The Israeli Law enabling parallel import of pharmaceuticals was implemented in January 2001. Prior to its legislation there was only one exclusive importer for each pharmaceutical product, imported directly from the manufacturer. Parallel import enables the importation of a given pharmaceutical to Israel by a number of importers- not necessarily directly from the manufacturer, thus amplifying economic competition, which should result in lower acquisition price. OBJECTIVES: Our study examines the impact of the law three years after its implementation, regarding the national expenditure on pharmaceuticals. METHODS: Since financial data is not available to the public, the study was based on qualitative data. A survey of senior management of the Israeli health care system was conducted. A pool of 50 executives was constructed, representing all relevant stakeholders. Each participant was interviewed face-to-face, using a uniform questionnaire. RESULTS: The response rate was 68%, all sectors had at least one representative. The preliminary analysis of the answers shows that although during 3 years, only 22 drugs were parallel imported, most of the responders answered that both the national expenditure and prices of pharmaceuticals were reduced. No damage was done to the publics' health, and there was no change in the number of newly approved pharmaceuticals. CONCLUSIONS: As a result of the Parallel Import legislation, combined with several other cost-containment reforms, a reduction in the prices of pharmaceuticals is noticed. The fact that only 22 pharmaceuticals, and none during 2003, were actually imported by parallel trade shows that the main reduction is attributed to lower prices established by the manufacturers themselves, trying to avoid competition from parallel imports. Thus, the importance of the law lies not necessarily by carrying it out, but simply by the fact that it allows the major buyers to use it as a tool in the negotiation with manufacturers.