Annual Report (2009) on the application of Council Regulation (EC) No 953/2003 of 26 May 2003 to avoid trade diversion into the European Union of certain key medicines
Date: 2010-11-11
Institutions: European Commission
Subjects: customs regulations, customs territory (EU), discriminatory price, export restriction, medicinal product, third country

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EUROPEAN COMMISSION  

Brussels, 11.11.2010 
COM(2010) 652 final 

Annual Report (2009) 

on the application of Council Regulation (EC) No 953/2003 of 26 May 2003 to avoid 
trade diversion into the European Union of certain key medicines 

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Annual Report (2009) 

on the application of Council Regulation (EC) No 953/2003 of 26 May 2003 to avoid 
trade diversion into the European Union of certain key medicines 

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TABLE OF CONTENTS 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

Background .................................................................................................................. 4 

Commission Reporting under Regulation (EC) No 953/2003 ..................................... 5 

Products registered ....................................................................................................... 5 

Countries of destination ............................................................................................... 6 

Diseases covered .......................................................................................................... 6 

Application of Price Formulae ..................................................................................... 7 

Evaluating the impact of the Regulation over time...................................................... 8 

ANNEX 1: Details of volumes of medicines sold in 2009 ...................................................... 10 

ANNEX 2: Volumes of tiered priced products sold by sub-region between 1 January 2009 and 
31 December 2009 ..................................................................................................... 19

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This  is  the  sixth  annual  report  foreseen  under  Article  11  of  Regulation  (EC)  No  953/20031, 
which  is  designed  to  prevent  parallel  trade  in  discounted  medicines  intended  for  the  least 
developed countries. This report covers the period from 1 January to 31 December 2009.  

1. 

BACKGROUND 

In  2000  the  UN  Millennium  Summit  adopted  the  Millennium  Development  Goals  (MDGs), 
one  of  which  is  to  fight  HIV/AIDS,  malaria  and  other  diseases.  In  response  to  this 
commitment  the  European  Commission  adopted  a  comprehensive  framework2  to  accelerate 
action  targeted  at  the  three  major  diseases  –  HIV/AIDS,  malaria  and  tuberculosis  (TB).  In 
2001 a Programme for Action (PfA)3 was developed outlining specific measures to be taken. 
Follow-up  of  this  Programme  was  adopted  by  the  Commission  in  2005  covering  the  period 
2007-20114.  

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  drugs  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. It is also less prone to the constraints often encountered 
in "partnership schemes". 

To support tiered pricing, specific safeguards were devised to prevent diversion of medicines. 
In May 2003, the EU adopted Council Regulation (EC) No 953/2003 to avoid trade diversion 
into the European Union of certain key medicines5 ("the Regulation").  

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Article 11 of Regulation (EC) No 953/2003 foresees: “(1) The Commission shall monitor on an annual 
basis the volumes of exports of tiered priced products listed in Annex I and exported to the countries 
defined  in  Article  1  on  the  basis  of  information  provided  to  it  by  pharmaceutical  manufacturers  and 
exporters.  For  this  purpose  a  standard  form  will  be  issued  by  the  Commission.  Manufacturers  and 
exporters must submit such sales reports annually for each tiered priced product to the Commission on 
a confidential basis. 
(2)  The  Commission  shall  periodically  report  to  the  Council  on  the  volumes  exported  under  tiered 
prices,  including  on  the  volumes  exported  within  the  framework  of  a  partnership  agreement  agreed 
between the manufacturer and the government of a country of destination. The report shall examine the 
scope of countries and diseases and general criteria for the implementation of Article 3.” 
Accelerated  action  targeted  at  major  communicable  diseases  within  the  context  of  poverty  reduction, 
COM(2000)585. 
Programme  for  Action:  Accelerated  action  on  HIV/AIDS,  malaria  and  tuberculosis  in  the  context  of 
poverty  reduction  COM(2001)96.  Update  on  the  EC  Programme  for  Action:  Accelerated  action  on 
HIV/AIDS, malaria and tuberculosis in the context of poverty reduction. Outstanding policy issues and 
future challenges COM(2003)93. 
European  Programme  for  Action  to  confront  HIV/AIDS,  Malaria  and  TB  through  External  Action 
(COM(2005)179).  For 
,  please  consult: 
http://ec.europa.eu/development/icenter/repository/COMM_PDF_SEC_2009_0748_F_EN_AUTRE_D
OCUMENT_TRAVAIL_SERVICE.pdf  
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 

the  2009  progress  report  (SEC(2009)  748  final) 

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2. 

