EU Pharma Package: Interplay With The Critical Medicines Act – Status Update.

What You Need to Know 

• Key takeaway #1The Critical Medicines Act (CMA) is now in the trilogue phase. The Commission’s and Council’s proposals are largely aligned, while the Parliament proposes significantly more far-reaching amendments across all chapters, including new redistribution and Union stockpiling mechanisms, expanded MEAT criteria for public procurement, and broader eligibility for strategic projects. Pharmaceutical companies — particularly those focused on older, off-patent, and generic products — should closely monitor the trilogue outcome. 

• Key takeaway #2All three EU institutions agree that public procurement for critical medicines must move beyond a lowest-price approach. However, they diverge on the details: The Parliament requires MEAT criteria to outweigh price and defines what constitutes a “significant proportion” of EU manufacturing; the Council replaces this with broader “resilience requirements” and narrows the available exceptions. Companies supplying critical medicines should assess how these changes may affect their competitiveness in public tenders. 

• Key takeaway #3Stockpiling remains a key point of contention. The Parliament proposes binding redistribution and a Union stockpile as last-resort measures, along with quarterly reporting obligations for Member States. The Council reemphasizes the autonomy of the Member States to impose stocks requirements, but with the obligation to notify the new Critical Medicines Coordination Group of their intention to do so. 

In our eighth alert in this EU Pharma Package Series, we took a “detour” to discuss the interplay between the measures proposed in the Pharma Package and those contained in other important EU initiatives such as the proposed Critical Medicines Act (CMA), and the Medicinal Countermeasures and EU Stockpiling Strategies. 

At the time of that alert, only the Commission proposal for the CMA was available. The CMA is now in the trilogue phase, which gives a good opportunity to revisit this topic and discuss the most notable changes and additions proposed by the Council and the Parliament compared to the original Commission proposal. 

By way of reminder, the CMA aims to complement the regulatory obligations in the proposed Pharma Package (discussed in our previous alert) by focusing predominantly on enhancing industry opportunities and tackling the root causes of medicine shortages. The provisions of the CMA apply to either or both: 

• Critical medicines – which are on the Union list of critical medicinal products established under the Pharma Package; and 

• Medicines of common interest – products for which, in three or more Member States, the functioning of the market does not sufficiently ensure the availability and accessibility to patients in the quantities and presentations necessary to cover patients’ needs. The Parliament proposes to broaden the scope of ‘medicinal products of common interest’ to explicitly include (i) orphan drugs and (ii) contraceptive or abortifacient medicinal products. 

Older, off-patent, and generic medicinal products make up the majority of the medicinal products on the Union list of critical medicinal products — which makes the CMA proposal particularly interesting to monitor for companies focusing on these types of products. 

Competent bodies and authorities 

The CMA establishes a “Critical Medicines Coordination Group” (CMCG) to facilitate implementation of the CMA. The Parliament appears to have a notably different view on the role of the CMCG: 

• Whereas the Commission and Council limit the members of the CMCG to representatives of the Commission and the Member States (with observer status for the European Medicines Agency (EMA)), the Parliament proposes to broaden membership to the EMA (specifically the Executive Steering Group on Shortages and Safety of Medicinal Products (MSSG)) and representatives from patient organizations and healthcare professional organizations (with observer status for the Parliament). 

• Whereas the role of the CMCG is limited to facilitating information exchanges and providing certain opinions in the context of the CMA in the Commission’s and Council’s proposals, the Parliament gives several additional powers to the CMCG, including (i) deciding on whether to give to the Commission its prior approval to requests for the redistribution of critical medicinal products submitted by one or more Member States in the event of a shortage or supply disruption; (ii) assessing national stockpiling strategies, their proportionality, compatibility with the internal market, and feasibility for implementation by industry, and, where appropriate, issuing recommendations on EU-wide minimum standards; and (iii) assessing whether a proposed strategic project would result in a significant duplication of existing or planned manufacturing capacities within the EU. 

The coordination work of the CMCG should not be confused with the work of the EMA’s MSSG. While the main tasks of the MSSG are to monitor the supply and demand of critical medicines and coordinate Union-level responses to actual or potential shortages of medicinal products during public health emergencies or major events, the focus of the CMCG is to facilitate coordination of the security of supply measures envisaged in the CMA. 

