REPORT FROM THE COMMISSION Annual Report (2010-2011) 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: 2012-12-18
Institutions: European Commission
Subjects: customs fraud, development aid, discriminatory price, export (EU), infectious disease, least-developed country, medicinal product

EUROPEAN 
COMMISSION 

Brussels, 18.12.2012  
COM(2012) 775 final 

REPORT FROM THE COMMISSION 

Annual Report (2010-2011) 

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 

EN 

   EN 

 
 
 
 
  
 
 
REPORT FROM THE COMMISSION 

Annual Report (2010-2011) 

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 

EN 

2 

   EN 

 
 
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 ..................................................................................... 6 

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

ANNEX 1: Details of volumes of medicines sold in 2010-2011............................................... 9 

EN 

3 

   EN 

 
This is the seventh 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 2010 to 31 December 2011.  

As in previous reports, the volume of sales of registered tiered priced medicines has further 
declined in 2010 and 2011. This is again explained by the fact that eleven voluntary licenses 
have now been granted by the applicant for the manufacture and supply of medicines for the 
treatment of HIV/AIDS (ARVs), as opposed to eight in 2009.  

In  view  of  the  absence  of  newly  registered  medicines  by  (other)  pharmaceutical  companies 
since  2004,  the  European  Commission  will  consider  organising  a  public  consultation  with 
stakeholders on the implementation of Regulation 953/2003. The consultation could assist in 
the evaluation of the role of Regulation 953/2003 in promoting the accessibility of affordable 
essential medicines to the poorest developing countries.  

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.  

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 20112 
informs  about  the  steadily  decline  of  the  HIV  incidence  rate  by  nearly  25%  worldwide 
between 2001 and 2009. However, this global progress masks substantial regional differences. 
While  the  incidence  rate  fell  significantly  in  sub-Saharan  Africa  and  Southern  Asia,  it 
remained  unchanged  in  Eastern  Asia,  Western  Europe,  Central  Europe  and  North  America. 
Despite  the  good  progress,  Sub-Sahara  Africa  remains  the  most  heavily  affected  region, 
accounting for 69% of new  HIV infections,  68%  of all people living with HIV and 72% of 
AIDS deaths.  

Supplying poor and developing countries with medicines at sustainable low prices is one of 
the  key  objectives  in  the  fight  against  these  major  diseases.3  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 

1 

2 
3 

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.” 
http://www.undp.org/content/dam/undp/library/MDG/english/MDG_Report_2011_EN.pdf  
Intellectual  property  rights  on  medicines  can  lead  to  higher  prices  by  limiting  the  supply  of  cheaper 
generic alternatives. Yet there are also many other important factors that may influence the accessibility 
of medicines to patients in poor developing countries. Such factors include the lack of national health 
insurance  coverage,  import  tariffs  and  taxes  on  medicines,  high distribution  mark-ups  and  inadequate 
public procurement systems. 

EN 

4 

   EN 

 
                                                 
 
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. Thus, in May 2003, the EU adopted 
Council  Regulation  (EC)  No  953/2003  to  avoid  trade  diversion  into  the  European  Union  of 
certain key medicines4 ("the Regulation").  

2. 

COMMISSION REPORTING UNDER REGULATION (EC) NO 953/2003 

This  report  covers  the  period  from  1st  January  2010  to  31st  December  2011.  During  the 
reporting  period,  no  new  products  were  registered  by  the  European  Commission  under  this 
Regulation. 

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  applicants  (or  applicant 
companies)  under  Article  11(1)  of 
the 
confidentiality  of  the  data provided by applicants and neither guarantees nor  questions  their 
accuracy. 

the  Regulation.  The  Commission  respects 

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-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  

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): 

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 

EN 

5 

   EN 

 
                                                 
•  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 
2010 and 2011 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, negotiated5. 

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 

Unlike  in  previous  reports,  it  was  not  possible  to  obtain  a  detailed  breakdown  of  volumes 
supplied per region in the reporting period. However, the applicant declared that tiered priced 
products had been supplied to all LDCs, the World Bank's low-income countries, and all of 
Sub-Saharan  Africa.  These  countries,  according  to  UNITAID,  cover  75%  of  all  the  people 
currently living with HIV/AIDS.  

5. 

DISEASES COVERED 

for 

countries 

a  major 

developing 

HIV/AIDS,  malaria  and  tuberculosis  are  generally  considered  the  gravest  public  health 
concerns 
development.  
and 
This is why EU development policy, including this Regulation, is more specifically focusing 
on these three diseases. However, only medicines for the treatment of HIV/AIDS have been 
registered  by  the  applicant,  which  could  be  justified  by  the  much  higher  costs  of  ARVs  as 
compared to the treatment for malaria and tuberculosis. This is also explained by the fact that 
the  risks  of  illegal  re-importation  in  the  EU  of  medicines  for  the  treatment  of  malaria  and 
tuberculosis  are  fairly  limited  due  to  the  limited  occurrence  of  these  diseases  in  the  EU.] 
Medicines  to  treat  opportunistic  infections  associated  with  HIV/AIDS  are  also  eligible  and 
suitable  for  coverage  under  the  Regulation,  but  there  have  been  no  applications  to 

obstacle 

to 

5 

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://bi.theglobalfund.org/analytics/saw.dll?Dashboard&nqUser=PQRExternalUser&PQRLANGUAG
E=en&PortalPath=/shared/PQR%20External%20Users/_portal/PQR%20Public&Page=Price%20list 

