Essential medicines for developing countries (HIV/AIDS, tuberculosis and malaria)

This purpose of this Regulation is to achieve the objectives of the " Programme for Action: Accelerated action on HIV/AIDS, malaria and TB in the context of poverty reduction" by setting up a system enabling pharmaceutical producers to sell developing countries essential medicines at reduced prices while ensuring that these products do not find their way back to the EU. The ultimate goal is to give the developing countries greater access to the essential medicines they need to fight the major communicable diseases.

ACT

Council Regulation (EC) 953/2003 of 26 May 2003 to avoid trade diversion into the European Union of certain key medicines.

SUMMARY

Scope

This Regulation applies to any pharmaceutical product used in the prevention, diagnosis and treatment of the following communicable diseases: HIV/AIDS, malaria and tuberculosis. It does not apply to goods of a non-commercial nature contained in travellers' personal luggage for personal use within the limits laid down in respect of relief from customs duty.

The list of countries of destination can be found in Annex 2 to the Regulation. There are 76 countries listed.

Principle of tiered pricing

In order for pharmaceutical products to qualify as tiered priced products, their manufacturers or exporters of products must submit applications to the Commission. This application must specify:

• the product's name and composition as well as sufficient information to verify which disease it is preventing, diagnosing or treating;
• the proposed price;
• the countries of destination.

If the Commission, assisted by a committee of representatives of the Member States, decides that the application fulfils the criteria set out in the Regulation, the product is added to Annex 1 and the applicant informed within 15 days of the date of the decision.

Setting tiered prices

When setting a tiered price, the applicant manufacturer or exporter has two options:

• 25 % of the average ex-factory price charged in OECD markets;
• the direct production costs plus 15 %.

General obligation

It is illegal to import into the Community tiered priced products for the purposes of entry, release for free circulation, re-export, placing under suspensive procedures or placing in a free-zone or free warehouse.

Identification of tiered priced products: marking with a logo

Once a product has been approved as a tiered priced product the manufacturer and exporter affix a logo (see Annex 5) on all packaging, products and documents used in connection with the approved product.

Manufacturers and exporters of tiered priced products sold in the poorest developing countries may, in addition, identify these products by affixing the text "Approved as tiered priced product by EC under Regulation ……." in any of the official languages of the European Union on any packaging or by differentiating the product in a way as may seem fit.

Any additional information (means of transport, trading routes, batch-numbers, etc.) available to the exporter should be made available to the customs authorities to assist them in identifying tiered priced products.

Controls performed by the Member States' customs authorities

The customs authorities will suspend the release of, or detain, tiered priced products for as long as is necessary to obtain a final decision from the competent authorities on the nature of the goods in question.

If imported products are recognised by the competent authority as tiered priced products, that authority will issue a decision instructing the customs authority to destroy these products unless the importer is prepared to make the goods available for humanitarian purposes to the benefit of countries listed in Annex 2. Destruction is normally carried out at the expense of the importer but in any case without cost to the exchequer.

Where imported products are found not to qualify as tiered priced products as defined in this Regulation, the competent authority issues a decision to that effect enabling the customs authority to release the products to the consignee.

Monitoring the volume of exports of tiered priced products

Manufacturers and exporters are obliged to submit annual reports to the Commission on the volume of sales of each tiered priced product. On the basis of these reports, the Commission reports to the Council on the volumes exported.

Intellectual property law

This regulation has been laid down in parallel with the debate in the WTO's TRIPs (Trade-Related Aspects of Intellectual Property Rights) Council on the possibility of allowing the developing countries, in health emergencies, to obtain compulsory licences to manufacture the medicines they need.

If the countries in question obtain the medicines they need through tiered pricing, as the proposal for a Regulation suggests, they will not need such compulsory licences.

Last updated: 01.07.2011