Lowering the prices of medicines through generics and parallel importation

• Main Author: Pasana, Princesita C.
• Format: text
• Language: English
• Published: Animo Repository 2009
• Subjects: Drugs—Generic substitution—Law and legislation—Philippines; Gray market; Drugs—Prices—Philippines; Commercial Law; Medical Jurisprudence
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/6137; https://animorepository.dlsu.edu.ph/cgi/viewcontent.cgi?article=12979&context=etd_masteral
• Institution: De La Salle University

Re-importation (or parallel trade) occurs when products protected by patent, trademark or copyright are first placed into circulation on one market, then (re-) imported into a second market without the authorization of the original owner of the intellectual property rights (IPRs). Myriad products are re-imported, including automobiles, clothing, perfume and other consumer goods. This paper focuses on re-importation of pharmaceuticals, with a special focus on the Philippines and the passage of The Universally Accessible Cheaper and Quality Medicines Act (Cheaper Medicines Act), or Republic Act 9502, which took effect on July 5, 2008. The problem posed is whether parallel trade is generally necessary taking into consideration that there are already laws that specifically address the issue of lowering the prices of medicines in the country. The primary objective of this paper is to determine the effects of parallel trade on the pharmaceutical industry and on the intellectual property protection granted through the patent system as a response to its legalization under the Cheaper Medicines Act of 2008, which contains an amendment to our Intellectual Property Code. In relation to this, the paper also provides an analysis of the benefits and disadvantages of utilizing parallel trade. Lastly, this paper looks into the current laws in place in the country geared towards the same objective of providing more affordable drugs in order to make a conclusion regarding the necessity of the change adopted in our patent protection laws, as provided in the Cheaper Medicines Act of 2008. Intellectual property rights are limited rights conferred by governments over certain products of the intellect (e.g. patents which protect inventions, copyrights which protect expressions of ideas and trademarks which protect brands). They are bound by the geographical boundaries of each state: the principle of “national exhaustion” means that the IPR holders’ rights are extinct upon first sale within national borders (i.e. anyone who buys a product can do what he likes with it afterwards, within that country). By contrast, international exhaustion terminates rights upon first sale anywhere. This would mean that someone who buys the product in a country could export it and have it re- imported elsewhere. Supporters of parallel trade argue that it lowers prices, which is especially popular with consumers and governments that are looking for ways of reducing health expenditure. Others object that parallel trade in fact adds nothing, except substantial profits to the traders themselves, and that it also lowers safety (parallel importers are in many cases not subject to the same regulations as the original manufacturers). More importantly, re- importation undermines intellectual property protection and hence the incentives to invest in research, development and marketing of IP-based products; this would hurt the consumer in the long run. The study is limited to the effects of parallel importation of essential drugs, as determined by the Department of Health and covers as many geographical areas as data allow.