TABLE OF CONTENTS

1........... Background.................................................................................................................. 3

2........... Commission Reporting under Regulation (EC) No 953/2003...................................... 4

3........... Products registered....................................................................................................... 4

4........... Countries of destination............................................................................................... 5

5........... Diseases covered........................................................................................................... 5

6........... Application of Price Formulae...................................................................................... 5

7........... Evaluating the impact of the Regulation over time...................................................... 5

ANNEX 1: Details of volumes of medicines sold in 2012-2013

This is the eighth annual report foreseen under Article 11 of Regulation (EC) No 953/2003, which is designed to prevent parallel trade in discounted medicines intended for the least developed countries. This report covers the period from 1 January 2012 to 31 December 2013.

As in previous reporting periods, the volume of sales of registered tiered priced medicines has further declined in 2012 and 2013. With a historic low sales volume in 2012. This is explained by the fact that currently fourteen licenses have been granted by the applicant for the manufacture and supply of medicines for the treatment of HIV/AIDS (ARVs), as opposed to nine in 2011.

As part of the REFIT exercise[1], the European Commission will evaluate the Regulation by 2015.

1. Background

In 2000 the UN Millennium Summit adopted eight Millennium Development Goals (MDGs), aimed at freeing humanity from extreme poverty, hunger, illiteracy and disease by 2015. MDG number six aims specifically at halting and reversing the spread of HIV/AIDS, malaria and other major diseases by 2015. In 2011 there was a UN Political Declaration supporting the achievement of MDG 6 which sets forth a series of ambitious targets and elimination commitments for 2015.[2]

HIV/AIDS, tuberculosis and malaria remain major plagues in many resource-poor countries, particularly in Sub-Saharan Africa.The UNAIDS report on the global AIDS epidemic 2013[3] informs about the historic declines in AIDS-related deaths and new HIV infections in low- and middle-income countries. According to the report, as of December 2012, an estimated 9.7 million people in low- and middle- income countries were receiving antiretroviral therapy. This is a historic increase of 1.6 million over 2011. Hence, the goal of the 2011 UN Political Declaration to reach 15 million people living with HIV with lifesaving antiretroviral treatment by 2015 is approaching. However, access to treatment varies considerably within and between countries and regions. The 9.7 million people worldwide receiving antiretroviral therapy in low- and middle-income countries represent only 34% of the 28.6 million people eligible under the WHO 2013 guidelines.

Supplying poor and developing countries with medicines at sustainable low prices is one of the key objectives in the fight against these major diseases. In order to achieve this, the European Commission has consistently advocated a policy of "tiered pricing" for medicines, combined with market segmentation between rich and poor countries. The advantage of such a policy is that it encourages manufacturers to distribute the medicines in question in the target countries at the lowest possible (“tiered”) price, while at the same time recouping their research and development expenditure with the higher prices charged in developed (OECD) countries. This approach is designed to promote sustainable supplies and continuous distribution of life-saving medicines.

To support tiered pricing, specific safeguards were devised to prevent diversion of medicines from poor developing countries into the European Union.

In May 2003, the EU adopted Council Regulation (EC) No 953/2003 to avoid trade diversion into the European Union of certain key medicines[4] ("the Regulation").

2. Commission Reporting under Regulation (EC) No 953/2003

The report contains the following information:

– The volumes exported under tiered prices for each product registered in annex I of the Regulation;

– The diseases treated with the products in question;

– An assessment of the application of the price formulae in Article 3 of the Regulation in relation to each of the products concerned.

This report is mainly based on the information received from the applicant under Article 11(1) of the Regulation.

In order to keep the public informed of all products registered under the Regulation, their producers, distinctive features, countries of destination, and other relevant details, the Commission has established a website where this information is available:

http://trade.ec.europa.eu/cgi-bin/antitradediversion/index.pl

The same website also provides information for manufacturers who wish to register a new product.

3. Products registered

There were no new products registered during the reporting period.

The products listed below, aimed at the treatment of HIV/AIDS, were registered in 2004 by GlaxoSmithKline (GSK), Brentford (UK):

EPIVIR 150 mg x 60 || || ||

COMBIVIR 300/150 mg x 60 || || ||

EPIVIR Oral Solution 10mg/ml 240 ml || || ||

RETROVIR 100 mg x 100 || || ||

RETROVIR 300 mg x 60 || || ||

RETROVIR 250 mg x 40 || || ||

TRIZIVIR 750 mg x 60 || || ||

ZIAGEN 300 mg x 60 || || ||

RETROVIR Oral Solution 10 mg/ml – 200 ml || || ||

Price ranges and the prices offered can be found in Annex I, together with the volumes sold in 2012 and 2013 for each product registered under the Regulation, with the exception of RETROVIR 300 mg x 60. ViiV Healthcare has discontinued the supply of this medicine.

Over the reporting period, no attempts to illegally re-import tiered-priced products registered under the Regulation back into the EU were reported to the Commission.

4. Countries of destination

Countries of destination during the reporting period were: Kenia, Laos, South Africa and Uganda.

