The objective of independent distribution of medicines is to offer Europeans original supply of medicines at a lower price. This creates sizable savings for public healthcare systems, pharmacies and, ultimately, patients. The savings stem from the price differences of manufacturers’ prices for the same medicine between countries of the EEA. Pharmaceutical companies often use price discrimination to get the maximum profit from every market in Europe. Parallel imports are the only form of price competition during the validity of the patent protection of a medicine. In other words, parallel imports in medicines create competition on a sector where patents give the patent-holder a monopoly in every national market – and therefore almost an unlimited opportunity to define the price of the medicine, which can, in many cases, be extremely high. Price competition provided by parallel import is good for the European economy, good for health care systems and good for patients. There are two main categories for savings coming from independent distribution: direct and indirect savings.
Direct savings are the most immediate benefit of parallel imports, and the easiest to calculate. The savings are derived from the difference between the original manufacturer’s price for a certain medicine and the less expensive parallel imported alternative. Direct savings represent the benefits from bringing a pharmaceutical product with the same standards of safety and quality at a lower price to the destination market.
The distribution of the savings depends on how the healthcare system is configured in each country. In many cases, public health insurers retain the price difference between the manufacturer’s price and the parallel imported medicine’s price. This saving is ultimately passed to the patients, who must then pay lower contributions, direct fees or taxes to sustain the healthcare system. In other countries, like Sweden, it has been decided that price differences should be retained by pharmacies. The size of savings also depends on other elements, for example incentives to provide parallel imported medicines, hurdles to the entry of imports, different reimbursement or degree of competition of the parallel importers in the market.
Indirect savings are those that are derived from the competitive pressure exerted by parallel importers of medicines. In other words, the competition from parallel imported products in the market leads to reductions of the manufacturers’ prices of the medicines. Indirect savings can also stem from the potential competition from parallel imports that has not yet been realized – manufacturers would lower the price pre-emptively to prevent the entry of parallel importers into the market.
Although these savings are significant and, in most cases, larger than the direct savings, they are harder to quantify because the comparative price of the manufacturer in absence of competition from parallel imports can only be estimated. This “counterfactual price” cannot be fully known, but an estimation is possible. One of the approaches most used in the literature is to consider the price of the manufacturer’s medicine before the entry of the parallel imported alternative in the market as the counterfactual price.
Several studies on the savings from independent distribution demonstrate the positive effects of parallel imports in creating considerable savings for the European healthcare systems. These studies have calculated savings of €4.4 billion for Germany, €123.9 million for Poland, €235.4 million for Sweden and €99.2 million for Denmark.
If the remaining restrictions to independent distribution of medicines were removed, the possibilities for parallel import to create savings for healthcare systems and patients would be yet more significant.
Secret price agreements are increasingly being adopted by countries across Europe to manage the pricing and reimbursement of medicines. These confidential arrangements between payers (such as national health systems or insurers) and pharmaceutical companies have become a central element in determining medicine prices. Today, such agreements exist in all European Economic Area (EEA) countries. They are primarily used for new, high-cost medicines lacking generic competition and are mostly structured as Managed Entry Agreements (MEAs). MEAs are arrangements between a manufacturer and a public payer or provider, which enable access to a health technology, for example a medicine, under specific conditions, financial or performance based.
The pharmaceutical industry defends secret price agreements by claiming that confidential, country-specific discounts are essential to ensuring access to costly, innovative treatments—especially in markets where there is uncertainty about cost-effectiveness. Large Member States may use these agreements to negotiate substantial discounts off list prices, while smaller or lower-income countries often see them as the only feasible way to gain access to medicines that might not otherwise be introduced in their markets. Supporters argue that these confidential arrangements contribute to increased access to medicines by facilitating the entry of new therapies at lower prices.
In the context of publicly funded healthcare systems, the continued use of confidential pricing agreements must be critically re-evaluated. While pharmaceutical companies argue that secrecy enables price flexibility and access, growing evidence suggests the opposite: secret price agreements distort markets, drive prices upwards, limit competition, and undermine transparency without delivering tangible benefits to patients or healthcare systems in terms of affordability and access to medicines. It is difficult for parallel importers of medicines to introduce their products on the market when they do not know who and which price they are competing with, ultimately restricting access to more affordable medicines. Price discrimination via confidential deals has therefore failed to improve access to affordable medicines, particularly for lower-income countries, and may in fact exacerbate inequalities between different EEA countries.
As noted by the Institute for Quality and Efficiency in Health Care (IQWiG), secret prices risk driving up international reference prices, making medicines even less accessible for many countries and leading to “massive collateral damage” for European patients.