COMMISSION REPORTING UNDER REGULATION (EC) NO 953/2003 

This report covers the period from 1st January to 31st December 2009. During the reporting 
period, no new products were registered. 

The report contains the following information: 

– 

– 

– 

– 

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

The sub-regions benefiting from these exports at tiered prices; 

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.  The  Commission  respects  the  confidentiality  of  the  data  provided  by 
applicants and neither guarantees nor questions their accuracy. 

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 continuously updated: 

– 

http://trade-info.cec.eu.int/cgi-bin/antitradediversion/index.pl 

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

3. 

PRODUCTS REGISTERED  

The  products  listed  below  were  registered  in  2004  by  GlaxoSmithKline  (GSK),  Brentford 
(UK). 

PRODUCT NAME 

OECD PRICE RANGE 

PRICE OFFERED 

EPIVIR 150 mg x 60 

US$ 121.81 – US$ 395.78 

US$ 5.70 

COMBIVIR 300/150 mg x 60 

US$ 177.49 – US$ 767.59 

US$ 19.50 

EPIVIR Oral Solution 10mg/ml - 240 ml  US$ 33.32– US$ 71.73 

US$ 6.73 

RETROVIR 100 mg x 100 

US$ 104.07 – US$ 219.42 

US$ 15.77  

RETROVIR 300 mg x 60 

US$ 125.15 – 295.42 

US$ 17.40 

RETROVIR 250 mg x 40 

US$ 83.84 – US$ 205.16 

US$ 13.27  

TRIZIVIR 750 mg x 60 

US$ 539.09 – 887.97 

US$ 102.00 

ZIAGEN 300 mg x 60 

US$ 152.64 – US$ 411.42  

US$ 72.90 

RETROVIR Oral Solution 10 mg/ml – 
200 ml 

US$ 17.85 – US$ 73.83 

US$ 7.10 

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It  should  be  noted  that  both  the  prices  offered  ("tiered"  prices)  and  the  OECD  price  ranges 
shown in the table above are those reported by the producer at the time when the applications 
were  submitted.  An  update  of  these  price  ranges  and  the  prices  offered  can  be  found  in 
Annex  I,  together  with  the  volumes  sold  in  2009  for  each  product  registered  under  the 
Regulation. 

Under the Regulation, no distinction can be made between purchasers – public or private - for 
products at these prices in the countries listed. However, it must be noted that these prices are 
indicative. The actual sales prices have not been reported, as Article 11(1) of the Regulation 
places  no  obligation  on  applicants  to  do  so.  It  therefore  cannot  be  excluded  that  in  some 
instances lower prices for the products can be and, indeed have been, negotiated6. 

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.  

As  HIV/AIDS,  Malaria  and  TB  are  chronic  diseases,  purchases  of  medication  have  to  be 
sustainable.  The  Commission  has  been  informed  that  most  sales  are  part  of  long-  standing 
agreements  with  purchasers.  No  exports  under  specific  “partnership  agreements”  have  been 
notified to the Commission.  

4. 

COUNTRIES OF DESTINATION 

In the reporting period, tiered priced products have been supplied to 14 of the countries listed 
in  Annex  II  of  the  Regulation.  These  were:  Cambodia,  Cameroon,  Democratic  Republic  of 
Congo,  Haiti,  Ivory  Coast,  Kenya,  Mozambique,  Namibia,  Nigeria,  Rwanda,  South  Africa, 
Togo, Uganda, and Zimbabwe. 

