Incoming EU pharma package heralds significant procurement opportunities

In December, the European Parliament and Council of Ministers reached a provisional agreement on the highly-anticipated package of proposed changes to EU pharmaceuticals laws.

When enacted, the package will introduce new requirements for supply security, sustainability, data exclusivity and authorisation of medicines across the EU and will mark the largest reform of EU medicines law in two decades. The reforms will also have substantial implications for public procurement law and will affect companies across the EU as well as business outside the EU that have relevant operations in EU member states.

Although formal adoption and publication of the package are still pending, the new package comprises both a new regulation and new directive, which replace directive 2001/83/EC and regulation (EC) No 726/2004, and are expected to comprehensively modernise the existing framework.

Among the changes, the new regulation and directive will integrate new rules on so-called ‘orphan’ medicines. The general protection period is reduced from 10 to 9 years, while ‘breakthrough orphan drugs’ will in future benefit from an extended exclusivity period of up to a total of 11 years.

The reforms, which are expected to enter into force within this year, or at the latest in 2027, are designed to support innovation and speed up patient access to new treatments, including children. In particular, they are expected to streamline the process for studying medicines in children, including formalising a new process for iterative paediatric investigation plans (PIPs) that has already been piloted by the European Medicine Agency (EMA).

Although the implementation and transitional periods are still not entirely clear, Dr. Lars Hettich, a regulatory expert with Pinsent Masons in Düsseldorf, said it was never too early for public contracting authorities – from municipal hospitals and university clinics to purchasing cooperatives – as well as businesses to make early adjustments to prepare for the new rules coming into force.

“The EU pharmaceutical package will strengthen measures to ensure the supply of essential medicines,” he said. “Member states may require companies to provide medicines in sufficient quantities to avoid supply gaps. Public contracting authorities must therefore adapt their procurement documents by, for example, including delivery obligations, multi-supplier models or crisis stockpiling.”

In particular, Hettich highlighted that the reforms will introduce mandatory environmental requirements across the entire life cycle of medicines for the first time, including compulsory environmental risk assessments. This is significant from a procurement perspective because it will mean that in future contracting authorities will be required to incorporate these environmental obligations into their tenders – either as technical specifications or when defining award criteria – which will affect all EU-wide procedures. 

Businesses from third countries must also meet the new requirements when tendering in the EU. “This focus on sustainability, supply capability and transparency increases the importance of strategically oriented procurement procedures,” said Hettich.

To mitigate future supply shortages, the reform provides, among other things, crisis mechanisms and forward-looking models for compulsory licences. Contracting authorities are advised to prepare corresponding contractual mechanisms, including escalation and substitution clauses. Exporters outside the EU will also need assess the potential impact of these changes on their supply and IP strategies. 

The package will also introduce changes to data and market protection, including baseline plus modular extensions, shifting the timing of the entry of generic competition. In some cases, contracting authorities could expect that generics and biosimilars will become available earlier for tenders. Companies are being advised to review their pipeline and launch strategies accordingly. 

The introduction of electronic product information will entail increased requirements in relation to interoperability, data quality and IT interfaces. Contracting authorities should plan these aspects according to suitability, performance and award criteria. Businesses will also need to prepare their systems and content at an early stage. 

Hettich urged contracting authorities to promptly review their procurement strategies ahead of the changes coming into force and, if necessary, switch to multi-supplier and stockpiling models and pre-structure contractual clauses on delivery obligations, escalation and substitution. He said entities would need to ensure they have appropriate processes for evaluating environmental and sustainability criteria, including environmental risk assessments, and ensure that their IT systems are up-to-date to process relevant electronic product information in future procedures. Tender cycles and price benchmarks may also need to be adjusted to generic or biosimilar timelines and to simulate market scenarios, he added.

For companies, the procurement obligations of the incoming laws are already clear, he said. “Companies should increase their supply chain resilience and anticipate compliance obligations in shortage management. It will also be important for them to standardise ESG and environmental data set. prepare evidence for procurement procedures, factor modulation of data of market protection into their portfolios, launches and pricing strategies and assess their incentives – such as for anti-infectives – more strategically.”