The EU Parliament and Council have reached an agreement on the Critical Medicines Act (Cma), the regulation on critical medicines, which redefines the rules on how the EU produces, purchases and guarantees supplies of essential medicines. Among antibiotics, insulin, painkillers, vaccines and therapies for rare diseases, there are over 270 medicines considered strategic for European public health which will be at the center of a new system that incentivises production within the EU, encourages joint purchases between member countries and imposes resilience criteria in tenders. The declared objective is to reduce dependence on India and China, currently suppliers of most of the active pharmaceutical ingredients used in Europe.
“Patients should not have to worry about the availability of essential medicines, such as antibiotics, at their pharmacy or hospital” and with this agreement “we are taking concrete measures to reduce our vulnerabilities, diversify supply chains and strengthen Europe’s capacity to produce essential medicines and their ingredients closer to home”, claimed Neophytos Charalambides, Minister of Health of Cyprus, the country holding the rotating presidency of the EU.
Accumulated dependencies
Over the last thirty years, European pharmaceutical production has progressively moved towards countries where manufacturing costs are much lower. Active pharmaceutical ingredients (Paf, in English Active Pharmaceutical Ingredients or API) are now increasingly manufactured in Asia. According to a 2021 European Commission study, 80 percent of active pharmaceutical ingredients imported into the EU came from just five countries, with China alone accounting for 45 percent of the total, and the other countries being the USA, the United Kingdom, Indonesia and India.
This geographic concentration has made Europe vulnerable. During the Covid-19 pandemic, production and logistics blockages in Asia have caused drug shortages in many European countries, putting pressure on hospitals and pharmacies. In recent years, the EU has also seen serious shortages of essential medicines such as antibiotics, insulin and painkillers.
In the previous regulatory framework, public procurement rules rewarded the lowest price, pushing purchasing bodies towards non-European suppliers and there was no organic European mechanism for joint purchases between countries. Furthermore, the European production of generic drugs (those no longer covered by patent, like most antibiotics) is in slow decline.
The new rules
The heart of the new law is a change of logic in public procurement. Until now, when a European hospital or healthcare institution launched a tender to purchase antibiotics or insulin, the dominant criterion was price: the cheapest supplier won. With the CMA, contracting authorities will now also be obliged to evaluate the safety and diversification of the drug supply chain. And a channel of preference will have to be given to European production.
Contracting authorities will be able to reward suppliers in proportion to the share of production carried out in the EU: the higher the percentage of European production of the drug (or its active ingredient), the greater the advantage granted during the tender.
A second pillar of the law concerns the so-called “industrial strategic projects”. Companies making investments to create, modernize or expand production capacities for critical medicines in the EU will be able to obtain the “strategic project” designation, thus having easier access to national or European funding and benefiting from accelerated procedures. In exchange, these companies will have to comply with specific obligations, starting with the priority of supply to the European market.
“We are sending a clear signal: Europe is determined to strengthen its pharmaceutical sector. Companies that produce medicines in Europe will be privileged in procurement procedures. Strategic projects will be able to benefit from access to national and European Union funding, as well as faster and more efficient authorization procedures”, claimed one of the speakers for the Chamber, the popular Hungarian Tomislav Sokol.
The third tool is the strengthening of joint purchases between member countries. Already in the past it was theoretically possible for multiple states to coordinate to buy drugs together, increasing their bargaining power. In practice, however, the activation threshold was high: at least nine countries were needed to start a common procedure. With the new agreement, this threshold has been lowered to five countries, making the tool much more accessible. The European Commission, at the request of at least five states, will be able to initiate a purchase procedure on their behalf.
“Recent crises have taught us that no member state can address supply shortages alone. By strengthening cooperation and supporting production in Europe, we are building a stronger and safer European Health Union for all citizens,” said Romanian liberal Vlad Voiculescu.
Orphan medicines and rare diseases
The text deals with orphan medicinal products, i.e. drugs developed to treat very rare diseases that affect fewer than five out of ten thousand people. These are often innovative and expensive therapies, far from the profile of the typical “critical” generic drug such as an antibiotic. The CMA has expanded its scope to include them in some key areas, such as strategic projects and joint procurement. This means that these therapies will also be able to benefit from state aid and joint purchasing procedures, improving accessibility especially in smaller countries, which often do not have sufficient negotiating weight to guarantee their patients access to such expensive drugs.
The negotiations
The negotiations between the European Parliament and the EU Council, which represents the governments of the member countries, have been long and complex. The procurement chapter was the most controversial. Parliament had called for public tenders for critical medicines to give mandatory preference to products with at least 50 percent of the production value produced in the EU. The Council had opposed such a rigid obligation, fearing that medicines produced mainly in Europe would cost significantly higher, which would be difficult for already under-pressure healthcare systems to bear. The final compromise leaves contracting authorities the possibility of applying European preference through a system of graduated rewards, without making it mandatory.
Another difference concerned the mandatory redistribution of stocks in the event of a shortage. Parliament had proposed that if a country found itself short of a critical medicine, other countries would be forced to give up part of their reserves. The Council opposed it, and the final version includes a voluntary solidarity mechanism: countries agree to share information on emergency supplies and can redistribute products on a voluntary basis, but there are no coercive obligations.
On the joint purchasing front, however, the Council accepted the threshold of five countries proposed by Parliament (compared to the nine originally envisaged). However, it eliminated an article that would have allowed the European Commission to directly participate in joint purchasing procedures, an instrument that governments considered an undue interference by the community executive in national health policy choices.
