Examination of witnesses (Questions 480
TUESDAY 11 MAY 1998
MR J BARKER
and MR T BROWN
480. Yes, the ultimate consumer.
(Mr Barker) The patient, because as you of course
know, the consumer is a strange animal in the pharmaceutical world.
As far as the patient is concerned, the prime benefit comes back
through the clawback through the price containment that parallel
import products have on the price of product.
481. Is that right? We get the impression that
the profit goes to the parallel importer and maybe the pharmacist
but neither the NHS nor the NHS's patients, the general public,
actually benefit from this process.
(Mr Barker) In my opinion this is one of these misconceptions
which seems to be very popular. There is unquestionably a financial
benefit to the Treasury through the clawback. That is estimated
to be around about two per cent, so there is a financial benefit
there which can be quantified and is quantified. What is more
difficult to quantify is the fact that the parallel imported product
does on occasions mean that the domestic manufacturer is unable
to apply for a price increase. It can on occasions encourage him
to discount, as he often will do, the domestic product in the
United Kingdom. That does happen.
482. We have not been able to get any evidence
of that. Can you provide some evidence of that? We have seen that
assertion from you and it is something we have heard before, but
getting hard evidence sounds more difficult. Could you supply
us with some clear evidence of where parallel importing has resulted
in price decreases?
(Mr Barker) I would prefer to do that in writing.
483. We are very happy to have that.
(Mr Barker) It would be on a confidential basis. I
can supply evidence which firstly shows products where prices
have actually been reduced and secondly I can supply evidence
of where we have been offered products at a lower price to encourage
us to market or to supply the domestic version as opposed to the
484. The other thing that many of the drug manufacturers
claim is that their research projects are going to suffer if these
parallel imports go on because they will not be able to fund the
very expensive research in which they are engaged. You say that
there is evidence to show that the reverse is actually the case.
Can you elaborate on that?
(Mr Barker) I do not think, with respect, I said the
reverse is the case. What I in fact suggested was that there is
no evidence to support the contention by the manufacturers that
their R&D budget has been or is likely to be affected in any
significant sense at all by the parallel trade. As you well know,
if you look at the published financial figures of the pharmaceutical
companies, they are all increasing their profits year on year.
They claimthey claimto be increasing their R&D
expenditure, so quite how they then argue that their R&D budget
is at risk, I do not follow.
485. They have not all increased their profits.
(Mr Barker) The majority.
486. There are one or two who have got into
quite spectacular difficulty.
(Mr Barker) They are the exception, not the rule,
with the greatest respect.
487. You do not think that this sort of claim
that they need some sort of guarantee of return on their investment
is one which stands up to any detailed scrutiny.
(Mr Barker) I am not aware that too many sectors generally
have any such guarantees. I am not quite sure that I understand
why the pharmaceutical sector needs to be singled out for that
kind of guarantee.
488. They do have certain problems, do they
not? You have said yourself that the testing which goes on and
the licensing arrangements are fairly severe.
(Mr Barker) Accepted.
489. I am not holding a candle for them. I am
trying to tease out from you evidence that will support the statements
you are making to us.
(Mr Barker) Was that a question? I am sorry.
490. Yes, it was. I am sorry if it was not clear.
(Mr Barker) Could you repeat the question?
491. I am concerned that you suggest that it
would not affect their ability to conduct research in any way
if parallel importing were to go on in an unrestricted manner,
whereas they would say that they need at least the reliability
of a market in which to operate. You are suggesting that really
that does not stand up. Why does it not stand up?
(Mr Barker) What I am suggesting is that I have yet
to receive any evidence at all that their R&D budget has been
affected and significantly affected by the parallel trade. Nobody
has ever produced that evidence.
492. Presumably it could be.
(Mr Barker) If they would like to produce that evidence,
then we would be happy to consider it, but at this time the statement
has often been made. It was made in the Bannerman round table
conferences for three consecutive years and never once was any
(Mr Brown) Is not the point that the burden of proof
lies firmly with them rather than with us? If they made the statement,
they need to establish that it is the case.
493. Is it the truth that the major source of
parallel imports are generic drugs rather than R&D based ones?
Would that be true?
(Mr Barker) No. I am not quite sure where that information
has come from. The majority of the parallel trade is concerned
with branded products rather than generic products. I cannot speak
for the importation of generic products through the parallel trade
route. It is true that some products are brought into this country
as brands, but are then put into the supply chain as generics,
yes. But I am not aware myself of any significant volume of generic
products coming into the parallel trade route.
494. Earlier you commented on the counterfeit
pharmaceuticals issue. Am I right in understanding that you are
saying that those who argue that parallel importing has led to
an increase in counterfeit pharmaceuticals in the UK are exaggerating
the problem? Is that how I understood you? May I put it more neutrally?
Do you think that parallel importing has led to an increase in
the number of counterfeit pharmaceuticals in the UK market?
(Mr Barker) As far as I am concerned, I am only personally
aware of two examples of a counterfeit product. The MCA as the
regulatory authority are on public record as stating that counterfeit
in pharmaceuticals is not an issue for the United Kingdom.
495. Could I ask you to comment on the global
situation because the ABPI have expressed concern that counterfeiting
globally is increasing. Do you share that view?
(Mr Barker) I cannot answer the question because I
do not have the knowledge to answer it. The only observation I
would make to that of course is that the pharmaceutical industry
itself and the manufacturing side of it has, I would suggest,
a very decided responsibility in this area. If they cannot control
their own raw material actives, and so on ... I know that in the
extreme case of course you will even have products with no active
ingredient in at all, but it is primarily their responsibility
rather than anybody else's.
496. What conditions make the UK a major source
for parallel exports? Is it just that prices are lower than in
countries like Denmark or Germany?
(Mr Barker) Yes.
497. It is as simple as that.
(Mr Barker) Yes.
498. No other conditions which would affect
(Mr Barker) The only other factorand it is
a factor of courseis that in this country, as we are all
painfully aware, our ability to speak any language other than
English is not high, whereas of course if you go to Germany, Denmark,
Holland and so on, English is very widely spoken and understood,
with the consequence that all the problems associated with a foreign
language are not so acute in countries like Denmark, Holland,
Chairman: Thank you very much, that is very
helpful. I think you indicated it might be appropriate to reply
to us in writing on a couple of points and we should be happy
to receive that. Thank you very much for your time and your trouble