With  the  exceptions  of  Cambodia  and  Haiti,  all  the  countries  concerned  are  in  Sub-Saharan 
Africa, the region where the prevalence of HIV/AIDS is highest. 

Detailed  information  on  the  volumes  of  exports  to  each  of  the  7  sub-regions  (Europe  and 
Central Asia, East Asia and Pacific, Latin America and the Caribbean, West Africa, Central 
Africa, East Africa and Southern Africa) can be found in Annex 2 to this report. 

5. 

DISEASES COVERED 

for 

developing 

HIV/AIDS,  malaria  and  tuberculosis  are  generally  considered  the  gravest  public  health 
development.  
and 
concerns 
This  is  why  EU  development  policy,  including  the  Regulation,  is  specifically  focusing  on 
these  three  diseases.  Considering  that  the  list  of  registered  products  remained  unchanged  in 
2009,  the  diseases  covered  in  this  report  remain  identical,  i.e.  exclusively  treatment  of 
HIV/AIDS. 

a  major 

countries 

obstacle 

to 

However, there are certainly some pharmaceuticals for treating malaria and tuberculosis that 
would  benefit  from  registration  under  the  Regulation.  Medicines  to  treat  opportunistic 

6 

Readers  interested  in  obtaining  information  on  actual  sales  prices  may  find  it  on  the  website  of  the 
Global Fund to Fight AIDS, TB and Malaria. 
http://www.theglobalfund.org/fr/procurement/pqr/?lang=fr 

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infections  associated  with  HIV/AIDS  are  also  eligible  and  suitable  for  coverage  under  the 
Regulation, but there have been no applications so far. 

6. 

APPLICATION OF PRICE FORMULAE 

To date the application of the price formulae provided for in Article 3 of the Regulation has 
not caused any practical problems. The applicant has not found it necessary to avail itself of 
the services of an independent auditor in order to protect sensitive business data (a possibility 
allowed  by  Article  4(2)(ii)  of  the  Regulation).  For  all  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. 

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7. 

EVALUATING THE IMPACT OF THE REGULATION OVER TIME 

The  table  below  gives  some  indication  of  the  sales  trends  per  product  registered  under  the 
Regulation over the last five years: 

Figure 1: 

Product/unit 

Combivir 300/150 mg x 60 
Retrovir 250 mg x 40 
Retrovir 100 mg x 100 
Trizivir 750 mg x 60 
Retrovir Oral Solution 10 mg 
Ziagen 300 mg x 60 
Epivir Oral Solution 10mg/ml 
240 ml 
Epivir 150 mg x 60 
Retrovir 300 mg x 60 
Total 

Figure 2: 

2006

2007

2008

397.450
585
132.176
4.903
119.807
40.208

153.793
643
92.467
17.102
272.063
35.884

178.216
2.700
136.571
7.475
13.502
26.872

2009 
(GSK) 
66.344 
17.240 
10.185 
9.895 
7.305 
5.058 

2009 
(licensees)
905.655
0
43.728
0
137.779
0

406.287
975.250
48.410
2.125.076

155.523
1.125.986
118.725
1.972.186

33.311
971.689
47.682
1.418.018

4.008 
0 
0 
120.035 

720.863
6.406.552
1.305.821
9.520.398

Total annual sales of registered tiered priced products under Council Regulation (EC) No 953/2003 

9.520.398

2.741.081

2.125.076

1.972.186

1.418.018

2005

2006

2007

2008

2009 (GSK)

120.035

2009 
(Licensees)

10.000.000
9.800.000
9.600.000
9.400.000
9.200.000
9.000.000
8.800.000
8.600.000
8.400.000
8.200.000
8.000.000
7.800.000
7.600.000
7.400.000
7.200.000
7.000.000
6.800.000
6.600.000
6.400.000
6.200.000
6.000.000
5.800.000
5.600.000
5.400.000
5.200.000
5.000.000
4.800.000
4.600.000
4.400.000
4.200.000
4.000.000
3.800.000
3.600.000
3.400.000
3.200.000
3.000.000
2.800.000
2.600.000
2.400.000
2.200.000
2.000.000
1.800.000
1.600.000
1.400.000
1.200.000
1.000.000
800.000
600.000
400.000
200.000
0

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Of all the products registered, only Retrovir 250 mg x 40, and Trizivir 750 mg x 60 showed an 
increase  in  volume  sold  at  tiered  prices  compared  to  the  previous  year.  Overall  sales 
decreased by 92 %.  

