Parallel Importing, Exhaustion of Patent Rights, Differential Pricing

• Pages: 196-198

Contenidos

• The Issue.
• Legal and Policy Considerations.
• Practice Examples.
• References.

Page 196

The Issue

Patented drugs sell at different prices in different national or regional markets. If a procurement authority in country B finds a patented drug for a cheaper price in country A, can it be imported legally?

Legal and Policy Considerations

If drugs that the patent holder has placed on the market in market A are imported into market B without the consent of the patent holder, this is referred to as "parallel importing." It is important to note that this applies only to products legitimately put on the market by the patent holder and not to counterfeit goods or illegal copies.

Whether "parallel importing" is legal depends on how the question of so-called patent "exhaustion" is dealt with under the importing country's legal system. "Exhaustion" refers to the loss of the right to control the resale of the protected product after the first sale by means of an intellectual property right (here, a patent). Three types of exhaustion can be distinguished: national, regional, and international. Within a national market, the right is exhausted as soon as the product is put on the market by a right holder or with his consent. Subsequent resale within the country can no longer be controlled. However, under national exhaustion, the holder of a patent retains the right to control the resale of the product in national market B if the product has been sold with his consent in national market A. Therefore, he may prevent parallel importing from market A into market B.

Under regional exhaustion, the effect of national exhaustion is extended to a group of two or more countries. Therefore, the sale in any of the participating countries exhausts the right to control the resale within the entire region. International exhaustion expands this concept to a global scale. As a consequence, under our example, if the product has been sold with the consent of the patent holder in national market A, this sale exhausts the patent right globally and the patent holder can no longer prevent parallel imports by third parties into country B.

An important clarification of the Doha Declaration (see Topic 11.2) was that WTO Members are free under the TRIPS Agreement to adopt the exhaustion regime that best fits their needs-this means that countries are free to allow parallel importing. However, the role of parallel imports as a sustainable source ofPage 197...