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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