This further drop in 2009 is again primarily due to more customers purchasing ARVs from 
other  producers  and  in  particular  from  generic  manufacturers,  including  those  licensed  by 
GSK.  Figure  1  and  2  on  page  8  show  the  total  sales  from  generic  manufacturers  for  the  9 
registered products under the Regulation in 2009. GSK has granted voluntary licences to eight 
generic companies for the manufacture and supply of ARVs (Retrovir, Epivir and Combivir, 
all used mainly as first line treatment) to both the public and private sectors in sub-Saharan 
Africa.  This  trend  is  welcome  as  it  improves  the  availability  of  affordable  ARVs  for 
customers in developing countries and helps to maintain a sustainable supply. In 2009 GSK 
licencees  supplied  439  million  tablets  of  their  versions  of  Epivir  and  Combivir  to  African 
countries  and  GSK  supplied  32.7  million  tablets  making  a  total  of  471.7  million  tablets  in 
2009  compared  with  a  total  of  349  million  in  2008.  It  should,  therefore  once  again  be 
underlined that, overall, access to preferentially priced medicines has increased significantly. 

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ANNEX 1: DETAILS OF VOLUMES OF MEDICINES SOLD IN 2009 

EPIVIR Oral Solution 10mg/ml – 240 ml 

Sub-region 

Date of Approval: 19 April 2004 

Volumes sold (units)7 
- 1 January 2009 to 31 
December 2009 

Southern Africa 

Total no. of packs sold 

per month 

4,008 

4,008 

334 

Disease targeted: HIV infection 

Active ingredient: lamivudine 

Price offered (per unit): US$ 5.42 

Lowest OECD list price:  US$ 39.58 

Preferential/lowest OECD list price: 13.69% 

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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. 