Strategic projects 

Any company or consortium of companies developing a project may ask a Member State to designate their project as a “strategic project”. A “strategic project” is a project located in the EU related to creating, modernizing, or increasing manufacturing capacity for certain medicines. It can benefit from fast-tracked permit-granting processes and streamlined environmental assessments, as well as administrative, technical, regulatory and scientific, and financial support from the relevant Member State or the EU. 

Notable differences between the proposals of the EU institutions are the following: 

• Whereas the Commission and Council limit the eligibility of strategic projects to critical medicines only, the Parliament proposes to extend strategic projects to medicines of common interest (i) upon a positive recommendation of the CMCG for Member State support, or (ii) subject to the condition that the EU funding allocation exceeds EUR 500 million. 

• The Commission’s and Council’s proposals list four alternative criteria to qualify for strategic project designation. The Parliament proposes a few wording changes to the criteria initially proposed by the Commission. Notably, strategic projects would also be possible if (i) the project creates capacity for compounding techniques within pharmacies and hospitals, or (ii) the project reserves a defined portion of manufacturing capacity, within a fixed timeframe, to produce specific medicinal products at the request of the CMCG. 

• Several additions are proposed by the Parliament alone:  

• Cross-border strategic projects (i.e., carried out by a minimum of two Member States) would be possible, with the Commission acting as coordinator. 

• EU financial support would be excluded if a project results in unnecessary duplication of existing or planned manufacturing capacities for the same medicinal product, its active substances or key inputs within the Union — which is assessed by the CMCG. 

• Financial support provided for a strategic project may be suspended, revoked, or recovered, in whole or in part, if the project promoter fails to comply with certain measures as imposed by the EU or funding Member State. In addition, an exclusion from funding or even a fine may be imposed on the project promoter depending on the impact and severity of the non-compliance. 

• Where there is a substantiated risk that export of a medicinal product (critical or of common interest) would undermine supply within the EU, the Commission may — upon request by at least one Member State — require the project promoter who receives financial support to obtain an export permit. 

Public procurement – award criteria 

Due to budgetary constraints, Member States often have procurement rules in place that focus predominantly on reducing medicine acquisition costs and securing the lowest price. The draft CMA introduces a requirement for contracting authorities to also consider other criteria. 

The EU institutions each emphasize different aspects in their respective proposals: 

• Commission: the Commission’s proposal introduces a requirement that contracting authorities also use Most Economically Advantageous Tender (MEAT) criteria in the tender award process for critical medicines, such as supply chain diversification and monitoring, environmental sustainability, and social rights. The proposal foresees an exception to using the MEAT criteria where this can be justified by market analysis or considerations related to the financing of health services. 

• Parliament: the Parliament’s proposal also refers to the MEAT criteria, but strengthens the wording by (i) stating that the MEAT criteria must be the main basis for award decisions and be given greater weight than price, and (ii) making the inclusion of additional qualitative criteria, in particular criteria relating to environmental sustainability and the promotion of social rights, an obligation (rather than stating “shall not preclude contracting authorities from using” such criteria). 

Furthermore, for critical medicines “for which a vulnerability in the supply chains has been confirmed”, and for medicines of common interest, contracting authorities shall (in the Commission’s proposal this is “may” for medicines of common interest) favor suppliers that manufacture a significant proportion of the tendered medicinal products in the EU. “Significant proportion” is an undefined concept in the Commission’s proposal. 

However, the Parliament’s proposal includes an elaborate definition with three non-cumulative criteria that must take place within the EU (or the EFTA or — for medicines of common interest for which no relevant substitute is produced within the Union — even a third country with which the EU has established a strategic partnership): 

(i) At least 50% of the active substance is produced in the EU. 

(ii) At least 50% of the value of the final medicinal product results from manufacturing or processing operations carried out in the EU. 

(iii) Essential manufacturing steps, including the synthesis or biological production of active substances, are carried out in the EU. 

The Parliament’s proposal has a similar exception to the one foreseen by the Commission but states “where the application would result in a disproportionately high price in a specific procurement procedure” rather than “considerations related to the financing of health services”. 

