When a new medicine is created, the patent-holder can prohibit other companies from making and selling their medicine, but cannot prohibit licenced wholesalers who have bought the product from the patent-holder from reselling the medicine in other countries within the EEA where the patent-holder sells it at a higher price.
Parallel Importers buy these pharmaceuticals and then under strictly regulated conditions move medicines to the destination market, repackage them to comply with national legislation and linguistic needs, and sell them at a lower price than the standard local price, in competition with that same identical product sold by the manufacturer or its local licensee. This is possible because prices of individual drugs vary between Member States.
Therefore, parallel import are the only form of price competition during the period of patent protection of a medicine (called intra-brand competition). In other words, parallel trade in medicines creates competition in a business where patents provide the rights owner with a monopoly in every national market. This is good for the European economy, good for health care systems and good for patients.
Prices of medicines vary for two main reasons: manufacturers seek profit-maximising pricing strategies and; price and reimbursement regulations are set nationally. Although some countries have low average medicine prices, trade in medicines flow in all directions in the Single Market. That is because, the price of an individual drug can be much lower in a traditional high-priced market than in the average low-priced market. In fact, more than 50% of all imports come from high-income countries.