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EPIVIR 150 mg x 60 

Sub-region 

Date of Approval: 19 April 2004 

Volumes sold (units) - 
1 January 2009 to 31 
December 2009- 

Disease targeted: HIV infection 

Active ingredient: lamivudine 

Total no. of packs sold 

Per month 

0 

0 

Price offered (per unit): US$ 5.23 

Lowest OECD list price:  US$ 147.49 

Preferential/lowest OECD list price: 3.55%   

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COMBIVIR 300/150 mg x 60 

Sub-region 

Date of Approval: 19 April 2004 

Volumes sold (units)  
- 1 January 2009 to 31 
December 2009- 

Disease targeted: HIV infection 

Active ingredient: lamivudine + zidovudine  

Latin  America  and  the 
Caribbean 

Central Africa 

East Africa 

Southern Africa 

Total no. of packs sold 

Price offered (per unit): US$ 16.19 

Per month 

Lowest OECD list price:  US$ 302.85 

Preferential/lowest OECD list price: 5.35%   

50 

2,520 

13,766 

50,008 

66,344 

5,529 

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RETROVIR 100 mg x 100 

Sub-region 

Date of Approval: 19 April 2004 

Volumes sold (units) - 
1 January 2009 to 31 
December 2009- 

Disease targeted: HIV infection 

Active ingredient: zidovudine 

West Africa 

East Africa 

Southern Africa 

Price offered (per unit): US$ 12.17 

Total no. of packs sold 

Per month 

Lowest OECD list price:  US$ 101.69 

Preferential/lowest OECD list price: 11.97 % 

5,278 

1,996 

2,911 

10,185 

849 

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RETROVIR 300 mg x 60 

Sub-region 

Volumes sold (units) -
1 January 2009 to 31 
December 2009- 

Total no. of packs sold 

Per month 

0 

0 

Date of Approval: 19 April 2004 

Disease targeted: HIV infection 

Active ingredient: zidovudine 

Price offered (per unit): US$ 13.24 

Lowest OECD list price:  US$ 211.09 

Preferential/lowest OECD list price: 6.27%   

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RETROVIR 250 mg x 40 

Sub-region 

Volumes sold (units) -
1  January  2009  to  31 
December 2009- 

Date of Approval: 19 April 2004 

Disease targeted: HIV infection 

Active ingredient: zidovudine 

Price offered (per unit): US$ 11.03 

Lowest OECD list price: US$ 109.16 

Preferential/lowest OECD list price: 10.10% 

East Asia and Pacific 

Southern Africa 

Total no. of packs sold 

per month 

10,892 

6,348 

17,240 

1,437 

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TRIZIVIR 750 mg x 60 

Sub-region 

Date of Approval: 19 April 2004 

Volumes sold (units) - 
1 January 2009 to 31 
December 2009- 

Disease targeted: HIV infection 

Active  ingredient:  abacavir  sulphate  (300  mg)  +  lamivudine 
(150 mg) + zidovudine (300 mg) 

West Africa 

East Africa 

Southern Africa 

Price offered (per unit): US$ 53.71 

Total no. of packs sold 

Per month 

Lowest OECD list price:  US$ 545.81 

Preferential/lowest OECD list price: 9.84 % 

6,688 

507 

2,700 

9,895 

825 

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ZIAGEN 300 mg x 60 

Sub-region 

Date of Approval: 20 September 2004 

Volumes sold (units) -
1 January 2009 to 31 
December 2009- 

Disease targeted: HIV infection 

Active ingredient: abacavir sulphate 

Price offered (per unit): US$ 35.91 

Lowest OECD list price: US$ 255.92 

Preferential/lowest OECD list price: 14.03% 

East Africa 

Southern Africa 

Total no. of packs sold 

per month 

900 

4,158 

5,058 

421 

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RETROVIR Oral Solution 10 mg/ml – 200 ml 

Sub-region 

Date of Approval : 20 September 2004 

Volumes sold (units) – 
1  January  2009  to  31 
December 2009- 

Disease targeted: HIV infection 

Active ingredient: zidovudine 

West Africa 

East Africa 

Price offered (per unit): US$ 6.35 

Total no. of packs sold 

Per month 

Lowest OECD list price: US$ 25.72 

Preferential/lowest OECD list price: 24.69% 

4,043 

3,262 

7,305 

609 

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ANNEX 2: VOLUMES OF TIERED PRICED PRODUCTS SOLD BY SUB-REGION BETWEEN  

1 JANUARY 2009 AND 31 DECEMBER 2009 

Sub-regions 

Products  

East  Asia 
Pacific 

and 

RETROVIR 250 mg x40 

Latin  America  and 
the Caribbean 

COMBIVIR 300/150 mg x 60 

West Africa 

RETROVIR 100mgx100 

RETROVIR Oral Solution 

TRIZIVIR 750 mg x 60 

Central Africa 

COMBIVIR 300/150 mg x 60 

East Africa 

COMBIVIR 300/150 mg x 60 

RETROVIR 100mgx100 

RETROVIR Oral Solution 

TRIZIVIR 750 mg x 60 

ZIAGEN 300 mg x 60 

Southern Africa 

EPIVIR Oral Solution  

COMBIVIR 300/150 mg x 60  

RETROVIR 100 mg x 100 

RETROVIR 250mgx40 

TRIZIVIR 750 mg x 60 

ZIAGEN 300 mg x 60 

Units 

10,892 

50 

5,278 

4,043 

6,688 

2,520 

13,766 

1,996 

3,262 

507 

900 

4,008 

50,008 

2,911 

6,348 

2,700 

4,158 

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