5. Diseases covered

The Regulation allows for the registration of medicines treating HIV/AIDS, malaria and tuberculosis. These diseases are generally considered the gravest public health concerns for developing countries and a major obstacle to development.

This is why EU development policy, including this Regulation, is more specifically focusing on these three diseases. Only medicines for the treatment of HIV/AIDS have been registered by the applicant. Considering that the list of registered products has remained unchanged since 2004, the diseases covered in this report remain identical, i.e. exclusively the treatment of HIV/AIDS.

6. Application of Price Formulae

For seven of the nine products, it proved sufficient to show that the price offered (i.e. the “tiered” price) was less than 25% of the lowest OECD list price. Both the tiered price and the OECD list prices are available to the public.

However, for two products –Epivir oral solution and Retrovir oral solution-, the tiered price was higher than the 25% of the lowest OECD price. Retrovir oral solution has not been supplied during the reporting period.

The applicant justified the higher percentages by the decreasing volumes of products being sold as a consequence of their licensing policy of the last years. The commercial price is also low in the OECD country and the access price is based on the cost of producing the product. Oral solutions are also more expensive to manufacture. This has led to a situation where the commercial selling price is close to the actual cost of the good, which is reflected in the access price.

7. Evaluating the impact of the Regulation over time

The table below gives the sales trends per product registered under the Regulation over the last eight years:

Figure 1:

Product/unit || 2006 || 2007 || 2008 || 2009 || 2010 || 2011 || 2012 || 2013

Combivir 300/150 mg x 60 || 397.450 || 153.793 || 178.216 || 66.344 || 478 || 8.459 || 3.000 || 0

Retrovir 250 mg x 40 || 585 || 643 || 2.700 || 17.240 || 0 || 0 || 0 || 0

Retrovir 100 mg x 100 || 132.176 || 92.467 || 136.571 || 10.185 || 322 || 385 || 323 || 390

Trizivir 750 mg x 60 || 4.903 || 17.102 || 7.475 || 9.895 || 1.333 || 140 || 296 || 0

Retrovir Oral Solution 10 mg || 119.807 || 272.063 || 13.502 || 7.305 || 9.932 || 1.944 || 0 || 0

Ziagen 300 mg x 60 || 40.208 || 35.884 || 26.872 || 5.058 || 113.591 || 13.697 || 432 || 90.748

Epivir Oral Solution 10mg/ml 240 ml || 406.287 || 155.523 || 33.311 || 4.008 || 24.731 || 11.571 || 72 || 0

Epivir 150 mg x 60 || 975.250 || 1.125.986 || 971.689 || 0 || 2.605 || 42.701 || 0 || 0

Retrovir 300 mg x 60 || 48.410 || 118.725 || 47.682 || 0 || 2.335 || 6.035 || 642 || NA

Total || 2.125.076 || 1.972.186 || 1.418.018 || 120.035 || 155.327 || 84.932 || 4.765 || 91.138

Figure 2:

As shown in figure 2, the total sales of registered tiered priced medicines has significantly and steadily decreased over the last eight years. This constant drop, which accentuated itself in 2009, could be explained primarily by more customers purchasing ARVs from other producers and in particular from generic manufacturers, including those licensed by GlaxoSmithKline through its licenses. ViiV Healthcare, a company established by GlaxoSmithKline and Pfizer, has now granted fourteen licences for the manufacture and supply of ARVs.

Over the two year period (2012-2013), some 95.000 packages of ARVs were exported to LDC under the Regulation. There was a major decline in 2012 with a sales volume of no more than 4.765 packages which fell under the Regulation. This concerned mostly the export of Combivir 300/150 mg x 60 to Uganda. In 2013 the sales volume increased, due to the sales of Ziagen tablets to South Africa (around 90.000 packages).

[1] For more info consult: http://ec.europa.eu/smart-regulation/refit/index_en.htm

[2] General Assembly Resolution 65/277. Political Declaration on HIV and AIDS: Intensifying our efforts to eliminate HIV and AIDS, A/RES/65/277 (10 June 2011), available from undocs.org/A/RES/65/277.

[3] UNAIDS Global Report 2013, available from http://www.unaids.org/en/resources/campaigns/globalreport2013/globalreport/

[4] OJ L 135, 3.6.2003, pages 5 – 11. The Regulation has last been updated by Commission Regulation 1662/2005 of 11 October 2005 (OJ L 267, 12.10.2005, pages 19 – 21): http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:267:0019:0021:EN:PDF

ANNEX 1: Details of volumes of medicines sold in 2012-2013

EPIVIR Oral Solution 10mg/ml – 240 ml Date of Approval: 19 April 2004 || || Volumes sold (units)[1] - 1 January 2012 to 31 December 2013

Disease targeted: HIV infection Active ingredient: lamivudine Price offered (per unit) 2012: US$ 8.74 Price offered (per unit) 2013: US$ 7.03 Lowest OECD list price 2012: US$ 13.95 Lowest OECD list price 2013: US$ 18.29 Preferential/lowest OECD list price 2012: 62.63 % Preferential/lowest OECD list price 2013: 38.44 % || ||