EN 

6 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
date.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 

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  Regulation6).  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  (Annex  1,  pp  9  and  17).  
The  applicant  justified  the  higher  percentages  by  the  decreasing  volumes  of  products  being 
sold. The applicant further explained that, as the tiered priced production has decreased –due 
to the success of the voluntary license strategy-, the cost of these specific packs per unit has 
increased.  In  addition,  the  applicant  referred  to  its  tiered  pricing  policy  whereby  their 
medicines are sold according to GDP and burden of epidemic which means that their tiered 
price as indicated in Annex I of this report and the lowest OECD price may not be far apart if 
the OECD country has low GDP and a high burden of HIV.  

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 six 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

397.450
585
132.176
4.903
119.807
40.208

2007

153.793
643
92.467
17.102
272.063
35.884

2008
178.216
2.700
136.571
7.475
13.502
26.872

2009  
66.344 
17.240 
10.185 
9.895 
7.305 
5.058 

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 

2010
478
0
322
1.333
9.932
113.591

24.731
2.605
2.335
155.327

2011
8.459
0
385
140
1.944
13.697

11.571
42.701
6.035
84.932

6 

Instead of submitting detailed information on the price offered, the applicant may submit a certificate 
issued by an independent auditor, stating that the price has been verified and corresponds to one of the 
criteria set out in Annex III. 

EN 

7 

   EN 

 
 
 
                                                 
Total sales of registered tiered priced medicines

2,900,000
2,800,000
2,700,000
2,600,000
2,500,000
2,400,000
2,300,000
2,200,000
2,100,000
2,000,000
1,900,000
1,800,000
1,700,000
1,600,000
1,500,000
1,400,000
1,300,000
1,200,000
1,100,000
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0

2005

2006

2007

2008

2009

2010

2011

As shown in figure 2, the total sales of registered tiered priced medicines has significantly and 
steadily decreased over the last six years. The total sales of 2011 represent just 3% of the total 
sales  of  2005.  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 Royalty Free 
Voluntary Licenses. ViiV Healthcare, a company established by GlaxoSmithKline and Pfizer 
to deliver advances in treatment and care for people living with HIV has now granted eleven 
voluntary licences for the manufacture and supply of ARVs.  

In 2011, ViiV Healthcare and its licensees supplied an estimated 717 million of its versions of 
Epivir and Combivir to African countries. This is the equivalent of approximately 12 months’ 
supply for over a million people living with HIV. 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  some  cases,  the  volumes  reported  in  Annex  I  vary  greatly  between  2010  and  2011.  
The  explanation  provided  by  the  applicant  referred  to  the  award  process  for  the  supply.  
The  applicant  is  increasingly  asked  to  respond  to  requests  from  governments  or  non-
government organisations to supply medicines in a very short time frame. These are normally 
requests to respond to a medication out of stock which generic companies cannot supply.  

It should also be underlined that, since the creation of this Regulation, available data seem to 
indicate  the  absence  of  cases  of  illegally  re-imported  tiered-priced  products  reported  to  the 
Commission. 

In view of the data presented above and the absence of newly registered medicines by (other) 
pharmaceutical  companies  since  2004,  the  European  Commission  will  consider  the  need  to 
organise  a  public  consultation  with  stakeholders  on  the  implementation  of  Regulation 
953/2003  in  order  to  better  evaluate  its  role  in  promoting  the  accessibility  of  affordable 
essential medicines to the poorest developing countries.  

EN 

8 

   EN 

 
 
ANNEX 1: DETAILS OF VOLUMES OF MEDICINES SOLD IN 2010-2011 

EPIVIR Oral Solution 10mg/ml – 240 ml 

Date of Approval: 19 April 2004 

Volumes sold (units)7 
- 1 January 2010 to 31 
December 2011 

Disease targeted: HIV infection 

Active ingredient: lamivudine 

Price offered (per unit) 2010: US$ 5.42 

Price offered (per unit) 2011: US$ 12 

Total  no.  of  packs  sold 
2010 

Total  no.  of  packs  sold 
2011 

24,731 

11,571 

Lowest OECD list price:  US$ 29.38 

Preferential/lowest OECD list price 2010: 18.5% 

Preferential/lowest OECD list price 2011: 40.8% 

7 

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. 