• Council: the Council’s proposal does not refer to MEAT criteria but to “resilience requirements” although the idea is the same. The Council does clarify in more detail the form that these resilience requirements can take, namely, selection criteria, technical specifications, best price-quality ratio as contract award criteria, or contract performance clauses (all within the meaning of the Public Procurement Directive 2014/24/EU). The Council does away with the “significant proportion” concept entirely and replaces this with the following, rather vague, criterion: The contracting authorities must favor critical medicinal products or their active substances manufactured in the Union “that address the vulnerability and dependency identified”. Furthermore, this no longer applies to medicinal products of common interest in the Council’s proposal. 

The Council also replaces the exception foreseen by the Parliament and the Commission with four possible and more narrow exceptions: (i) the required product can only be supplied by a specific company and no reasonable alternative or substitute exists; (ii) no suitable tenders have been submitted in response to a similar procurement procedure by the same contracting authority in the last two years; (iii) it would oblige a contracting authority to acquire critical medicinal products having disproportionate costs; or (iv) it is strictly necessary due to reasons of extreme urgency that qualify as “force majeure”. 

Collaborative procurement 

The CMA aims to foster the use of collaborative procurement mechanisms: 

• Commission-facilitated Member State procurement (cross-border procurement); 

• Commission procurement on behalf of or in the name of Member States; and 

• Joint procurement. 

The table in our previous client alert on the CMA summarized the provisions of the CMA with respect to the different types of collaborative procurement under the Commission’s proposal. In this alert, we will only mention the differences with the Parliament’s and Council’s proposals, which are the following: 

• Under the Commission’s proposal, Commission procurement on behalf of or in the name of Member States and joint procurement are possible upon joint request of at least nine Member States. The Council proposes to lower this to six and the Parliament to five. In addition, the Parliament proposes to open up these collaborative procurement mechanisms to candidate Member States with whom the EU has a bilateral agreement providing for such a participation — such countries would not, however, count towards the minimum number of actual Member State participants required. 

• Under the Commission’s proposal, Commission procurement on behalf of or in the name of Member States and joint procurement are only possible “to the extent it will help improve the security of supply and availability of critical medicines, or the availability and accessibility of medicines of common interest”. The Parliament proposes to add affordability to this criterion. 

• Under the Commission’s and Council’s proposal, the Commission may require exclusivity or binding minimum purchase quantities from the participating Member States, if it deems this necessary. Under the Parliament’s proposal, the Commission must impose these on the participating Member States, as well as a number of other obligations. 

• The Council’s proposal has removed the provision on joint procurement entirely. For joint procurement, Article 168 (2) of Financial Regulation 2024/2509 would apply without any changes thereto.          

Strategic partnerships 

The Commission will explore the conclusion of new international strategic partnerships between the EU and third countries or international organizations, to broaden the supply chain, diversify sources and reduce dependencies. The Parliament adds a few other provisions regarding the relationship with third countries, including the obligation for the Commission to (i) facilitate the alignment of the pharmaceutical legislation of candidate Member States; (ii) promote the harmonization of EU quality, safety and environmental standards for pharmaceutical production between the EU and third countries; and (iii) establish and maintain a list of countries that meet Union regulatory standards for the quality and safety of medicinal products, to be made available to contracting authorities and healthcare providers. 

Stockpiling 

As we discussed in our last alert on shortage measures under the Pharma Package, the division of competence between the EU and the Member States as regards stockpiling is a delicate point. 

Under the Commission’s proposal, the CMA contains only a high-level “safeguard” related to Member States’ national stockpiling requirements and other unilateral national security of supply measures, such as stock monitoring and reporting, shortage notification rules, export bans and national restrictions on trade: 

Measures on security of supply applied in one Member State shall not result in any negative impact in other Member States. Member States shall, in particular, avoid such an impact when proposing and defining the scope and timing of any form of requirements for companies to hold contingency stocks. Member States shall ensure that any requirements they impose on companies in the supply chain to hold contingency stocks are proportionate and respect the principles of transparency and solidarity. 

The Council unsurprisingly (given that it is made up of government representatives of the Member States) does not change the underlying idea of this safeguard, even though it rephrases it. The Council does add that the Member States must inform the CMCG of their intention to impose such requirements or make significant changes to existing requirements with the explicit emphasis that this is “without prejudice to their right to decide to impose contingency stocks requirements”. 

