A Point of View on Parallel Imports

In view of parallel imports, the TRIPS Agreement (Trade Related Intellectual Property Rights) under article 6 states that nothing except the National Treatment and MFN (Most Favoured Nation) clause – article 3 and 4 respectively, shall be addressed by the TRIPS agreement. Hence, the TRIPS agreement sets an international benchmark but does not interfere with any national law on the principle of exhaustion of rights. Thus, till date, there exists a different standpoint on parallel imports among different countries across the globe. This paper refers to qualitative analysis of economics of parallel imports and highlights some of the specific factors that play a vital role in the thriving parallel imports or grey markets. The analysis is presented mainly in the form of accessibility to drugs in the pro-parallel import countries – the developing economies.

Policy Implications:

•  The exhaustion regime that enables importation of drugs into the developing economies should be complemented by empowering developing economies to impose specific export restrictions to address the cause of accessibility in view of the fragmented exhaustion regime and the financial arbitrage.

• A three way subsidy sharing burden (involves the MNCs, the Government and the citizens) in case of drug imports should be evaluated by developing economies to address the profitability issue of MNCs that critically oppose legitimacy of parallel imports.