EN 

9 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
EPIVIR 150 mg x 60 

Date of Approval: 19 April 2004 

Disease targeted: HIV infection 

Active ingredient: lamivudine 

Volumes sold (units) - 
1 January 2010 to 31 
December 2011- 

Price offered (per unit) 2010: US$ 5.23 

Price offered (per unit) 2011: US$ 6.56 

Total  no.  of  packs  sold 
2010 

Total  no.  of  packs  sold 
2011 

2,605 

42,701 

Lowest OECD list price:  US$ 181.42 

Preferential/lowest OECD list price 2010: 2.9% 

Preferential/lowest OECD list price 2011: 3.6% 

EN 

10 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COMBIVIR 300/150 mg x 60 

Date of Approval: 19 April 2004 

Disease targeted: HIV infection 

Active ingredient: lamivudine + zidovudine   

Volumes sold (units)  
- 1 January 2010 to 31 
December 2011- 

Price offered (per unit) 2010: US$ 16.19 

Price offered (per unit) 2011: US$ 18.98 

Total  no.  of  packs  sold 
2010 

Total  no.  of  packs  sold 
2011  

478 

8,459 

Lowest OECD list price:  US$ 264.34 

Preferential/lowest OECD list price 2010: 6.1% 

Preferential/lowest OECD list price 2011: 7.2% 

EN 

11 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RETROVIR 100 mg x 100 

Date of Approval: 19 April 2004 

Disease targeted: HIV infection 

Active ingredient: zidovudine 

Volumes sold (units) - 
1 January 2010 to 31 
December 2011- 

Price offered (per unit) 2010: US$ 12.17 

Price offered (per unit) 2011: US$ 18.48 

Total  no.  of  packs  sold 
2010 

Total  no.  of  packs  sold 
2011 

322 

385 

Lowest OECD list price:US$ 88.75 

Preferential/lowest OECD list price 2010: 13.7 % 

Preferential/lowest OECD list price 2011: 20.8 % 

EN 

12 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RETROVIR 300 mg x 60 

Date of Approval: 19 April 2004 

Disease targeted: HIV infection 

Active ingredient: zidovudine 

Volumes sold (units) -
1 January 2010 to 31 
December 2011- 

Price offered (per unit) 2010: US$ 13.24 

Price offered (per unit) 2011:US$ 24.70 

Total  no.  of  packs  sold 
2010 

Total  no.  of  packs  sold 
2011 

2,335 

6,035 

Lowest OECD list price:  US$ 133.20 

Preferential/lowest OECD list price 2010: 9.9% 

Preferential/lowest OECD list price 2011: 18.5% 

EN 

13 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RETROVIR 250 mg x 40 

Date of Approval: 19 April 2004 

Disease targeted: HIV infection 

Active ingredient: zidovudine 

Volumes sold (units) -
1  January  2010  to  31 
December 2011- 

Price offered (per unit) 2010: US$ 11.03 

Price offered (per unit) 2011: US$ 12.03 

Total  no.  of  packs  sold 
2010  

Total  no.  of  packs  sold 
2011 

0 

0 

Lowest OECD list price: US$ 81.15 

Preferential/lowest OECD list price 2010: 13.6% 

Preferential/lowest OECD list price 2011: 14.8% 

EN 

14 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TRIZIVIR 750 mg x 60 

Date of Approval: 19 April 2004 

Volumes sold (units) - 
1 January 2010 to 31 
December 2011- 

Disease targeted: HIV infection 

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

Price offered (per unit) 2010: US$ 53.71 

Price offered (per unit) 2011: US$ 53.01 

Total  no.  of  packs  sold 
2010 

Total  no.  of  packs  sold 
2011 

1,333 

140 

Lowest OECD list price:  US$ 450.31 

Preferential/lowest OECD list price 2010: 11.9 % 

Preferential/lowest OECD list price 2011: 11.8% 

EN 

15 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ZIAGEN 300 mg x 60 

Date of Approval: 20 September 2004 

Disease targeted: HIV infection 

Active ingredient: abacavir sulphate 

Volumes sold (units) -
1 January 2010 to 31 
December 2011- 

Price offered (per unit) 2010: US$ 35.91 

Price offered (per unit) 2011: US$ 31.36 

Total  no.  of  packs  sold 
2010 

Total  no.  of  packs  sold 
2011 

113,591 

13,697 

Lowest OECD list price: US$ 223.37 

Preferential/lowest OECD list price 2010: 16.1% 

Preferential/lowest OECD list price 2011: 14% 

EN 

16 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RETROVIR Oral Solution 10 mg/ml – 200 ml 

Date of Approval : 20 September 2004 

Volumes sold (units) – 
1  January  2010  to  31 
December 2011- 

Disease targeted: HIV infection 

Active ingredient: zidovudine 

Price offered (per unit) 2010: US$ 6.35 

Price offered (per unit) 2011: US$ 10.38 

Total  no.  of  packs  sold 
2010 

Total  no.  of  packs  sold 
2011 

9,932 

1,944 

Lowest OECD list price: US$ 16.22 

Preferential/lowest OECD list price 2010: 39.2 % 

Preferential/lowest OECD list price 2011: 64% 

EN 

17 

   EN