DEVELOPMENT-EU: Cheap Medicines for the Poor

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Stefania Bianchi

BRUSSELS, May 26 2003 (IPS) - The European Union adopted a new regulation Monday, enabling exporters to provide essential medicines at starkly reduced prices to poor countries.

The European Council, made up of Heads of State or Government of the 15 member states of the EU and Romano Prodi, President of the European Commission, adopted the regulation which also aims to halt the re-importation of these medicines.

The decision enables pharmaceutical companies to significantly increase the delivery of medicines to fight HIV/AIDS, malaria and tuberculosis in developing countries at lower or ‘tiered’ prices, while keeping higher prices for the same products in the EU.

Exporters are invited to put their products on a tiered-price list which will be run by the European Commission, the executive arm of the EU.

These medicines will be made available to developing countries with a price cut of 75 per cent off the average ‘ex-factory’ price, or at the cost of production plus 15 per cent.

EU Trade Commissioner, Pascal Lamy, welcomed the decision.

"This regulation is an important contribution to a global partnership ensuring cheap yet sustainable supply of key medicines at prices only slightly above their own production costs, whereas public and private donors provide the necessary funding for research and development," he said.

The EU will provide the necessary legal framework, in order to ensure that medicines are not diverted back into EU markets. "We are thus setting an example with a practical means of helping poorer countries struggling with public health crisis," said Lamy.

To prevent these medicines from being re-imported to members of the EU at a lower price than the retail price within the Union, products under the new regulation will bear a logo allowing customs to easily identify them.

This is expected to proscribe the warehousing, trans-shipment and re-exportation of such goods.

EU Commissioner for Development and Humanitarian Aid, Poul Nielson, said that the new regulation was only a small part of EU measures to assist developing countries in health matters.

"I welcome this regulation as a measure which delivers in a tangible, concrete way what we promised in the Programme of Action. We need to substantially increase the supply of tiered-price products so that cheaper medicines reach the poorest patients. This measure should be seen as part of a wider plan to improve the health situation in developing countries," said Nielson.

Under the new legislation, re-importation to the EU is prohibited from 76 countries, including least developed countries, and those where HIV/AIDS is particularly prevalent.

It follows demands from pharmaceutical companies in developed countries to ensure that their discounted medicines actually reach those most in need and are not diverted to higher priced markets.

The EU hopes that other developed countries will adopt similar measures.

The measures agreed Monday are part of the ‘Programme for Action: Accelerated action on HIV/AIDS, malaria and TB in the context of poverty reduction’, adopted by the Commission in February 2001.

The programme is designed to address the global emergency caused by the three major communicable diseases over a period of five years.

The World Trade Organisation (WTO), the only international body dealing with the rules of trade between nations, is also discussing Trade-Related Intellectual Property rights that allow countries in need of medicine to invoke compulsory licences to manufacture them.

In yet another significant move, the ACP-EU Council – made up of EU officials, finance ministers and members of ACP governments – announced Monday a package to support global initiatives in the areas of Health and Debt Relief.

A total of 351 million euros (416 million dollars) has been approved for fighting the three killer diseases in all developing countries, while 335 million euros (397 million dollars) has been given to debt relief in the framework of the Highly Indebted Countries (HIPC) initiative.

HIPC aims to reduce the levels of debt in the poorest countries of the world.