API Alert: EU Proposes New Requirements To Secure Pharma Supply Chains

The European Commission has issued its long-awaited proposal to reform pharmaceutical legislation in the EU, the first major overhaul in 20 years, which includes new requirements to address drug shortages and secure supply chains. 

The European Commission has issued its long-awaited proposal to reform pharmaceutical legislation in the EU, the first major overhaul in 20 years, which includes new requirements to address drug shortages and secure supply chains. 

Proposed reforms
The European Commission is proposing to revise the European Union’s (EU) pharmaceutical legislation, the largest reform in over 20 years. The European Commission began the process for the proposed reforms in November 2020 by issuing its Pharmaceutical Strategy for Europe. The Strategy kick-started a revision of the current pharmaceutical legislation and seeks to respond to current challenges faced in the EU’s pharmaceutical sector. The legislative proposals will now be submitted to the European Parliament and the European Council for discussion and consideration for adoption.

The revision includes two legislative proposals: a new Directive and a new Regulation which constitute the EU regulatory framework for all medicines and simplifies and replaces the previous pharmaceuticals legislation. The proposed Directive contains all the requirements for authorization, monitoring, labelling and regulatory protection, placing on the market, and other regulatory procedures for all medicines authorized at the EU and national levels. The Regulation sets specific rules (on top of the ones in the Directive) for medicines authorized at the EU level. It sets out the rules on coordinated management of critical shortages and security of supply of critical medicines. It also sets out the rules governing the European Medicines Agency (EMA). The proposed reforms seek to achieve the following main objectives:

Security of supply. Enhance availability and ensure medicines can always be supplied to patients, regardless of where they live in the EU;

Increase access to medicines. Create a single market for medicines ensuring that all patients across the EU have timely and equitable access to safe, effective, and affordable medicines;

Facilitate innovation. Continue to offer an attractive and innovation-friendly framework for research, development, and production of medicines in Europe;

Improve the regulatory process. Reduce drastically the administrative burden by speeding up procedures significantly and reduce authorization times for medicines, so they reach patients faster;

Address antimicrobial resistance. Address antimicrobial resistance and the presence of pharmaceuticals in the environment through a One Health approach;

Environmental standards for medicines. Make medicines more environmentally sustainable.

Stella Kyriakides, the EU Commissioner for Health and Food Safety, commented on the importance of the proposed legislation. “Today [April 25, 2023], we add another central pillar to our European Health Union. We are putting forward proposals to ensure that medicines reach patients everywhere in Europe, in a timely and equitable fashion. It is a reform which ensures that Europe remains attractive for business, and our pharmaceutical industry a global innovation powerhouse. Building a single market for medicines is a necessity both for our citizens and our companies.” The European Health Union refers to a collective effort by the EU and its member states to advance three main goals: better protect the health of EU citizens; equip the EU and its member states to better prevent and address future pandemics; and improve resilience of Europe’s health systems 

Security of supply and supply-chain reforms
For drug manufacturers, the proposed legislation has several measures to address drug shortages and ensuring security of supply. The proposed reforms introduce new requirements for monitoring shortages of medicines by national authorities and the European Medicines Agency (EMA) and a stronger coordination role for the EMA. The proposal also calls for strengthening obligations on companies, including earlier reporting of shortages and withdrawals of medicines and development and maintenance of shortage prevention plans. In addition, under the proposals, EU authorities will establish an EU-wide list of critical medicines, and the supply-chain vulnerabilities of these medicines will be assessed, with specific recommendations on measures to be taken by companies and other supply-chain stakeholders. In addition, under the proposal, the European Commission will be able to adopt legally binding measures to strengthen the security of supply of specific critical medicines.

Specific proposals
Shortages of medicines have been a serious concern in the EU for several years. The COVID-19 pandemic, in particular,  highlighted shortcomings of the current legal framework. The extension of the EMA’s mandate as part of the European Health Union allowed improving coordination and management of the supply of medicines shortages during crises.

The proposed legislation, however, goes beyond crisis preparedness and response and seeks to address systemic shortages at all times. The new legislation will enhance the monitoring and mitigation of medicines shortages, in particular critical shortages, at national levels and by the EMA. Pharmaceutical companies will have to report shortages of medicines more quickly and establish shortage prevention plans. Pharmaceutical companies will also have to address critical shortages and report on the results of the measures taken, such as the increase or reorganization of manufacturing capacity or the adjustment of distribution to improve supply.

In addition, the proposal calls for an EU list of critical medicines, referring to medicines considered to be most critical for health systems at all times, to be established. Recommendations on measures to be taken will be made to companies and other relevant stakeholders to strengthen the supply chains of those medicines in order to ensure continuity and security of supply for the EU. The proposed legislation also allows the European Commission to introduce, through an implementing act, measures to strengthen security of supply, including requirements to establish contingency stocks.

In the context of securing the supply of medicines, the proposed reforms do not directly address reshoring and “strategic autonomy,” an overarching policy objective of the European Commission that refers to the capacity of the EU to act autonomously, meaning without being dependent on other countries, in strategically important policy areas. Although strategic autonomy and reshoring are not directly addressed in the proposal, the European Commission says “there is sufficient flexibility to target specific vulnerabilities, including problematic dependencies.“

In parallel, the European Commission is setting up the EU FAB flexible manufacturing project, a network of so-called “ever-warm” single and/or multi-technology production capacities for vaccine and therapeutics manufacturing in the EU. The EU FAB facilities will be reserved for surge manufacturing capacity and will establish an inventory of production facilities, raw materials, consumables, equipment, and infrastructure. The participating production sites will have to make qualified staff available and have clear operational processes and quality controls in place. The EU FAB is intended to quickly and easily activate its network of manufacturing capacities to meet demand for vaccines and/or therapeutics needs until the market has scaled up production capacities.

The EU has also already established the Joint Industrial Cooperation Forum to find solutions to supply-chain bottlenecks and vulnerabilities as well as raw materials for medical countermeasures. This was established under the European Health Emergency preparedness and Response Authority (HERA), whose goal is to strengthen Europe’s ability to prevent, detect, and rapidly respond to cross-border health emergencies by ensuring the development, manufacturing, procurement, and equitable distribution of key medical countermeasures, which includes therapeutics, vaccines, diagnostics, and other products such as personal protective equipment. In addition, the Important Project of Common European Interest on Health will allow participating EU countries to allocate state aid to support innovative EU projects in health, including those relevant for security of supply. Also, the European Commission recently came forward with a proposal for Critical Raw Materials, which covers essential components to produce medicines and other medical countermeasures.

The proposals also call for the mandate of the EMA and its Executive Steering Group on Shortages and Safety of Medicinal Products to be extended with respect to the management of critical shortages and the security of supply of critical medicines. The proposal calls for an inspectorate to be established within the EMA to reinforce EU member states’ capacities, in particular for inspections in third countries (i.e., non-EU countries), to build efficiency in surveillance and support marketing authorization procedures.

In issuing its proposals, the European Commission underscored the importance of the bio/pharma manufacturing sector to the EU’s economy. EU exports of medicines increased from EUR 50 billion ($55 billion) in 2002 to EUR 235 billion ($258 billion) in 2021 while EU imports grew from EUR 32 billion ($35 billion) to EUR 100 billion ($110 billion) in the same period. The EU’s trade surplus in medicinal and pharmaceutical products reached EUR 136 billion ($148 billion) in 2021, the highest value on record, according to data from Eurostat, the EU’s statistical office.

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