Drugs are sold at different prices in different EU countries; prices are often set via negotiation between the state and the pharmaceutical drugs and reflect the importance of the social security system, the bargaining powers of the different parties. Arbitragers can therefore buy drugs in countries with low prices and resell them in countries with high prices and make a profit; this (legal) practice is called "parallel trade". The amount of parallel trade for pharmaceutical drugs is of the order of 10% of the total sales in Europe. This puts limits on the ability of firms to price discriminate across countries. Recently (see the FT article http://www.ft.com/cms/s/0/cdc5066a-c7d1-11de-8ba8-00144feab49a.html ), the French government is introducing a law proposal by which pharmaceutical drugs will be able to charge a higher price locally for drugs that are exported, effectively cutting down on the ability of arbitragers to earn profits.
