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 entry 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}
Date: 2008-12-10
Institutions: European Commission
Subjects: approximation of laws, legal code, medicinal product, pharmaceutical legislation, public health, single market

EN 

EN 

   EN 

 
 
COMMISSION OF THE EUROPEAN 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 entry 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 

   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 the entry into the legal supply chain of 
medicinal products which are falsified in relation to their identity, history or source 

There  is  an  alarming  increase  in  the  EU  of  medicinal  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  sub-standard  or  false 
ingredients, or no ingredients or ingredients in the wrong dosage, including active ingredients. 
They are a major threat to European patients and European industry. 

To  this  adds  that  the  risk  profile  has  changed.  The  number  of  false  representations  of 
innovative  and  life-saving  medicines  is  increasing.  Moreover,  in  order  to  increase  volume, 
these  products  are  channelled  through  the  lawful  supply  chain  towards  the  patient.  In  this 
way, in 2007, many thousand packs of false representations of life-saving drugs have reached 
patients in the EU. 

While there is uncertainty as to the precise number of cases today or in the future, there is a 
clear  trend  visible  which  threatens  the  high  level  of  protection  of  public  health  in  the  EU. 
Moreover, it can have disastrous consequences for the trust of the public in the industry and in 
the policy maker – well comparable to the “food-and-feed crisis” of the 1990’s. 

The underlying causes for false representations of medicinal products remaining undetected in 
the lawful supply chain are manifold, but can be reduced to four aspects: 

•  False  representations  of  medicinal  products  can  not  always  be  easily  distinguished  from 

originals; 

•  The  distribution  chain  has  become  very  complex  and  is  only  as  “strong  as  its  weakest 

link”; 

•  There are legal uncertainties as to the regime applicable to products introduced 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 representation of the original API. 

These  aspects  relate  in  particular  to  the  pharmaceutical  legislation  in  the  EU  which  ensures 
the functioning of the internal market for medicinal 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 allowed to “add to” these rules. Moreover, the aim to 
combat counterfeit medicines in the legal supply chain (without hampering the functioning of 
the  internal  market  for  medicinal  products)  cannot  be  sufficiently  achieved  by  the  Member 
States and can be better achieved by the Community. 

Against this background, the impact assessment discusses a variety of policy options for a set 
of  specific  objectives  to  address  the  underlying  causes.  Many  of  these  policy  options 

EN 

2 

   EN 

 
strengthen  substantial  rules  which  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  Commission  to  render  obligatory  specific  safety-features  on  the 

packaging for prescription medicines. 

•  An extension of certain rules for wholesalers to other economic actors 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 harmonised rules for official inspections. Moreover, 
compliant wholesalers would be listed in a European 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  importations  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 development of counterfeit medicines for the period 
until  2020  have  been  developed.  While  these  scenarios  (and  related  costs)  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 costs of the chosen policy options. These costs 
are going to be, until 2020, as follows: 

(cid:121) 

(cid:121) 

(cid:121) 

(cid:121) 

(cid:121) 

For  manufacturers  and  importers  of  medicinal  products:  between  6.8bn EUR  and 
11bn EUR, depending on the safety technique chosen; Moreover, depending on the 
chosen approach, pharmacies are going to bear costs of approx. 157m EUR; 

For wholesale distributors of medicinal products: approx. 280m EUR; 

For wholesale distributors who engage only in export activity: approx. 403m EUR; 

For other traders situated in the distribution chain: approx. 5m EUR; 

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  original  manufacturer  (typically  the  trademark 

EN 

3 

   EN 

 
holder)  and  the  last  actor  in  the  distribution  chain  (typically  the  pharmacist)  or  end  user 
(doctor/patient). 

Manipulations  of  safety  features  render  subsequent  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  subsequently  undetected  and  reached  the  patient 
through the legal supply chain. 

The impact assessment report assesses the socio-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 medicinal products. This is due to the 
fact  that  parallel  traders,  as  part  of  their  business  model,  have  to  re-package  medicinal 
products in view of, in particular, 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,  the  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 security schemes in high-price countries (DK, 
UK,  SV,  NL,  DE).  The  exact  amount  of  these  savings  is  highly  controversial.  Studies 
conclude a range between 100m to 600m EUR per year in the EU.  

The impact assessment also looks at second round effects of this policy option. 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 budget 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 national regulation of pricing and re-imbursement in the high-price 
countries. 

In  accordance  with  the  Commission  guidelines,  the  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 for a policy-decision of Commission in its proposal to the co-
legislator. 

EN 

4 

   EN