Reference is also made to the requirement for the Member States to comply with the existing obligation to notify technical regulations and technical barriers to the internal market, including those set out in Directive (EU) 2015/1535 (Single Market Transparency Directive) — the so-called TRIS notification. We strongly recommend pharmaceutical companies to monitor the TRIS notifications (which can be done here), as the notification leads to a three-month standstill period during which companies can submit their concerns on the proposed Member State measure to the Commission. 

The Parliament’s proposal on the other hand significantly amends this section of the CMA by: 

• Describing in more detail what Member States are NOT allowed to do and what they must take into account when designing their national requirements. Any measures imposed by the Member States must not only be proportionate and with respect for the principles of transparency and solidarity (as proposed by the Commission and the Council), but must also be targeted, evidence-based, non-discriminatory, and implemented in a manner that minimizes waste and environmental impact. 

• Giving the Commission powers to issue guidelines recommending the establishment of common standards for contingency stocks (held by the pharmaceutical company, (manufacturer or wholesaler) itself) and national stockpiles (reserves held by the Member State for a public health use). The common standards could cover issues such as quantitative thresholds for stock requirements, the use of harmonized packaging, and the possibility of holding semi-finished products as stock. 

• Establishing two “last-resort mechanisms”:  

• A Union coordination mechanism for critical medicinal products where the Commission upon a justified and substantiated request of one or more Member States shall — only after all other measures have been exhausted, including the voluntary mechanisms provided for in EU legislation (such as the European Solidarity Mechanism) — adopt a binding decision requiring redistribution from a national stockpile or a contingency stock subject to the prior approval of the CMCG. There is also an appeal mechanism included to challenge the redistribution decision, and the Member State or pharmaceutical company targeted by the redistribution decision has the right to compensation from the receiving Member State for the value of the critical medicinal products transferred and the costs of transport and a reasonable mark-up. 

• A Union stockpile for critical medicinal products to be activated in situations where the Union coordination mechanism indicates the existence of a recurrent or persistent shortage in national stockpiles and contingency stocks. 

• Enhancing transparency in the form of an EU-wide reporting system for Member States to report to the Commission the status of their national stockpiles and contingency stocks on a quarterly basis or any significant change in stock levels. This is not an obligation for the pharmaceutical companies directly (although they must provide the necessary stock-related information upon request) and the information is not made publicly available, given its commercially sensitive nature. 

Duty to cooperate 

The Commission’s proposal includes a broad duty to cooperate for marketing authorization holders and other economic operators in the supply and distribution chains of critical medicinal products. They must provide any information necessary for the purpose of application of the CMA upon request of the Commission or the national competent authorities. The proposal does state that the authorities must aim to avoid duplication of the information requested and submitted, given the large number of reporting obligations for pharmaceutical companies and databases and IT platforms that already exist. 

The Parliament and Council echo this sentiment of avoiding duplication by specifically referring in their proposals to existing data infrastructures and initiatives, such as the European Health Data Space, the European Medicines Verification System (EMVS), the European Shortages Monitoring Platform (ESMP), EudraGMDP, the Technical Regulation Information System (TRIS), and the marketing authorization application process in general. 

Leveraging this data would reduce the burden on the pharmaceutical companies and streamline the monitoring of medicinal product supply chains for the authorities. 

The Council adds even further limitation by stating that (i) not the Commission but only the EMA may request information at EU level and only for the purposes of providing regulatory support to a strategic project; and (ii) the company may indicate that the information requested has already been provided to the authority concerned pursuant to other relevant legislation. 

Conclusion 

Overall, the Commission’s and Council’s proposals are largely aligned, with some notable changes being proposed by the Council that focus on the role and competences of the Member States. The Parliament on the other hand proposes a fairly large number of amendments in all chapters of the CMA. 

It remains to be seen if the Parliament will hold strong during the trilogues. The proposed amendments with respect to stockpiling in particular will undoubtedly form a sticky point in the trilogue negotiations. In the Pharma Package trilogues, mostly the Council’s proposals were ultimately adopted. 

For further information, please contact:

Kristof Roox, Partner, Crowell & Moring

kroox@crowell.com