THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and in particular Article 133 thereof,
Having regard to the proposal from the Commission,
Whereas:
On 21 February 2001, the Commission adopted a communication to the European Parliament and to the Council on accelerated action targeted at major communicable diseases within the context of poverty reduction, according to which the Commission was instructed, inter alia, to establish a global tiered pricing system for key pharmaceuticals for the prevention, diagnosis and treatment of HIV/AIDS, TB and malaria and related diseases for the poorest developing countries and to prevent product diversion of these products to other markets by ensuring that effective safeguards were in place.
In a resolution dated 14 May 2001 on accelerated action on HIV, TB and malaria, the Council underlined the need to reinforce safeguards against diversion of low priced pharmaceuticals destined for poor markets and prevent price erosion in developed countries markets.
On 15 March 2001, a resolution of the European Parliament on access to drugs for HIV/AIDS victims in developing countries noted the inclusion of a commitment to tiered pricing in the Commission's programme for action and called for a system allowing developing countries equitable access to medicines and vaccines at affordable prices.
Many of the poorest developing countries are in urgent need of access to affordable essential medicines for treatment of communicable diseases. These countries are heavily dependant on imports of medicines as local manufacturing is scarce.
Price segmentation between developed country markets and the poorest developing country markets is necessary to ensure that the poorest developing countries are supplied with essential pharmaceutical products at heavily reduced prices. Therefore, these heavily reduced prices cannot be understood as a reference for the price to be paid for the same products in developed country markets.
Legislative and regulatory instruments are in place in most developed countries to prevent importation, in certain circumstances, of pharmaceutical products, but these instruments risk becoming insufficient where substantial volumes of heavily discounted pharmaceuticals are sold to the poorest developing country markets and the economic interest in trade diversion into high priced markets therefore may increase significantly.
There is a need to encourage the pharmaceutical producers to make pharmaceutical products available at heavily reduced prices in significantly increased volumes by ensuring through this Regulation that these products remain on those markets. Donations of pharmaceutical products and products sold under contracts awarded in response to competitive tenders from national governments or international procurement bodies, or under a partnership agreed between the manufacturer and the government of a country of destination may qualify under this Regulation on equal conditions, bearing in mind that donations are not contributing to the improvement of access to these products on a sustainable basis.
For the purpose of this Regulation, it is necessary to establish a procedure which identifies the products, countries and diseases covered by this Regulation.
This Regulation serves the purpose of preventing tiered priced products from being imported into the Community. Exemptions are laid down for certain situations under the strict provision that it is ensured that the final destination of the products in question is one of the countries listed in Annex II.
Manufacturers of tiered priced products must differentiate the appearance of tiered priced products to facilitate the task of identifying them.
It will be appropriate to review the lists of the diseases and the countries of destination covered by this Regulation, as well as the formulae used to identify tiered priced products in the light, inter alia, of the experience gained from its application.
The measures necessary for the implementation of this Regulation should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission(1).
With regard to tiered priced products contained in travellers' personal luggage for personal use, the same rules as set out in Council Regulation (EC) No 3295/94 of 22 December 1994 laying down measures to prohibit the release for free circulation, export, re-export or entry for a suspensive procedure of counterfeit and pirated goods(2), currently being reviewed, should apply.
Where tiered priced products have been seized under this Regulation, the competent authority may, in accordance with national legislation and with a view to ensuring that the intended use is made of the seized products to the full benefit of the countries listed in Annex II, decide to make them available for humanitarian purposes in these countries. In the absence of such decision, the seized products should be destroyed,
HAS ADOPTED THIS REGULATION:
This Regulation lays down:
the criteria for establishing what is a tiered priced product;
the conditions under which the customs authorities shall take action;
the measures which shall be taken by the competent authorities in the Member States.
For the purposes of this Regulation:
‘tiered priced product’ means any pharmaceutical product used in the prevention, diagnosis and treatment of a disease referred to in Annex IV which is priced in accordance with one of the optional price calculations set out in Article 3, verified by the Commission or an independent auditor as provided for in Article 4 and entered in the list of tiered priced products set out in Annex I;
‘countries of destination’ are those countries listed in Annex II;
‘competent authority’ means an authority designated by a Member State to determine whether goods suspended by the customs authorities in the respective Member State are tiered priced products and to give instructions depending on the outcome of the review.
It shall be prohibited to import into the Community tiered priced products for the purposes of release for free circulation, re-export, placing under suspensive procedures or placing in a free zone or free warehouse.
The following shall be exempted from the prohibition regarding tiered priced products as set out in paragraph 1:
re-export to countries of destination;
placing under a transit or customs warehouse procedure or in a free zone or free warehouse for the purpose of re-export to a country of destination.
The tiered price referred to in Article 4(2)(ii) of this Regulation shall, at the option of the applicant, be either:
no higher than the percentage set out in Annex III of the weighted average ex factory price charged by a manufacturer in OECD markets for the same product at the time of application; or, alternatively,
a manufacturer's direct production costs, with the addition of a maximum percentage which is set out in Annex III.
In order for products to benefit from this Regulation, manufacturers or exporters of pharmaceutical products shall submit applications to the Commission.
Any application addressed to the Commission shall contain the following information:
the product name and active ingredient of the tiered priced product and sufficient information to verify which disease it is preventing, diagnosing or treating;
the price offered in relation to either of the optional price calculations set out in Article 3 in sufficient detail to enable verification. Instead of submitting such detailed information, 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. The independent auditor is appointed in agreement between the manufacturer and the Commission. Any information submitted by the applicant to the auditor shall remain confidential;
the country or countries of destination to which the applicant intends to sell the product concerned;
the code number based on the Combined Nomenclature as set out in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff(3) and, where appropriate, supplemented by TARIC subdivisions, to identify unambiguously the goods concerned;
any measures taken by the manufacturer or exporter to make the tiered priced product easily distinguishable from identical products offered for sale inside the Community.
The Commission shall determine whether a product fulfils the criteria set out in this Regulation in accordance with the procedure laid down in Article 5(2).
Where the requirements set out in this Regulation are fulfilled, the product shall be added to Annex I at the next following update. The applicant shall be informed of the decision of the Commission within 15 days.
If an application is not sufficiently detailed for review as to substance, the Commission shall in writing ask the applicant to submit such missing information. If the applicant does not complete the application within the time period set out in that communication, the application shall be null and void.
If the Commission finds that the application does not fulfil the criteria set out in this Regulation, the application shall be rejected and the applicant shall be informed within 15 days of the date of the decision. Nothing shall prevent the applicant from resubmitting a modified application for the same product.
Products destined to be donated to recipients in one of the countries listed in Annex II may be notified accordingly for approval and insertion in Annex I.
Annex I to this Regulation shall be updated every second month by the Commission.
Where adjustments to Annexes II, III and IV are necessary, the procedure referred to in Article 5(3) shall apply.