Geographic price disparity between pharmaceutical products exists due to the variation in national economies and the unique ways that each country determines the price of pharmaceuticals. Price disparity still exists even in areas of “free trade” or in a single combined market of multiple countries, such as the European Union. This has led to parallel trade, where products are purchased in countries with lower prices and sold in those with higher prices. The fact that such disparities can develop seems contrary to the concept of a simple, free market, and it raises the question of whether price disparity will ever truly disappear.
The principle of free trade and tariff-free access to economic goods across borders is a founding principle of the EU and other regional trade agreements. Therefore, the continued existence of legal parallel trade combined with international referencing could lead to the end of price disparity, with prices converging to an average regional price. Continue reading