Report condemns parallel trade in medicines as unsafe for patients

An impact assessment of the effect of parallel trade on patient safety in the EU has highlighted several features that lead to adverse effects for patients.

In 2006, DG Enterprise and Industry launched a study to assess aspects of patient safety related to parallel trade with medicines. An external contractor, Europe Economics, has now presented results of the study to the European Commission. The report relates to patented medicines supplied to patients through healthcare service providers and not to generic medicines or over-the-counter products.

The current annual value of sales by parallel traders is estimated at Euro 4.9bn, representing about 150 million packets of medicines. About 100 parallel trade enterprises are involved, between them employing about 12,000 people (5,000 in the UK), some on a part-time or casual basis. Almost all packs sold by parallel traders have been opened in order to insert a package leaflet in a different language, and either repackaged or re-labelled. Trade estimates are that about one third of packs are repackaged and two thirds re-labelled.

The report said that repackaging and re-labelling of medicinal products, as an additional manufacturing step, is an inherent risk to the safety of patients, especially when existing regulatory requirements are not effectively applied or enforced or when they are not exhaustive. The practice may also lead to confusion if it results in a patient receiving apparently different products for what should be the same medicine.

Parallel trade leads to prices charged in different EU Member States becoming more similar. Unlike in the case of generic products, prices of patented medicines will not converge to the level of the most efficient producer but to the level that results from negotiations between patent holders and purchasing authorities in the major (richer) national markets. As a result, healthcare service providers in lower - income Member States pay significantly more than they would otherwise have had to pay.

Package leaflets may be out of date, resulting in patients and healthcare professionals receiving wrong information that may lead to mistaken actions, and the commercial pressures for price convergence lead to product "dry-outs" in Member States from which exports are taken. Interruptions to supply also occur in importing Member States.

There are likely to be increased delays before new medicines are made available in lower-income Member States.

The distribution system is made more complex with more parties and transactions being involved, and regulatory authorities do not know where packets or batches of medicines are at anytime nor who has purchased them and only limited information is available to the original manufacturers. This inevitably risks reducing the efficiency of recalls.

However, there are no significant offsetting benefits for patients resulting from parallel trade in patented medicines, apart from minor exceptions when a parallel trader identifies faults in the original packaging and is able to rectify these; or when shortages are alleviated by stocks held by parallel traders.

The problems have arisen as unintended consequences of EU policies designed to promote the free movement of goods. Although this is a fundamental freedom enshrined in the EC Treaty, restrictions to it can be justified under the Treaty where this is necessary for the protection of human health.

The report considers a number of possible policy options:

1. A continuation of present policies; this would involve a continuation of significant disbenefits for patient safety and access to medicines

2. To prohibit repackaging and/or re-labelling of the relevant medicines and require a seal to be placed on original packs that could not be legally or accidentally broken; this would dramatically reduce the volume of parallel trade, involving significant job losses. However, regulatory and administrative costs would be reduced, there would be environmental advantages and the efficiency of the distribution chain would be improved.

3. A combination of new legislation, guidelines and enforcement measures designed to address some specific issues arising from parallel trade. These would include:

(a) Introducing harmonised provisions for applications for a parallel trade licence and standard requirements for repackaging and re-labelling.

(b) Requiring parallel traders to use up to date package information leaflets, with significant fines for non-compliance.

(c) Legislation to increase the power of the Commission or EMEA to enforce good practice over centrally authorised products.

(d) Identification of products that would not be available for parallel trade without particularly close supervision and demanding conditions for authorisation.

(e) Limitation of parallel trade to products identical to and having a common origin with those with current market authorisation.

(f) Specific pharmacovigilance requirements for parallel traders.

(g) Preparing technical guidelines for re-labelling, re-boxing, bundling and other aspects of repackaging as guidance, including to high-risk products. Such guidance could be established in the GMP guide and possibly underpinned by legislation.

(h) Greater market supervision and enforcement of regulations by both EU and national authorities.

(i) More robust enforcement of requirements that manufacturers and distributors should have in place efficient product recall systems.

(j) Detailed exploration of the option of a common database of parallel trade licences and licensed distributors.

(k) Legislation to pave the way for enhanced transparency in the market, through, for example, a requirement for product traceability or pedigree, if further work on the issues raised by counterfeiting shows that such a requirement would be justified.

(l) Ensuring that the 2004 legislation designed to prevent the risk of interrupted product supply is working effectively, in importing as well as exporting countries.

The costs of implementing and enforcing these recommendations would either fall directly on the traders involved or should be recovered from them so as to avoid any increase in costs for patients or taxpayers.

Under option 3 some of the risks to patients arising from errors resulting from inaccurate repackaging and re-labelling would be avoided, and in particular the incidence of out-of-date package leaflets could be greatly reduced. Other problems would be alleviated to some extent through a programme of refined regulation and increased resources devoted to enforcement. However the volumes of parallel trade would not be much affected and so the inevitable systemic problems of reduced access and increased risk to patients would remain.