Parallel Importation: Economic and social welfare dimensions

The document explains that parallel importation occurs when goods first sold under an intellectual property right in one country are imported into another. It argues that while producers prefer restricting these imports to enable geographic price discrimination and protect brand investments, consumers benefit from lower prices and increased accessibility. In the pharmaceutical sector, the author challenges industry claims that restricting parallel imports is necessary for R&D funding or public safety, suggesting instead that open importation reduces strain on public health budgets and that safety is maintained through government supervision.

• Parallel importation is legally based on the 'exhaustion of rights' doctrine, which stipulates that an intellectual property holder's control over a specific good ends once it has been first sold. There are three geographic scopes for this policy: national (no parallel imports), regional (imports permitted within a defined region like the EU), and international (imports permitted from anywhere in the world).
• Restricting parallel importation allows producers to segment international markets and engage in geographic price discrimination, charging different prices for the same product in different markets without fear that low-priced goods will be imported into high-priced markets.
• Open parallel importation generally increases consumer welfare by making products available at the lowest prices producers can profitably charge. For developing countries, it can stimulate production by allowing wholesalers to export lower-priced locally produced goods to more affluent markets, leveraging their comparative advantage in low-cost labour.
• In the pharmaceutical sector, parallel importation provides public welfare benefits by lowering prices for consumers, increasing access for lower-income individuals, and reducing the financial burden on public health budgets. The document clarifies that these are 'genuine' products and not counterfeit medicines.
• The author disputes pharmaceutical industry arguments that restricting parallel imports is essential for R&D, noting that companies spend a higher percentage of income on advertising and promotion—particularly for 'lifestyle' drugs—than on R&D.
• The claim that parallel importation threatens public safety is countered by the fact that medicines in developed countries are subject to strict government supervision, and there is little evidence of quality interference in the supply chain.

APA

Abbott, F. M., & Ball, E. (2007). Parallel Importation: Economic and social welfare dimensions. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/parallel_importation.pdf

Chicago

Abbott, Frederick M., and Edward Ball. Parallel Importation: Economic and social welfare dimensions. International Institute for Sustainable Development, 2007. https://www.iisd.org/system/files/publications/parallel_importation.pdf.

Wikipedia

{{cite report |last1=Abbott |first1=Frederick M. |last2=Ball |first2=Edward |title=Parallel Importation: Economic and social welfare dimensions |publisher=International Institute for Sustainable Development |date=June 2007 |url=https://www.iisd.org/system/files/publications/parallel_importation.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{abbott2007parallel, author = {Abbott, Frederick M. and Ball, Edward}, title = {{Parallel Importation: Economic and social welfare dimensions}}, institution = {International Institute for Sustainable Development}, year = {2007}, month = jun, url = {https://www.iisd.org/system/files/publications/parallel_importation.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }