The Pharmaceutical Strategy for Europe, adopted by the European Commission on 25 November 2020, highlights the need to secure the supply of medicines across the EU and avoid shortages as a key priority.
The proposed reform of the existing EU pharmaceutical legislation is a key action within the Pharmaceutical Strategy. Included in the reform is the formulation of policies and legislation to prevent and mitigate supply shortages of medicines following an increase in medicines shortages, both as a result of the COVID-19 emergency and outside of it. Recitals to the draft legislation point to the fragmented response and lack of coordination among member states in the face of medicines shortages. The goal of the new legislation with respect to security of medicines supply is to strengthen the resilience of pharmaceutical supply chains and address issues such as concentration of supply, particularly with respect to medicines identified as critical. Key goals are to ensure the security of supply as well as earlier access to innovative medicines for the benefit of all member states, but to do so without compromising the affordability of medicines.
The proposals are found in the current versions of the draft new regulation and directive, on which the European Council provided comments on 4 June 2025. This draft legislation provides a measure of coordination with respect to supply chains and introduces several new obligations for marketing authorisation holders (MAHs) to prevent or mitigate shortages. It also provides incentives to maintain supplies across the whole of the EU, applying financial or other penalties (eg loss of exclusivity) for failure to comply.
The European Commission also proposed a draft Critical Medicines Act on 11 March 2025. This is aimed at improving the availability, supply, and production of 'critical medicines' (as identified in the Union List of Critical Medicines), and 'medicines of common interest'. A medicinal product of common interest is a medicinal product, other than a critical medicinal product, the supply of which does not sufficiently meet patient needs in three or more EU Member States. The Critical Medicines Act also focuses on bringing more pharmaceutical production within the EU. This is to be achieved via mechanisms for financial support for these strategic projects to address specific vulnerabilities in the supply chain, as well as changes to procurement requirements, which are also to be more coordinated.
Key proposed changes and how to prepare
Supply obligations
- Supply requirements: Under the proposed Pharmaceutical Package, individual Member States may request that the MAH for a product subject to exclusivity (whether through regulatory protection or market exclusivity, or patent protection or supplementary protection certificate) place that product on the market and ensure supply to that Member State. A MAH subject to such requests must (within the limits of its responsibility) supply that requested medicinal product in sufficient quantities and in the presentations to the needs of the relevant patient population in that Member State.
This provision effectively removes the right from MAHs to determine the countries of the EU in which they enter, or at least the timing for doing so. MAHs will need to factor this loss of independence of market entry strategy into their financial calculations for entry into the EU market.
- Loss of exclusivity for failure to supply: The proposed penalties for failure to supply are significant. MAHs failing to comply with Member States' requests will lose their rights to market exclusivity if they fail to comply within four years of grant of the marketing authorisation. Failure is defined as not either: making the product available, or supplying it continuously within that period in sufficient quantities to cover the needs of patients in the relevant Member State(s). For centralised products, further legislation is proposed to achieve the same effect.
MAHs of products subject to exclusivity may wish to consider what the needs are of the patient populations for their products across Member States in order to anticipate requests for supply from Member States.
Marketing authorisation holders should also revisit their contracts with suppliers, to ensure that they have the right to demand and receive increased quantities with additional language labelling requirements, and that there are appropriate remedies if the supplier cannot meet these order requirements (preferably the right to use another supplier). MAHs may also wish to diversify their supply chain, for example through engaging multiple suppliers for the same product (if possible), to reduce the chance that the MAH will not be able to meet the supply requests of Member States.
Shortage prevention obligations
- Shortage prevention plan: The new regulation proposed by the Pharmaceutical Package proposes to make it mandatory for all MAHs to put in place and keep updated a shortage prevention plan. Such MAHs must, upon request by a competent authority, submit a copy of the shortage mitigation plan as well as a risk assessment of the impact of the suspension, cessation or withdrawal of the medicinal product within the deadline set.
Part V of the proposed regulation sets out in detail what must be included in the shortage prevention plan. MAHs for existing critical medicinal products should remain vigilant as to what date this obligation will apply from, and dedicate appropriate resources to putting a plan in place to avoid being in breach of the requirement. Compliance with the current recommendations (see part one) would be a helpful first step towards compliance with the final version of the new legislation.
- Notification of supply-related decisions: The proposed regulation also requires MAHs of all products (both critical and not) to notify competent authorities and the EMA (for centralised products) of the following:
(i) a decision to permanently cease marketing no less than twelve months before the last supply
(ii) a request to permanently withdraw the marketing authorisation no less than twelve months before the last supply
(iii) a decision to temporarily suspend marketing no less than six months before the start of the suspension
(iv) a temporary disruption in the supply exceeding two weeks, no less than six months before the disruption, or as soon as possible if that is not feasible. The European Commission may impose financial penalties in the form of fines (up to 5% of the MAH's annual EU turnover) or periodic penalty payments (up to 2.5% of average daily EU turnover) for a failure to comply with these notification obligations.
MAHs should have appropriate staff training and procedures are put in place to ensure that the notification deadlines prescribed in the proposed regulation are met.
- Transfer to third parties: Where a MAH intends to withdraw the marketing authorisation or permanently cease marketing a critical medicinal product or a priority antimicrobial, the proposed regulation requires that they offer that authorisation either for transfer or through providing access to the dossier/ authorisation to a third party, in the interest of keeping that product on the market in the EU. There is a set procedure for making that offer, which is required to be on yet undefined 'reasonable terms'.
This requirement may impact on MAHs' business decisions to exit, or even enter, the EU market. Again, appropriate staff training and procedures should be put in place to ensure the business is aware of this consequence of exit, and also to ensure the process prescribed by the proposed regulation is followed.
Incentivising resilience through procurement awards
- Shift in procurement award criteria. The proposed Critical Medicines Act requires contracting authorities in Member States to move away from price-only award criteria. They are to instead apply procurement requirements such as diversified suppliers that monitor supply chains, and that have in their supply contracts performance clauses on timely delivery. Contracting authorities may also favour suppliers that manufacture a significant proportion of critical medicinal products in the EU.
Suppliers looking to win tenders from contracting authorities should be alive to this intended shift in award criteria, and consider the potential benefits of aligning their own supply chain with the new resilience-focused criteria to gain advantages in tender processes. For example, MAHs may wish (where possible) to consider contract manufacturers that have facilities based in the EU and/or to source products from multiple suppliers.
Commission engagement in cross-border procurement
- Three or more Member States may request that the Commission facilitates the procurement of medicines 'of common interest'. There is no definition of what constitutes 'facilitation'.
- Nine or more Member States may request the Commission to procure on their behalf either critical medicines or medicines of common interest for which a joint clinical assessment has been undertaken. If accepted by the Commission, this process will then be opened to all Member States. All participants will be bound to the terms of the procurement.
One can see that joint procurements should produce better terms for Member States, but manufacturers will be obliged to supply to countries which they might otherwise have preferred not to for financial reasons. However, being prepared to supply across the EU will be increasingly necessary if the Pharma Package is enacted. This might give some manufacturers pause for thought before entering the EU market.
An opportunity for manufacturers?
Both the proposed legislation for the pharmaceutical package and the Critical Medicines Act will inevitably increase notifications, internal administration and the need to communicate with regulatory authorities. Supply chains are currently driven by the need to keep prices lower and inevitably rely on sourcing active pharmaceutical ingredients (API) and even final medicinal products from the lowest cost countries, often India or China, which are at risk for geopolitical events and threats to transport links. However, if the EU is willing to focus on procurement decisions not just on price, but also on supply chain resilience and, in particular EU manufacturing, then prices will necessarily rise in the pursuit of lowering supply chain risks. This could be an opportunity for manufacturers to diversify their manufacturing sites, thereby lowering their own supply risks, but this will only make sense if there are financial gains to be made in overall operations.
