The counterfeiting of pharmaceutical drugs is a serious issue that poses a real threat to the unsuspecting public, and many consumers who rely on prescription medications have suffered catastrophic consequences to their health by consuming fake, or even toxic, prescriptions.
Founded in 2003 and headquartered in northern New Jersey, Secure Symbology has patented technology that offers a low-cost, reliable anti-counterfeiting solution. Its advanced bar code technology is the basis for its system that provides an electronic product pedigree and unit-level track-and-trace capability. Used by the pharmaceutical industry, Secure Symbology is expanding its reach to include the automotive, aeronautical and food manufacturers, in addition to luxury brands and consumer product manufacturers with their ever-increasing counterfeiting problems.
As I read this, I couldn’t help thinking that such a technological solution could come to the aid of those pharma companies that wished to differentially price their drugs. As many of you may know, one of the reasons touted by big pharma for its reluctance to “differentially” price is the fear of parallel imports. In other words, if priced differently in different markets, a pill sold for 10 dollars in Eritrea would find its way to the US where it is marked at USD 100. For more information on the business of pharmaceutical price arbitrage, see this Forbes article here.
See also this excellent article by Professor Kevin Outterson that demonstrates that, for “essential access” programs, the threat of price arbitrage is more anecdotal than real. His abstract states:
“While neoclassical economic theory suggests that arbitrage will undermine global differential pricing of pharmaceuticals, the empirical results are more complex. Pharmaceutical regulation, IP laws, global trade agreements, and company policies support differential pricing despite the pressure of arbitrage. For essential access programs in particular, the theoretical threat of pharmaceutical arbitrage is shown to be rarely observed empirically. Counterfeiting is demonstrated to be the more serious threat. These conclusions call for changes in the U.S. PEPFAR program for AIDS and in the implementation of the WTO TRIPS Agreement.”
In particular, see his insightful analysis of the Glaxo vs Dowelhurst case, where low cost AIDS drugs meant for Africa allegedly found their way back to the UK.
Whatever be the case, if “parallel imports” are really the reason why pharma companies shy away from differential pricing, then it’s clear that “technological” solutions may prove a good antidote. And indeed, some companies are already deploying color coding technology to offset threats of parallel trade.
Of course, one needs to be careful here, as “imports” are not always illegal. See Section 107A (b) of the Indian Patents Act in this regard, which enjoys the distinction of providing the “widest” ambit for permissible parallel imports anywhere in the world. For an analysis of this provision, see here.
So perhaps, with the emergence of more technologies of this nature (some companies already use color coding technology), will we see more differential pricing schemes adopted in the future? And consequently a “fairer” and more reasonable drug pricing scheme by big pharma across the world?