European Union underpins tiered pricing for HIV, TB and malaria drugs

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Earlier this week, the European Union adopted a new regulation to prevent the re-importation of drugs exported under a 'tiered pricing' system. This measure is intended to secure sustainable global access to a wider range of medicines, and will be promoted at next month's G-8 summit in Evian, France. While discounts will be voluntary, the aim is to maximise global access to medicines without damaging the commercial interests of manufacturers. It is also clearly aimed at heading off pressure for compulsory licensing of drugs to generic manufacturers to meet health emergencies, although it remains to be seen if it will achieve this.

The regulation applies equally to generic and proprietary medicines and has no impact on intellectual property rights. There are no patent-recognition conditions set for countries to qualify for discounts. It applies only to treatments for HIV/AIDS, TB and malaria, but with the aim of expanding it to a wider range of conditions if the model proves successful.

Similarly, there is a list of countries to which it applies, including most of Africa, China and India, but excluding many other countries that could benefit. For example, middle-income countries such as Argentina, Brazil and Thailand do need access to internationally traded HIV drugs, if only as second- and third-line treatments. The list includes Haiti and Honduras, but excludes the Dominican Republic and Guyana, for reasons which are unclear. It also excludes Russia and Ukraine, despite large epidemics and minimal access to treatment. However, there is nothing to stop voluntary discounts being offered more widely (or additional countries being added to the list).

Glossary

generic

In relation to medicines, a drug manufactured and sold without a brand name, in situations where the original manufacturer’s patent has expired or is not enforced. Generic drugs contain the same active ingredients as branded drugs, and have comparable strength, safety, efficacy and quality.

malaria

A serious disease caused by a parasite that commonly infects a certain type of mosquito which feeds on humans. People who get malaria are typically very sick with high fevers, shaking chills, and flu-like illness. 

middle income countries

The World Bank classifies countries according to their income: low, lower-middle, upper-middle and high. There are around 50 lower-middle income countries (mostly in Africa and Asia) and around 60 upper-middle income countries (in Africa, Eastern Europe, Asia, Latin America and the Caribbean).

In return for meeting a threshold level of discount, set at either 75% off the average 'ex-factory' price in OECD countries or 15% over the cost of production - whichever the company prefers - drugs will qualify for listing. Listed drugs can bear a logo which will mean that they cannot legally be shipped to or sold within the European Union. Manufacturers will also be encouraged to formulate their drugs so that the version sold within the European Union is easily distinguished from that sold at a discount outside it.

There has been some criticism, which appears to be misplaced, that these levels of discount are not sufficient to secure increased access to treatments. Clearly, some companies already offer deeper discounts and this regulation will do nothing to prevent that. Indeed, the European Commission observes that discounts of 99% already apply to some contraceptives and vaccines sold internationally. Similarly, international funding will remain essential for many countries to buy medicines.

Some publicity has suggested that the threshold will be the lower of the two alternative figures, but this would in fact make the system unworkable as it would open the way to endless arguments about production costs and commercial confidentiality. In reality, the 'costs plus 15%' formula would seem most likely to apply to high-volume generic producers, while most proprietary medicines could be discounted beyond 75% without threatening company profits.

Countries listed under the regulation

Afghanistan, Angola, Armenia, Azerbaijan, Bangladesh, Benin, Bhutan, Botswana, Burkina Faso, Burundi, Cambodia, Cameroon, Cape Verde, Central African Republic, Chad, China, Comoros, Congo, Democratic Republic of Congo, Republic of Djibouti, East Timor, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Ghana, Guinea, Guinea Bissau, Haiti, Honduras, India, Indonesia, Ivory Coast, Kenya, Kiribati, Democratic Republic of [North] Korea, Republic of Kyrgyz, Lao People's Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Maldives, Mali, Mauritania, Moldova, Mongolia, Mozambique, Myanmar, Namibia, Nepal, Nicaragua, Niger, Nigeria, Pakistan, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Africa, Sudan, Swaziland, Tajikistan, Tanzania, United Republic of Togo, Turkmenistan, Tuvalu, Uganda, Vanuatu, Vietnam, Yemen, Zambia, Zimbabwe.

Further details are available on the European Commission website, here.