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PARALLEL IMPORTS IN PHARMACEUTICALS: IMPLICATIONS …

1 PARALLEL IMPORTS IN PHARMACEUTICALS: IMPLICATIONS FORCOMPETITION AND PRICES IN DEVELOPING COUNTRIESK eith E. MaskusProfessor of EconomicsUniversity of Colorado at BoulderUCB 256, Boulder CO 80309-0256 Report to World Intellectual Property OrganizationUnder terms of Special Service AgreementDraft: April 200121. IntroductionParallel IMPORTS (PI), also called gray-market IMPORTS , are goods producedgenuinely under protection of a trademark, patent, or copyright, placed into circulation inone market, and then imported into a second market without the authorization of the localowner of the intellectual property right. This owner is typically a licensed local example, it is permissible for a trading firm to purchase quantities of prescriptiondrugs in Spain and import them into Sweden or Germany without the approval of thelocal distributor owning licensed patent rights.

restraints against PI constitute non-tariff barriers to trade and are inconsistent with the fundamental principles of the WTO. However, advocates of this view often modify it by recognizing the possible need for restraints in pharmaceuticals, which are subject to sharp international price differentials for regulatory purposes.

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