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Total no. of packs sold 2012 || 72

Total no. of packs sold 2013 || 0

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EPIVIR 150 mg x 60 Date of Approval: 19 April 2004 || || Volumes sold (units) - 1 January 2012 to 31 December 2013-

Disease targeted: HIV infection Active ingredient: lamivudine Price offered (per unit) 2012: US$ 3.60 Price offered (per unit) 2013: US$ 3.85 Lowest OECD list price 2012: US$ 40.45 Lowest OECD list price 2013: US$ 40.45 Preferential/lowest OECD list price 2012: 8.90 % Preferential/lowest OECD list price 2013: 9.52 % || ||

Total no. of packs sold 2012 || 0

Total no. of packs sold 2013 || 0

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COMBIVIR 300/150 mg x 60 Date of Approval: 19 April 2004 || || Volumes sold (units) - 1 January 2012 to 31 December 2013-

Disease targeted: HIV infection Active ingredient: lamivudine + zidovudine Price offered (per unit) 2012: US$ 10.20 Price offered (per unit) 2013: US$ 7.80 Lowest OECD list price 2012: US$ 158.70 Lowest OECD list price 2013: US$ 130.20 Preferential/lowest OECD list price 2012: 6.43 % Preferential/lowest OECD list price 2013: 5.99 % || ||

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Total no. of packs sold 2012 || 3000

Total no. of packs sold 2013 || 0

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RETROVIR 100 mg x 100 Date of Approval: 19 April 2004 || || Volumes sold (units) - 1 January 2012 to 31 December 2013-

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Disease targeted: HIV infection Active ingredient: zidovudine Price offered (per unit) 2012: US$ 7.00 Price offered (per unit) 2013: US$ 6.37 Lowest OECD list price 2012: US$ 99.11 Lowest OECD list price 2013: US$ 99.11 Preferential/lowest OECD list price 2012: 7.06 % Preferential/lowest OECD list price 2013: 6.43 % || ||

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Total no. of packs sold 2012 || 323

Total no. of packs sold 2013 || 390

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RETROVIR 250 mg x 40 Date of Approval: 19 April 2004 || || Volumes sold (units) -1 January 2012 to 31 December 2013-

Disease targeted: HIV infection Active ingredient: zidovudine Price offered (per unit) 2012: US$ 7.20 Price offered (per unit) 2013: US$ 3.96 Lowest OECD list price 2012: US$ 51.99 Lowest OECD list price 2013: US$ 51.99 Preferential/lowest OECD list price 2012: 13.85 % Preferential/lowest OECD list price 2013: 7.62 % || ||

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Total no. of packs sold 2012 || 0

Total no. of packs sold 2013 || 0

TRIZIVIR 750 mg x 60 Date of Approval: 19 April 2004 || || Volumes sold (units) - 1 January 2012 to 31 December 2013-

Disease targeted: HIV infection Active ingredient: abacavir sulphate (300 mg) + lamivudine (150 mg) + zidovudine (300 mg) Price offered (per unit) 2012: US$ 22.80 Price offered (per unit) 2013: US$ 19.20 Lowest OECD list price 2012: US$ 442.50 Lowest OECD list price 2013: US$ 470.14 Preferential/lowest OECD list price 2012: 5.15 % Preferential/lowest OECD list price 2013: 4.08 % || ||

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Total no. of packs sold 2012 || 296

Total no. of packs sold 2013 || 0

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ZIAGEN 300 mg x 60 Date of Approval: 20 September 2004 || || Volumes sold (units) -1 January 2012 to 31 December 2013-

Disease targeted: HIV infection Active ingredient: abacavir sulphate Price offered (per unit) 2012: US$ 12.60 Price offered (per unit) 2013: US$ 11.40 Lowest OECD list price 2012: US$ 95.86 Lowest OECD list price 2013: US$ 95.86 Preferential/lowest OECD list price 2012: 13.14 % Preferential/lowest OECD list price 2013: 11.89 % || ||

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Total no. of packs sold 2012 || 432

Total no. of packs sold 2013 || 90,748

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RETROVIR Oral Solution 10 mg/ml – 200 ml Date of Approval : 20 September 2004 || || Volumes sold (units) – 1 January 2012 to 31 December 2013-

Disease targeted: HIV infection Active ingredient: zidovudine Price offered (per unit) 2012: US$ 8.37 Price offered (per unit) 2013: US$ 6.83 Lowest OECD list price 2012: US$ 10.40 Lowest OECD list price 2013: US$ 10.40 Preferential/lowest OECD list price 2012: 80.50 % Preferential/lowest OECD list price 2013: 65.69 % || ||

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Total no. of packs sold 2012 || 0

Total no. of packs sold 2013 || 0

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[1] In this and the following tables, “units” are the packages in which the products concerned are packed. For example, one “unit” of EPIVIR Oral Solution 10mg/ml – 240 ml is one bottle of 240 ml. One unit of EPIVIR 150 mg x 60 (see following table) is one package containing 60 tablets.