Parallel Distribution: a powerful tool to save money and inject competition into Belgium’s healthcare market
In today’s world, finding ways to save money and foster competition in Belgium’s healthcare system is vital. Parallel distribution is an incredibly powerful tool that can do just that for the people of Belgium. First, though, let’s define what parallel distribution is. This is how it works: Say a company purchases medicine in one European country and sells it in another, all the while complying with the strictest EU standards and laws, that’s parallel distribution.
So, how can parallel distribution bring financial savings and insert competition into Belgium’s healthcare system? Let’s start with savings first. When parallel distribution is enabled, both direct and indirect savings take place. Direct savings can be best seen in how parallel distribution impacts the health systems of European Union countries.
In studies in Germany, Sweden, Denmark, and Poland, done in 2018, parallel distribution was shown to bring approximately €3.2 billion in overall savings for these countries’ national health systems. Germany saw the highest savings with €2.8 billion in savings followed by Sweden with €235 million, Poland with €124 million, and Denmark with €82 million. These savings are significant. In relative terms, they account for 6% of the total expenditure in medicines for pharmacies in Germany, 6% in Sweden, 3% in Denmark and 1.8% in Poland.
Without parallel distribution, the medicine market (at least that which cannot be reached by generic drugs) is uncompetitive and patent-protected. What’s more, pharmaceutical companies are in a highly privileged position when it comes to price-setting. Instead of working with the goal of increasing access, these companies often tend to be more concerned with obtaining the highest possible prices in each Member State. Price discrimination allows them to extract the maximum profit in each country based on the Member State’s ability to pay for medicines or the company’s negotiation power.
When parallel distribution is enabled, prices generally fall, which benefits consumers in all markets. These indirect savings bring the dynamic competition that Europe needs. Without it, the medication market will remain partitioned, uncompetitive and sluggish, especially when it comes to price.
The current unproportionate barriers to the parallel distribution of medicines across Europe must be removed. Not only do these barriers constitute unjustified restrictions to parallel trade, they go against EU law and the foundation of the internal market. More important, however, is the fact that parallel distribution helps individual Europeans. It cuts costs for healthcare systems, reduces medicine prices, and increases competition and access. Fostering parallel distribution means giving all of us more choice and better care.