cne.org has pulblished a “paper(link to PDF file, about 730k)”:http://www.cne.org/pub_pdf/2003_07_00_arfwedson_parallel.pdf by Jacob Arfwedson that reviews the debates about the impact of parallel importing on markets for pharmaceuticals. It’s well worth reading.  Arfwedson concludes that the evidence of the benefits of parallel importing or access to genetic drugs is mixed. bq. … parallel trade in pharmaceuticals and its impact on the research-based pharmaceutical industry, may or may not have slight short-term benefits for the consumer in terms of increased competition (lower prices) and as a counterweight to monopoly effects in the industry at large. This equilibrium will continue to depend on political decisions worldwide, in particular as the policy discussion evolves around the appropriate tradeoffs between protection of IPRs and the necessary adjustments to accommodate the resolution of healthcare crises such as the HIV/AIDS situation. Along the way, he digs up a very nice (simple graphic) demonstration of the potential benefits of price discrimination among markets * that are sufficiently islolated one from another e.g. by the territorial application of IP laws, or by commercial restrictions such as DVD-regionalization or simply by distance and,
* where the marginal costs of production are near-zero e.g. in software, pharmaceuticals, many services It’s an argument that has a neat application in explaining the rationality of dumping.  Arfwedson observes that bq. Access to medicine is not chiefly determined by the existence of patents and increased international aid to developing countries will only help insofar as it is administered by groups, associations and corporations which are competent to supply the necessary medical infrastructure, in cooperation with governments He also notes that bq. An important key to the future of intellectual property protection clearly lies in the developing countries, especially those that are currently switching from copycat industries to research-based innovation (e.g. India).

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