[Constrained competition in parallel drug importation: the case of simvastatin in Germany, the Netherlands, and the United Kingdom].
OBJECTIVE
To examine the effects of parallel simvastatin importation on drug price in three of the main parallel importing countries in the European Union, namely the United Kingdom, Germany, and the Netherlands.


METHODS
To estimate the market share of parallel imported simvastatin and the unit price -both locally produced and parallel imported- adjusted by defined daily dose in the importing country and in the exporting country (Spain). Ordinary least squares regression was used to examine the potential price competition resulting from parallel drug trade between 1997 and 2002.


RESULTS
The market share of parallel imported simvastatin progressively expanded (especially in the United Kingdom and Germany) in the period examined, although the price difference between parallel imported and locally sourced simvastatin was not significant. Prices tended to rise in the United Kingdom and Germany and declined in the Netherlands. We found no evidence of pro-competitive effects resulting from the expansion of parallel trade.


CONCLUSIONS
The development of parallel drug importation in the European Union produced unexpected effects (limited competition) on prices that differ from those expected by the introduction of a new competitor. This is partially the result of drug price regulation scant incentives to competition and of the lack of transparency in the drug reimbursement system, especially due to the effect of informal discounts (not observable to researchers). The case of simvastatin reveals that savings to the health system from parallel trade are trivial. Finally, of the three countries examined, the only country that shows a moderate downward pattern in simvastatin prices is the Netherlands. This effect can be attributed to the existence of a system that claws back informal discounts.
Costa-Font
Joan
J
London School of Economics and Political Science, United Kingdom; Departament de Teoria Econòmica, Universitat de Barcelona, Barcelona, España. j.costa-font@lse.ac.uk
Kanavos
Panos
P
D003132:Commerce / Q000706:statistics & numerical data; D016527:Drug Costs / Q000706:statistics & numerical data / Q000639:trends; D004465:Economic Competition / Q000191:economics / Q000706:statistics & numerical data / Q000639:trends; D005252:Fees, Pharmaceutical / Q000706:statistics & numerical data / Q000639:trends; D005858:Germany; D009426:Netherlands; D019821:Simvastatin / Q000191:economics*; D006113:United Kingdom
D019821:Simvastatin