What is Parallel Importation?
Parallel importation is the cross-border importation of the cheapest-priced drug from another country. Parallel importation is not limited under the World Trade Organization (WTO) agreement on intellectual property (TRIPS). This practice is neither
explicitly outlawed nor allowed under TRIPS. The United States is pressuring countries to make commitments to restrict parallel importation.
Parallel importation, often a term referred to as "participation in the grey market" is an important issue of intellectual
property and international trade. Parallel importers customarily buy their merchandise in a foreign country for a cheaper price
than they are retailed in the domestic country and rake in the profits by selling the goods locally with a higher price tag.
An illustration for this would be the importing of Colgate toothpaste from Thailand into Hong Kong.
The commodities are procured in markets where the price is lower and sold off in markets where the price of the same goods, for a
multiplicity of reasons, is significantly higher.
Patent owners want to be able to prevent this for various
reasons. They lose influence over how their products are sold
and risk having their brand image diluted if the goods are sold
in inferior ambience. Patent holders take pride in their after
sales care, these are almost non-existent in parallel
importation scenarios. The likelihood of the products being sold
in supermarkets [rather than pharmacies] will eventually
undermine the brand and make it insignificant. Patent owners
will deter from investing in new products which will lead to a
loss of choice for consumers. Patent owners will also be
unwilling to meet the higher costs of manufacture which could
damage the local economy.
These points are key to the pharmaceutical industry. However,
parallel importers contend that consumers should have the
privilege to buy everything at the lowest achievable price and
not at artificially inflated levels.