EU agrees measures to enable cheaper access to medicines in developing countries, May 2003

Government ministers from the EU's Member States agreed on 26 May 2003 to a plan that will enable drugs used in the fight against HIV/Aids, malaria and tuberculosis to be sold more cheaply in over 70 developing countries.

Although there are already a number of schemes in place to encourage pharmaceutical companies to sell their drugs more cheaply in the developing world, these have not enjoyed much success because of fears that the drugs would be sold back into Europe at cut-price, undermining lucrative markets. As the European Commissioner for Trade, Pascal Lamy, explained: drugs sold for €500 will be bought in Africa for €100 and someone will try to re-sell them in Europe for €490.

The EU's new legislation seeks to address this problem by establishing a system whereby pharmaceutical companies may choose to put their products on a tiered-price list run by the European Commission. All products on the list shall bear a logo allowing customs officials to easily identify them and under the new law, imports of these products into the EU for free circulation, re-exportation, warehousing or trans-shipment will be prohibited. To be eligible to be added to the list, medicines will have to be sold at either the cost of production plus 15% or at a price reduction of 75% off the average 'ex factory' price in OECD countries.

Pascal Lamy, welcomed the Council's agreement, saying:

'This regulation is an important contribution to a global partnership ensuring cheap yet sustainable supply of key medicines to the populations of poor countries... We are setting an example with a practical means of helping poorer countries struggling with public health crises'

However neither development NGOs nor the pharmaceutical industry itself reacted as enthusiastically to the agreement. Whilst the development NGOs welcomed the agreement as a significant step forward they criticised the EU for reducing the discount requirement from 80% to 75%, following pressure from the French government, in particular, who sought to lower the requirement to 70%. Commenting on the move, Ellen't Hoen of Médecins Sans Frontières, said:

'Pharmaceutical companies are afraid to have limits imposed on their pricing policies for developing countries and the Member States of European Union are giving in to this pressure, all under the cover of offering advantageous prices to developing countries. It is essential that the member states strengthen and not weaken the European differential pricing scheme so that patients in poor countries can access essential medicines at affordable prices. This is even more essential as these proposals might be taken into consideration in the meetings that will take place during the next G8'.

The EU's pharmaceutical industry also criticised the European Commission, claiming that they were not consulted over the proposal which was only discussed with the Anglo-American pharmaceuticals giant GlaxoSmithKline. The European Federation of Pharmaceutical Industries and Associations (EFPIA) have repeatedly stated that they back increasing access to medicines, however they have suggested that the new system is too rigid and will not encourage companies to increase their exports to developing countries.

The agreement is viewed as a key building block in the EU's 2001-2006 action programme aimed at addressing the global emergency caused by HIV/Aids, tuberculosis and malaria. The European Commission hopes that if the new system is successful then other medicines targeted at different diseases will be added to the list and the number of countries involved in the scheme will be increased.

Links:
European Commission:
	26.05.03:	Press Release: Access to medicines: EU clears plan to ensure delivery of cheap medicines to developing countries [IP/03/748]
	Trade and Development: Access to essential medicines
European Sources Online: Financial Times:
	27.05.03:	EU seeks to speed up flow of cheap Aids drugs
European Federation of Pharmaceutical Industries and Associations:
	Homepage
Medécins Sans Frontières:
	Homepage
	27.03.03:	The price of essential medicines in developing countries: The member states of the European Union must strengthen the European price regulation scheme

Helen Bower

Compiled: Tuesday, 27 May 2003

The EU's Member States agreed on 26 May 2003 to new legislation that will enable drugs used in the fight against certain diseases to be sold more cheaply in over 70 developing countries.