Parallel Imports or Imposters: The Economics of Reimportation and Counterfeit Pharmaceuticals

ABSTRACTWhile pharmaceutical prices have always differed across countries, rising drug costs in the United States have increased interest in the potential for arbitrage and moved the issue to center stage. At first blush, parallel trade in pharmaceuticals appears to be the solution to rising drug prices. However, a more nuanced consideration of the issue reveals it to be more complicated and less straightforward. This paper examines the economic incentives involved in pharmaceutical reimportation with a particular focus on the risks of counterfeit pharmaceuticals and the role of patent protection in continued research and development. The public policy ramifications and quality implications are also considered. Reimportation is a complicated issue that has the potential to shape both health care policy and the look of the pharmaceutical industry.