Rory Watson, Brussels

The European Union is taking measures to prevent low cost drugs intended for patients in some of the world's poorest countries from being diverted and resold for huge profits in the West.

By clamping down on the illegal trade in reimported drugs that undercuts standard European prices, the EU is hoping to encourage pharmaceutical companies to expand the trend of making medicines available at special rates to the developing world.

The initiative comes amid growing evidence that cut price drugs are being diverted onto the European market. Recent investigations by Belgian customs authorities uncovered large quantities of GlaxoSmithKline products--notably Combivir (zidovudine) Epivir (lamivudine), and Trizivir (abacavir)--destined for Africa being sold in the European Union.

Under the scheme, which covers both patented and generic products, companies will register with the European Commission the drugs they intend to sell at lower, tiered prices. These would then be stamped with a highly visible special logo--a light blue capital E surrounded by 15 gold stars--to alert customs that they should be banned from re-entering the union.

To qualify for the register, the commission has, for the first time, proposed a definition of low cost, tiered pricing. The drugs must be sold at either the cost of production plus 10% or at a price reflecting 80% off the average "ex factory" price in member states in the Organisation for Economic Cooperation and Development.

Initially, the scheme will only cover medicines for the prevention, the diagnosis, and the treatment of HIV/AIDS, tuberculosis, and malaria and will apply to 49 least developed and 23 other low income countries, mainly in Africa and Asia.

Announcing the plan, Pascal Lamy, the EU trade commissioner, said: "The EU wants to set an example with a practical means of helping poorer countries struggling with public health crises. Vaccines and contraceptives have long been available at affordable prices--now developed countries need to make an effort with other medicines."

He added that the initiative was a concrete example of the trade liberalisation commitment made during last year's negotiations in Doha, Qatar, and was just one element of a broader poverty reduction and health programme for the developing world.

The commission is confident that the governments in EU states will approve the plan before the end of the year, and it is hoping that other major pharmaceutical producing countries, notably the United States, will follow its example.