Reacción a "The European Commission presents its proposal on the Critical Medicines Act to guarantee supply and reduce external dependence"

Possible impact of the CMA

“Particularly in the segment of generics, which are important for broad-based care, dependence on Asian manufacturers is significant: around two-thirds of active ingredient suppliers are located in Asia, predominantly in China and India.”
“The EU's planned funding of European production capacities under the Critical Medicines Act (CMA) is a measure that has long been called for by a wide range of stakeholders, particularly because the necessary investment costs are considered to be hardly affordable for the national health systems of the member states. Furthermore, the efficient design of the corresponding production capacities requires economies of scale, which can only be achieved if production is for a larger economic area such as the entire EU.”

“However, the effectiveness of this measure depends on the resources provided. The indicative budget explicitly mentioned for the proposal for the CMA is around 80 million euros for the period 2026 to 2027. If we also consider that this sum roughly corresponds to the costs estimated in earlier studies for the repatriation of a single antibiotic active ingredient and that around 280 active ingredients are addressed by the CMA, it is doubtful that such financial resources will be sufficient to achieve a comprehensive strengthening or even reverse the dependence on Asia.”

Profitability of EU production

“The current dependence on Asian manufacturers for many active pharmaceutical ingredients is a direct consequence of the lower production costs in those countries. In many cases, the production of active ingredients for drugs that are no longer under patent protection is about 20 to 40 percent cheaper in Asia than in Europe. Under these conditions, European manufacturers can hardly survive in the long term in a pure price competition. Without financial support from public authorities, production in Europe – especially of drugs that are no longer protected by patents, such as many antibiotics – was often not sustainable in the past. Accordingly, an economically viable relocation of production – without financial incentives or subsidies – seems unrealistic.”

Incentives for pharmaceutical companies to produce in the EU

“In addition to financial incentives for investments in production capacities, the CMA also contains proposals for adapting public tenders. One example of public tenders is the discount contracts awarded by German health insurance funds. In this context, the CMA particularly addresses the sensible move, from a risk perspective, away from price as the only decisive award criterion. Europe-wide requirements, which, for example, include greater consideration of European production sites in tenders, could actually help to strengthen existing production in Europe. However, experience with the German Supply Shortage Act (ALBVVG) also shows the limits: the ALBVVG stipulates that when health insurance companies issue tenders for antibiotics, additional manufacturers must be considered that produce their active ingredients in the EU. However, German health insurance companies report that for some tender lots, no corresponding active ingredients from European production were offered at all.”
“Another measure concerns the implementation of joint tenders ('joint procurement') by several member states. An example of this was the complex procurement of the corona vaccines by the EU. So far, such tenders have not been seen as a primary means of combating drug shortages, but rather as an instrument for reducing purchase prices and improving the availability of medicines in smaller countries.”

“From an economic point of view, a significant expansion of European production and, in particular, a relocation of production back from Asia, is only possible with financial support. In addition to funds for investments in corresponding production capacities and facilities, their long-term financing would also have to be secured. This is because even a newly created European production of active pharmaceutical ingredients will have to hold its own in the market against Asian manufacturers, whose production costs are likely to remain significantly lower. The indicative budget mentioned in the CMA proposal cannot provide any major impetus at this stage. The politically discussed additional funding for the CMA, for example from the European Defense Fund, is therefore clearly necessary.” 

Adjustment of drug prices

“It should be emphasized that investments in greater resilience and security of supply almost always involve additional costs, which have a direct or indirect impact on the costs of healthcare. From the perspective of security of supply, it makes sense to move away from price as the only decisive award criterion in tenders for medicinal products. However, European production, for example of antibiotics, is generally more expensive than production in Asia. If public tenders increasingly award batches to manufacturers with European production, higher procurement costs must therefore also be expected, which may also have an impact on drug prices in the medium to long term.” 

Funding gaps in the CMA

“A crucial question is whether further funds will be made available for the CMA over and above the indicative budget of 83 million euros mentioned above – for example from the European Defense Fund. Only then would significant impetus for a sustainable expansion of production capacities in Europe be expected. Even if additional funds are provided, the focus must be on the active pharmaceutical ingredients addressed by the CMA that are truly prone to disruption – for example, due to having only a few manufacturers. According to the draft of the CMA, corresponding analyses have so far only been carried out for eleven of the 280 active ingredients.”
“The draft of the CMA also does not take a detailed look at the influence of other EU legislation on the production and provision of medicines – for example in the area of environmental law or intra-European import mechanisms, which, at least in individual cases, can counteract the CMA's central objectives.”

“Furthermore, stocks and pharmaceutical reserves are an important lever for strengthening security of supply that can be implemented quickly. National stockpiling obligations are already in place in numerous EU countries; in Germany, for example, the ALBVVG provides for corresponding stockpiling obligations. Centralized coordination of pharmaceutical reserves at the European level would be more advantageous from a logistical point of view and can avoid national solo efforts at the expense of other member states. In addition, this could offer the possibility of securing pharmaceutical raw materials and APIs for which there is insufficient European capacity".