Wylie Coyote: Federal Marshal

According to the Wall Street Journal, “European Union investigators are widening a probe of the pharmaceutical industry as they look into whether drug companies have used unfair tactics to block competition and prop up prices.”

The EU sent questionnaires to drug wholesalers and trading firms, asking them about pharmaceutical companies' distribution methods and other practices.

That’s kind of like asking the Association of Hungry Foxes about chicken coop security regulations.

Specifically, the EU is asking about the distribution methods drug companies’ use in Europe, and whether they are blocking competitors from distributing medicines.

Heinz Kobelt, secretary-general of the European Association of Euro-Pharmaceutical Companies, the trade group representing parallel traders, says EU investigators sent him a questionnaire in mid-May asking whether drug companies were using litigation or other tactics to thwart parallel trade.

So, Mr. Wylie E. Coyote, what do you think of the business practices of Mr. Roadrunner?

According to the Journal report, “Mr. Kobelt said the questionnaire asked for his group's views on so-called direct-to-pharmacy distribution channels, which Pfizer Inc. and AstraZeneca PLC have recently established in Britain. Direct-to-pharmacy channels differ from traditional distribution in that the drug company pays wholesalers a set fee to deliver goods to pharmacies, rather than selling to the wholesaler. The drug companies say the approach helps them keep better control over their goods and prevents counterfeit medicines from getting into pharmacies. Wholesalers say big pharmaceutical companies are trying to prevent parallel trade, a charge the companies deny.”

Is this the debate then? Big Pharma trying to reduce fraud and counterfeiting versus parallel traders who want to protect their profits? What’s best for the consumer?

Relative to the value of parallel trade, consider the insights of. W. Neil Palmer of RTI Health Solutions. (By way of bona fides, Neil has served as a senior official with the Canadian Patented Medicine Prices Review Board -- the dreaded PMPRB -- as well as with the Health Division of Health Canada, and the Kellogg Centre for Advanced Studies in Primary Care in Montreal.)

His take on the European experience with parallel trade:

* It is not the policy of EU governments to use parallel trade to deliver savings to their individual health care systems.

* Because savings are not passed on to consumers and payers.

* Patient care may be jeopardized because of quality, supply chain integrity and regulatory compliance issues -- as well as potential shortages occurring in exporting nations.

* Increased parallel trade results in decreased competitiveness of the pharmaceutical industry in local markets. And, since the profits of the parallel traders aren't reinvested into R&D, opportunities are lost for the patient, the local health care system, and the economy.

As far as safety goes, its been proven time and time again that parallel trade is the weak link in the European pharmaceutical chain of custody. Counterfeiters know it and so do national authorities across the EU.

For more on this issue, see here: www.drugwonks.com/blog_post/show/5362

Perhaps the EU is investigating the wrong people?