Why the govt must curb parallel importation of medicines

Parallel trade or importation of medicines and other pharmaceutical products is actually legal in Kenya, having been entrenched in law through the enactment of the Industrial Property Act of 2001.

This Parallel trade as it is currently practiced for pharmaceuticals, falls under two groups/areas: Registered distributors/wholesalers who import medicines from various countries into Kenya, and Other traders: this is by ‘briefcase traders” which pose the gravest danger to public health since the amorphous traders bring or smuggle in undeclared amounts of medicine including counterfeit medicines into Kenya.

The briefcase importers have no permits to handle pharmaceutical products and therefore are illegally in the business of importing medicines. A lot of laymen (non-pharmacists) are involved in this trade.
Several counterfeit cases in court usually involve these ‘briefcase traders’.

Despite the fact that these two groups seemingly or ostensibly import medicines into Kenya and sell them at reasonable prices, there are several illegalities in the ‘how’.

The tactics employed include: Bribing rogue employees/officers at JKIA, Wilson Airport, Mombasa, Malaba and Namanga ports of entry. Counterfeit medicines in Uganda easily find their way into Kenya through Malaba or Busia borders whereby the medicines are hidden inside other cargo or may also pass undetected in such border points which do not have scanning facilities.

Many of these traders evade paying the required taxes to the government that must be paid to PPB and KRA through the IDF fee. Some traders also have found mechanisms of compromising/bribing the officials so that Import permits can be illegally issued. Also, they do not have the required documents to get an import permit such as certificates of analysis, since their suppliers in countries such as Ukraine, Georgia, Turkey are also trading illegally and are restricted from selling outside their countries.

The other reason is to under-declare the quantities in the Import declaration, with the ultimate aim of reducing their tax burden which is a form of tax evasion. This is a big scandal that needs investigation.

Many briefcase traders travel to China, India and Pakistan with genuine packs purchased in local markets, they contract counterfeit manufacturers to manufacture similar packs of the counterfeit. Once the counterfeit manufacturer creates the replica, they’ll manufacture the product and ship it to Kenya and it goes through the port using compromised officers at Mombasa or alternatively send it to countries where the laws are lax, such as Somalia and this product is then transported overland to the port and airlifted to Nairobi Wilson Airport by the same planes that transport Miraa from Kenya to Mogadishu.

A random search of chemists in areas like Eastleigh reveals how deep and secretive this trade actually is. Many chemists there, will sell products at prices that are simply unmatchable compared to the legitimate outlets, offering discounts up to 80% of the recommended retail or wholesale price.

Other Parallel traders also deal with “CARGO” or stolen products by colluding with transport and logistics companies’ employees, diverting the trucks carrying highly expensive products after clearing by the legitimate importers, steal the cargo and then sell these at huge discounts through a sophisticated network of colleagues/Retailers who are known to them so as not to arouse any suspicion. Such retailers who stock this cargo only sell to their trusted/familiar customers to avoid detection. Some famous OTC medicines from Europe or America are available in high end /upmarket pharmacies even though the products are not registered at the Pharmacy and Poisons Board hence are illegal.

In many cases, the importers do not even obey the regulations around the types of packs that can be sold in Kenya, hence the prevalence of packs that have no English or Kiswahili language on the pack, which flouts PPB guidelines on language on the pack. Several packs in Kenya imported by these traders have Turkish or Arabic language on the pack which make it difficult for users to understand how to take the medicines and has an impact on patient safety.

Parallel importers also argue that the price that they offer is far lower compared with the authorised importers/distributors. In some cases, this may be true, however this price saving rarely trickles to the actual patient, since the retailer who purchases the packs will usually maximise his /her profits through the huge margins enjoyed by buying this packs but will sell the medicines to the patient at the same price as if it were through a legitimate source. This has been observed in some of the top hospitals in Nairobi who purchase Parallel imported medicine and sell at prices that are the same as the legitimate prices or even more expensive than the authorised importer’s price. The target for this is mainly to insurance patients.

In summary, the consequences of parallel importation as it is currently practiced in Kenya is that counterfeits are also introduced into the supply chain through these amorphous channels; it enriches only a few individuals; patients do not necessarily benefit from the price differential versus authorised importers and the government is denied much needed revenue in form of Import Declaration Fees making it a form of smuggling that should be dealt with by the government.

The Parallel Importation rules that were gazetted in September 2019 should also be enforced and all players to follow the law to ensure a level playing field.

The writer is a freelance journalists who comments on topical issues

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