If you suffer from epilepsy and you live in Athens you are less likely to receive the vital drugs you need for treatment than if you live in London, Berlin or Amsterdam. And, says Konstantinos Lourantos, president of the Association of Pharmacies of Attica, the fact that they are freely available in other parts of Europe contributes to their shortage in his country. The reason? Lourantos, whose organisation represents some 3,500 pharmacists in and around Athens, blames companies that buy up medicines in Greece and export them to other EU countries, exploiting the price differences for drugs across the EU.
The UK is one of the largest markets for these companies, known as the parallel pharmaceutical traders (PPTs), along with Germany, Holland and Denmark.
Lourantos says: 'For example, there is a medicine called Lamictal for epilepsy which is imported to Greece but it is re-exported in such a huge quantity that there is very little left.' He says the problem affects supplies of a number of drugs, including Astra Zeneca's Seroqual for treating bipolar disorder and Risperdal, an anti-psychotic treatment.
The APA tried using the Greek courts to stop this re-export trade, but its action was thrown out because the movement of drugs in the EU, like that of jeans or cars, is legal under the Treaty of Rome.
The parallel pharmaceutical trade started in Holland in the seventies and is now estimated to be worth between 2 and 3 per cent of total European drug sales. According to the British Association of European Pharmaceutical Distributors (BAEPD), which represents British parallel traders, it is worth 13 per cent of total UK drug sales of £9-10bn.
The trade is an arbitrage between patent medicine prices in different countries which are negotiated between governments and the pharmaceutical industry. Prices are generally set lower in, for example, Greece, Spain and France than in the UK, Germany and Holland. Traders buy 'low' in these countries, transport the products, repackage them in the language of the importing state, and sell them there at a higher price.
Parallel trading is highly controversial, not only because of the reported shortages of medicine in countries such as Greece, but also because international pharmaceutical giants such as Eli Lilly and Pfizer claim that the trade threatens patient safety and compromises the security of drugs supply. Parallel traders deny this and argue that it provides the only competition in the supply of patented treatments, so reducing prices.
UK pharmacists are encouraged to source drugs at the lowest price while maintaining safety. They can go to one of around a dozen 'full line' wholesalers (the biggest include Alliance Boots, Phoenix and AAH) which supply a wide range of approved drugs, or to one of 1,700 'short line' suppliers (including some 70 parallel traders) which have a more limited list, usually cheaper.
UK wholesalers typically get a discount from manufacturers on the price agreed with the government (the reimbursement price), of around 12.5 per cent. They pass between 10 to 11 per cent to pharmacists. Parallel importers can offer larger discounts (15-18 per cent) on the reimbursement price because they source products at below this level.
'This is the reason that pharmacists are in favour of PPT,' says Richard Freudenberg, secretary-general of the BAEPD. He argues that on legal and economic grounds, as well as ethical ones, the trade is justified. On the legal front, it is regulated by the Medicines and Healthcare Products Regulatory Agency (MHRA), which is the licensing authority for UK parallel importers and Freudenberg points to several studies that attempt to quantify the economic benefit. A study by the University of York in 2003 found PPT generated savings - eventually to state health budgets - of €342m in the UK in 2002, and €631m across the EU. A study by the University of Southern Denmark found the saving to be €237m in the UK in 2004.
Peter West, the co-author of the York study, says: 'The parallel trade allows the NHS to get some medicines at a cheaper price and it is making savings from that. If you think that governments are quite weak at keeping prices down then a bit of parallel trade does not hurt.'
Colette McReedy, chief pharmacist at the National Pharmacy Association, says: 'As a rule, what we are trying to do is source products at the best value for the taxpayer. Parallel trade plays a part.'
Both the York and USD papers claim a further but unquantifiable saving from the competitive effects of PPT: UK distributors may lower their prices in products where there is competition from PPT in order to protect sales volumes.
Those opposed to PPT say it is impossible to prove that market prices would be higher without it. As for direct savings, they point to research from the London School of Economics which estimates savings at a lower level and concludes that there are no direct benefits to patients. The difficulty with these reports is that they are funded by opposing sides (York and USD by the BAEPD, LSE by the drugs companies).
Jim Thompson, chairman of the European Alliance for Access to Safe Medicines, a group (funded by drugs companies) which recently published a report into the safety of the supply chain, says: 'The saving [made by PPT] is infinitesimally small. You are talking about £4 a head per person in the UK assuming an average drugs bill of £9bn [£150 a head].' Even Freudenberg concedes that the direct saving 'is quite small'.
The big companies go further. The Association of the British Pharmaceutical Industry argues that PPT takes £1.2bn from their revenues, money that goes to a middle man instead of being put to constructive use. Andrew Hotchkiss, managing director of US pharmaceutical giant Eli Lilly in the UK, says: 'The issue for us is that we end up losing potential margin that could be invested back in research and development.'
The view is shared by Pfizer, another US company operating in the UK. Julian Mount, vice-president of European Trade, says: '£1.2bn is an enormous amount in terms of what Pfizer loses in UK revenue. [It affects] R&D and our ability to reinvest.'
However, companies say their major concern is the impact of PPT on the drugs supply chain and safety. Mount says: 'We have seen a rise in the incidence of counterfeit medicines in the UK. That is why we need to ask whether this system is safe and whether our efforts to protect it are adequate.'
According to the EU, counterfeiting has increased dramatically since evidence first arose of it in Europe in 1998. The MHRA says there have been nine recalls of counterfeits in the UK in the past three years and a further five cases caught at wholesaler level before they reached the market.
Until last year, PPT traders dismissed the companies' concerns as without evidence. But last summer there were several recalls of counterfeit medicines that had entered the UK supply chain via a parallel trader.
These involved Lilley's anti-psychotic treatment Zyprexa, Sanofi-Aventis's blood-clot treatment Plavix, and Astra Zeneca's cancer treatment Casodex. Some 40,000 packs of tablets were seized by the MHRA and up to a further 10,000 were recalled.
The fakes, packaged in French, were made in China and shipped to Singapore. They were bought by a wholesaler in Luxembourg who sold them on to a Belgian wholesaler and another based in Liverpool, who in turn sold them to UK parallel importers. One of these, OPD, noticed mistakes on the packaging when it was preparing to rebox Zyprexa in English and reported back to Lilly, which informed the MHRA.
Andrew Hotchkiss says: 'This is a very serious problem. These are serious medicines for patients who are very unwell. The reality is that the patient will not recognise that the product is counterfeit.' He believes PPT represents too great a risk to be tolerated. 'These cases are due to people entering the supply chain using parallel trade. If it did not exist we would not have them.'
Julian Mount says: 'The fact is that medicines should not be traded around Europe. How many people will have to die before our position is proved correct?'
Freudenberg counters that no deaths have been attributed to the PPT imports. He adds that the counterfeits were detected and reported by one of his members. 'There has to be a theoretical risk because of the very fact that we are handling, opening and resealing packaging. But what level of risk does that involve? I would say that it is very small because of the procedures under which we operate.' The European Commission, however, launched a consultation on tackling counterfeit medicine in March that included proposals that would effectively prevent repackaging.
Freudenberg says big firms are finding ways of making it more difficult for PPT. In Spain, for example, several have introduced a system of 'differential pricing'. They charge wholesalers a full price and later offer a discount if it can be demonstrated that all products have been sold within Spain, discouraging re-export.
Another technique has been to strike exclusive distribution deals with wholesalers. Last year Pfizer made such an agreement with Unichem (now part of Alliance Boots), arguing that a single distributor limits the possibility of counterfeits entering the supply chain and strengthens the relationship with pharmacists.
Freudenberg says that these moves have been effective. 'It is now very difficult for traders to get hold of some Pfizer drugs, and impossible in Spain.' And he adds that Glaxo's imposition of quotas in Greece may well be the reason that Lourantos and his members find it difficult to get access to Lamictal.
Lourantos, however, is not persuaded. 'It has to stop,' he says.