EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 10.12.2008 
SEC(2008) 2675 
COMMISSION STAFF WORKING DOCUMENT 
 
Accompanying document to the 
Proposal for a 
 
DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
 
amending Directive 2001/83/EC as regards the prevention of the en try into the legal 
supply chain of medicinal products which are falsified in relation to their identity, 
history or source 
  
Summary of the Impact Assessment  
{COM(2008) 668 final} 
{SEC(2008) 2674} 
 
EN 2   EN COMMISSION STAFF WORKING DOCUMENT 
Executive summary of impact assessment report on a Commission proposal for a 
Directive of the European Parliament and of the Council amending Directive 
2001/83/EC as regards the prevention of th e entry into the legal supply chain of 
medicinal products which are falsified in rela tion to their identity, history or source 
There is an alarming increase in the EU of me dicinal products which are illegal and false 
representations relating to identity, history or source. These products (which are commonly 
referred to as “ counterfeit medicinal products ”) usually contain su b-standard or false 
ingredients, or no ingredients or ingredients in the wrong dosag e, including active ingredients. 
They are a major threat to Europ ean patients and European industry. 
To this adds that the risk profile has cha nged. The number of fals e representations of 
innovative and life-saving medicines is increa sing. Moreover, in order to increase volume, 
these products are channe lled through the lawful supply chai n towards the patient. In this 
way, in 2007, many thousand packs of false represen tations of life-saving drugs have reached 
patients in the EU. 
While there is uncertainty as to the precise numbe r of cases today or in the future, there is a 
clear trend visible which threat ens the high level of protecti on of public health in the EU. 
Moreover, it can have disastrous consequences fo r the trust of the public in the industry and in 
the policy maker – well comparable to th e “food-and-feed crisis” of the 1990’s. 
The underlying causes for false representations of  medicinal products re maining undetected in 
the lawful supply chain are manifold, but  can be reduced to four aspects: 
• False representations of medi cinal products can not always be easily distinguished from 
originals; 
• The distribution chain has become very comp lex and is only as “strong as its weakest 
link”; 
• There are legal uncertainties as to the regime a pplicable to products in troduced into the EU 
while allegedly not being placed on the market; and 
• Already the active pharmaceutical ingredients (“API”) entering the manufacturing process 
may be a false representati on of the original API. 
These aspects relate in particular to the pha rmaceutical legislation in  the EU which ensures 
the functioning of the internal market for me dicinal products while safeguarding a high level 
of protection of public health in the EU. To the extent that this legislation establishes 
exhaustive rules, Member States are not allowe d to “add to” these rules. Moreover, the aim to 
combat counterfeit medicines in the legal supp ly chain (without hampering the functioning of 
the internal market for medi cinal products) cannot be suffici ently achieved by the Member 
States and can be better  achieved by the Community. 
Against this background, the impact assessment di scusses a variety of policy options for a set 
of specific objectives to address the underl ying causes. Many of these policy options 
 
EN 3   EN strengthen substantial rules wh ich enhance enforcement. Indeed, enforcement is crucial, as 
counterfeit is by definition an illegal activity. 
The impact assessment supports the following policy options: 
• A legal basis for the Commi ssion to render obligatory speci fic safety-features on the 
packaging for prescription medicines. 
• An extension of certain rules for wholesaler s to other economic actor s in the distribution 
chain who are involved in the transactions (for example, by auctioning products) without 
actually handling the products. 
• Obligatory audits of distributors and harmoni sed rules for official inspections. Moreover, 
compliant wholesalers would be listed in a Eur opean database to enhance transparency of 
reliable traders. 
• Clarification of the rules of “import for export” , i.e. clear rules as to the requirements for 
products entering the Community allegedly not  made available on the Community market. 
• Strengthened requirements for impo rtations of API if it is established that the regulatory 
framework in the respective third country does not ensure a comparable  level of protection 
of human health for products exported to the EU. 
• Audits and notification of economic actors handling API in the EU. 
The assessment of the policy options is made against a baseline of  “non-action”. As a 
baseline, various scenarios of the future deve lopment of counterfeit medicines for the period 
until 2020 have been developed. While these scen arios (and related cost s) are by their very 
nature estimations based on best use of existing data (which is in itself limited), they reveal 
that societal direct and indirect costs of  non action will reach, depending on the scenario, 
between 9.5bn EUR and 116bn EUR until 2020. 
These costs of non-action compare against the co sts of the chosen polic y options. These costs 
are going to be, until 2020, as follows: 
y For manufacturers and importers of medicinal products: between 6.8bn EUR and 
11bn EUR, depending on the safety techni que chosen; Moreover, depending on the 
chosen approach, pharmacies are going to bear costs of approx. 157m EUR; 
y For wholesale distributors of me dicinal products: approx. 280m EUR; 
y For wholesale distributors who engage onl y in export activity: approx. 403m EUR; 
y For other traders situated in the distribution chain: approx. 5m EUR; 
y For manufacturers of API:  approx. 320m EUR. The bulk of  these costs is going to 
fall upon 3rd country manufacturers. 
Finally, the impact assessment also discusses as policy option a prohibition of manipulations 
(i.e. removing, tampering with, or over-labelling)  of safety features on the packaging by 
economic actors situated “in-between” the orig inal manufacturer (typ ically the trademark 
 
EN 4   EN holder) and the last actor in the distribution chain (typically the pharmacist) or end user 
(doctor/patient). 
Manipulations of safety features render subseq uent detection of counterfeit medicines more 
difficult/impossible, which increases the risk of counterfeit medicines reaching the patient 
through the legal supply chain. 
This risk is no theoretical construction. There have been cases in the past where counterfeit 
medicines, once re-packaged, remained subse quently undetected and reached the patient 
through the legal supply chain. 
The impact assessment report assesses the soci o-economic consequences if manipulations of 
safety-features affixed on the medicinal product were in principle prohibited and shows that 
these impacts would mainly relate  to parallel trade of medicina l products. This is due to the 
fact that parallel traders, as part of thei r business model, have to re-package medicinal 
products in view of, in part icular, language requirements  in the destination state. 
The impact assessment shows that, in a first-round effect , the reduction of parallel trade leads 
to losses of turnover for these businesses (approx. 3.2-4.5bn EUR) and reduces employment 
(approx. 9 000 jobs in the EU). Moreover, th e reduction of parallel trade removes price-
competition (between the originator and the parallel distributor) which may arguably reduce 
savings for public health budgets and/or social s ecurity schemes in high-price countries (DK, 
UK, SV, NL, DE). The exact amount of these savings is highly cont roversial. Studies 
conclude a range between 100m to 600m EUR per year in the EU.  
The impact assessment also l ooks at second round effects  of this policy op tion. It shows that 
the revenue and employment generated so far by parallel traders may be re-distributed to 
wholesale distributors and to the research-based  industry. With regard to the latter, these 
revenues may be re-invested in R&D thus contributing to the competitiveness of this sector. As regards potential savings for public health b udget and social security schemes, the impact 
assessment sets out various arguments as to the extent of the savings and whether they could also be obtained through nati onal regulation of pricing and re -imbursement in the high-price 
countries. 
In accordance with the Commission guidelines, th e impact assessment does not take a final 
stance on the policy option. Rather, it sets out the arguments and likely  impacts of this policy 
option thus providing the basis fo r a policy-decision of Commissi on in its proposal to the co-
legislator.