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Supplying poor and developing countries with medicines at sustainable, reduced prices is one of the most important tools in the fight against major diseases, especially the “Big Three”, namely HIV, TB and malaria. After more than a decade since the Council Regulation (EC) 953/2003 came into force, to avoid trade diversion into the European Union of certain key medicines, stakeholders came together to discuss the overall impact of the Regulation at a workshop on 15 July 2015, organised by Charles River Associates – the authors of a report on evaluating the impact of the Regulation.

Chaired by Anders Jessen, Head of unit B.3 DG TRADE and moderated by Tim Wilsdon, CRA Vice President and Anthony Barron, CRA Senior Associate, the workshop served to evaluate the regulation for the tiered pricing of medicines.

Several institutional actors play a meaningful role in promoting access to the market of pharmaceutical products, including the European Union (EU). With Council Regulation (EC) 953/2003, the EU specifically intended to encourage pharmaceutical companies to make their products available at heavily reduced prices for poor markets, ensuring at the same time that there was no trade diversion of these to developed countries.

The main objective of the workshop was to address the effects of the Regulation in terms of efficiency, effectiveness, coherence and relevance.

What is really puzzling, stated Helle Aagaard, Medecins Sans Frontieres, is that many people still continue believing that tiered pricing constitutes the single best instrument to make medicines affordable. She stated that in reality, the effects of the Regulation are rather limited with respect to the other possible options, namely TRIPS flexibilities (e.g. compulsory licensing, parallel importing), generic competition and voluntary commitments. Only a smart combination of different available tools would create the best impact for making medicines more affordable.

Also, as noted in the CRA report, there is scarce evidence that the current Regulation actually results in lower prices of pharmaceutical products or improved affordability. Indeed, It would be too ambitious to attribute this effect on one single tool, which is only part of a bigger package, argued Jon Pender, GSK. He called for the EU to put forward a strategy to achieve innovation in the sector and for establishing a positive climate for collaboration, coupled with a political commitment to jointly create something efficient. While the Regulation represented a good attempt at encouraging collaboration on common objectives, at the same time it is also a missed opportunity to focus on real needs, said Brendan Barnes, EFPIA. Indeed, there is no clear proof that such Regulation has functioned well towards those in direct need of affordable medicines, as noted by Helle Aagaard. This is probably because tiered pricing does not in any case reflect the ability for poor people to pay.

The opinion of the stakeholders present was that the Regulation is generally a partial failure. First of all, apart from GSK, no other pharmaceutical company joined the scheme. There are several fundamental reasons for this that are worth highlighting:

– Risk of trade diversion still remains, even after the implementation of the Regulation

– Companies did not need Regulation because they already had put in place alternative measures to avoid trade diversion, like different packaging of products

– The role of EC in formulating price is too controversial

– Product diversion was already illegal, before the entry into force of the Regulation

Another reason is that the role of the EU is not fully appreciated. Several participants raised concerns about the lack of capacity in promoting dialogue and cooperation among stakeholders. Critical voices argued that the EU does not prioritise welfare development and real innovation, opting instead for trade interests and low cost regulatory solutions.

In these terms, it becomes easy to miss the spirit of the Regulation, which is one of showing concrete solidarity to people in need through tangible action, while maintaining at the same time a safety net for industry against product diversion.

Nonetheless, too many points are still unclear, especially with regard to price transparency, competition (e.g. discouraging generic entry), the balance of powers, the efficacy of the instruments, the role of the EU and of the private actors and partnerships.

Lastly, in evaluating the impact of the Regulation, it would be an error not to take into account transatlantic relations, which could become unsettled through TTIP.

With little doubt, there is no concrete space for this Regulation as it currently stands, said Helle Aagaard. Therefore, if there is no time to scrap it, it should at least be rendered more relevant and transparent.