The price of identical products with the same degree of intellectual property protection (e.g. a patent or trademark protection) can vary from one country to another. If price differences are big enough, distributors have an incentive to exploit this difference commercially: they purchase large quantities of a product in a low-price country, then import it and sell it in a high-price country. By doing so, the parallel importer is in competition with the manufacturer.
It is important to make a distinction between trademark protection and patent protection: trademark protection is primarily protection of the product name conferred on the manufacturer that also protects consumers. A trademark provides protection against imitations. If you pay a high price for a Rolex, a Lacoste T-shirt or a handbag from Louis Vuitton, you want to be sure that you’re buying the original. In contrast, patent protection protects only against competition. A patent confers on the discoverer a time-limited exclusive right to exploit the discovery commercially, thus creating an incentive to invest in research and development. This protection against competition is generally more comprehensive but, unlike a trademark, lasts only for a limited period of time. Medicinal products lose their patent protection between 10 and a maximum of 15 years after authorisation.
The legislation governing patents ensures that the patenting of discoveries does not lead to the creation of unilateral monopolies or dependencies and does not hinder research. In return for the patent protection that has been granted, the holder is required to disclose the discovery when the patent is applied for and to explain it in a way that is evident to a specialist in the field. Because of this obligation, the interested public is able to find out the current status of the research and to discuss the pros and cons of the possible commercial use of a specific discovery. It is possible to use the discovery for research purposes without restriction, despite its being patented (this is known as the research privilege), and the same applies to private use. Compulsory licences, which are mandated by law, encourage patent holders to grant licences voluntarily. After the period of patent protection has expired, anyone can use the discovery (commercially) without restriction. Patent law thus establishes a balance between the interests of the patent holder, other parties involved in research and the public.
Parallel imports of patented goods for which prices on the domestic market have been set by the government are not permitted. This means that medicinal products cannot be the subject of parallel importing.
The pharmaceuticals market: state regulation – differentiated regulation
The dynamic of the pharmaceuticals market makes a very important contribution to Switzerland’s innovative strength. This position and this strength should not be weakened by parallel imports of products for which prices are regulated. Switzerland needs the substantial contribution made by the pharmaceutical industry.
- The parallel importer, who creates little added value, is the only beneficiary of parallel imports.
- Parallel imports make it easier for counterfeit medicines to find their way onto the market.
- Parallel imports can also cause considerable difficulties in terms of a country’s provision with medicines.