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EU scuppers Glaxo bid to halt cheap drug importsBy: Paul Durman The European Commission is expected shortly to ban Glaxo Smith Kline's attempts to prevent cheap medicines being imported into Britain. So-called parallel importing is fiercely opposed by the drugs industry, which claims the practice damages its profits without producing any savings for either patients or for government health budgets. Parallel importing is made possible because drug prices in Spain and Greece are typically much lower than in Britain and other northern European nations. Glaxo Wellcome (as the company was known before its recent merger with Smith Kline Beecham) attempted to clamp down on parallel importing by introducing dual pricing in Spain, charging more for products that were destined for export. Subsequent complaints prompted the commission to initiate an investigation into whether Glaxo was contravening the European Union's competition rules. After a two-year inquiry a spokeswoman said: "The commission will rule soon." And Peter Laing, analyst at SG Securities, is among experts predicting that the commission will ban GSK's dual pricing. There was also further evidence of the commission's thinking last week when Mario Monti, the competition commissioner, spoke at a conference in Brussels organised by Alliance Unichem, the pharmaceutical wholesaler. Jeff Harris, Alliance Uni- chem's chief executive, said Monti's strident comments were clear. "The commission sees parallel trade as a driving force for market integration, one of the few forces it can use to encourage cross-border trade." Because of safety concerns, drug prices are set through negotiating with regulators, country by country. While the industry would be happy to establish a single European price, parallel pricing encourages medicines to be sold at the lowest price - which, is typically that set by Spanish regulators. Industry estimates suggest that up to one in eight NHS prescriptions are now filled by imported medicines. GSK products affected include Imigran for migraine, and asthma drugs such as Seretide, Serevent, and Flixotide. The industry claims potential savings to the NHS are swallowed up by middlemen. America, the world's largest and most profitable drugs market, has recently considered opening its market to parallel imports. Although the drug reimportation bill was undermined by serious flaws, SG's Laing sees the proposal as visible concern about high pharmaceutical prices. The American election campaign recently focused on elderly patients forced to travel to Canada to obtain affordable medicines. While the powerful American drugs industry carries significant influence in the Bush administration, many believe that cutting the high cost of pharmaceuticals is inevitable. Laing says big companies are worried about rising medical bills. General Motors recently talked to leading drugs firms, including Glaxo Smith Kline and Astra Zeneca, to express concern. GM's spending on prescription drugs rose 19% a year over the past three years, and last year reached $1.2 billion. A GM manager recently told a congressional committee that "pharmaceutical manufacturers' pricing practices in the US have a negative impact on competitiveness of US firms".
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