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Print version ISSN 0042-9686
Bull World Health Organ vol.81 n.7 Genebra Jan. 2003
EU launches measures to stop diversion of cut-price drugs
The European Union has launched new measures to prevent unscrupulous middlemen from diverting low-cost life-saving drugs intended for poor countries and selling them on the black market in rich ones. The re-importation ban aims to encourage companies to increase the supply of cut-price drugs, known as "tiered-price products", to treat HIV/ AIDS, malaria, and tuberculosis in some of the world's poorest countries.
Access-to-medicines activists welcomed the move as a safeguard for the pharmaceuticals industry, and were confident that EU customs were tough enough to implement the new rules effectively, but drug industry groups were sceptical. Under the new EU regulation, which came into effect on 4 June, pharmaceutical companies may register their products sold at a discount of 75% or more on European prices, or those with a mark-up of 15% or more on production costs, on a voluntary basis.
These patented and generic medicines, destined for 76 poor countries that are unable to produce locally the drugs they need, will then be placed on a list administered by the European Commission. Drugs companies will be required to stamp these products with a special logo that can be easily identified by customs authorities. The regulation has made it a criminal offence to import any of these products into the EU "for free circulation, re-exportation, warehousing or trans-shipment".
Lena Sund, who drafted the regulation for the European Commission, said the re-importation ban was one part of the jigsaw, adding that drug distribution in developing countries needed to be improved, and more funding had to be found for research into "neglected" poverty-related diseases seen as unprofitable by the drug industry.
"Price discounting is an important step towards solving the problem, but we shouldn't only focus on a solution to trade diversion," Sund said. She added that some companies said they would be ready to register their products within the next few weeks, but others had been reluctant to join the system, complaining that it would be costly to re-label and re-package products. It would also be time-consuming in cases where they need new permission to import these re-packaged medicines, in the event, for instance, of distribution problems.
German Velasquez, coordinator of the WHO drug action programme, said he believed the ban was an effective tool to stem drug smuggling and he hoped it would spur other wealthy nations to follow suit. He added, however, that he thought the problem of diversion was "partly artificial" because the chance of drugs being diverted back to Europe was so slight. "What chemist in Europe would buy blackmarket drugs from Africa?" he asked.
Harvey Bale, Director-General of the International Federation of Pharmaceutical Manufacturers Associations based in Geneva, said the EU ban on re-importation of discounted drugs was "on the whole the right idea" but doubted whether it could be implemented properly. "They [EU states] will have to beef up vigilance and oversight in customs controls," he said, since not all EU customs controls were effective, for instance under the open-borders Schengen agreement within some EU states. He also he argued that drugs smugglers could use diplomatic pouches to circumvent customs.
A spokesman for the European pharmaceuticals industry was scathing about the EU re-importation ban. Christophe de Callatay of the European Federation of Pharmaceutical Industries and Associations in Brussels said the EU was taking the wrong approach. "The trouble is in the delivery [of drugs] because there's no public health infrastructure in many of these countries, no hospitals, no needles and no beds," he said, adding: "EU customs may be effective, but action must be taken at African borders too".