Lamy unveils ‘tiered’ drug price plan for poor

Date: 07/11/02

By Karen Carstens

PASCAL Lamy has unveiled a plan to ensure low-cost medicines to fight AIDS, malaria and tuberculosis can reach the patients in poor countries who need them most.

The proposed regulation would also prevent the marked-down drugs from being sold back in the EU by 'grey market' traders trying to make a fast euro, the French trade commissioner said last week.

'This is a pretty straightforward, open and transparent mechanism,' Lamy said. 'It is just one step along a bridge of many stones, some of which are already in place, but many of which still need to be added.'

The voluntary scheme introduces a 'tiered' pricing system based on two options:

• The average price of a drug in members of the Organisation for Economic and Cooperation, minus at least 80%, or;
• based on direct production costs, plus 10%.

David Earnshaw, a Brussels-based consultant and former EU spokesman for Oxfam International, applauded Lamy for 'finally explaining what tiered prices are'.

'The beauty of this initiative is that it provides actual formulas for the first time,' he said, ensuring that drugs companies can no longer make 'empty promises' about price reductions.

Lamy said he hoped EU ministers meeting today (7 November) will approve the plan, which also suggests labelling the low-cost drugs with a Europe logo - an electric-blue 'E' surrounded by yellow stars - for easy identification by officials if they do end up crossing the wrong borders.

Brian Ager, director-general of the European Federation of Pharmaceutical Industries and Associations, said:

'As shown by the recent events in the Netherlands, robust and effectively implemented barriers to re-importation are vital in ensuring medicines intended for poor patients actually reach them.'

GlaxoSmithKline and the Dutch government said in early October that more than 35,000 packets of the company's AIDS drugs supplied to Africa at cut-rate prices had been illegally resold in Germany and the Netherlands.

While Ager said he generally approved of the Commission's plan, he was sceptical about the 'E' logo. 'On their own, provisions for differentiating products exported at preferential prices from those sold in the EU by colour or packaging will not be sufficient, given that re-packaging is already widespread in the EU,' he said.

Seco Gerard, of Médecins Sans Frontières, said: 'We support the idea of working toward a tiered pricing system, but we wonder whether this system will provide the cheapest price possible.

'In theory, the concept is fine, it's just that how will we know exactly what 'production costs' are?' she said. 'It is based on elements for which there is no transparency.'

Another sticking point for Gerard is the list of 72 countries that would be eligible to receive the cheaper treatments. 'Why only these countries, and why only three diseases?' she asked.

The Commission's pragmatic stance is 'you have to start somewhere'. Lamy said he aims to get other industrialised nations, such as the United States and Japan, on board as part of a more general drive to boost access to medicines.

Gerard praised the Commission for taking such an active role on the issue: 'The EU has been a leader on this project, and that has to be recognised.'

Trade Commissioner Pascal Lamy has unveiled a plan to ensure low-cost medicines to fight AIDS, malaria and tuberculosis can reach the patients in poor countries who need them most.