Introduction

Over the past few years, the European Union has been actively working to overhaul its pharmaceutical legislative framework to better address unmet medical needs, such as those relating to rare diseases, as well as to improve Europe's competitiveness in the pharmaceutical market and to support innovation. In fact, in April 2023, the European Commission (the "Commission") had published a new so-called 'pharma package' which included proposals for a new regulation and a directive aimed precisely at tackling such issues. Such proposals now have to be negotiated with the European Parliament for a final version of these new rules to be agreed upon.

In tandem with such developments, the EU is also trying to tackle the vulnerabilities in Europe's pharmaceutical supply chains which have caused and continue to cause shortages in essential medicines for patients across the Union. Such concerns have been exacerbated in recent years due to Europe's experience during the Covid-19 pandemic, and due to ongoing geopolitical unrest in the region and globally. Therefore, on 11 March 2025, the Commission also unveiled a proposal for a new Critical Medicines Act (the "CMA"), which complements the pharma package, and which aims to strengthen the production, supply and accessibility of those critical medicinal products for which insufficient supply would risk or result in serious harm to patients. The proposal also seeks to improve access and security for other 'medicines of common interest' for which, in at least three Member States, the market fails to adequately ensure availability and accessibility for patients, in the necessary quantities and forms.

The CMA's approach for tackling such issues is essentially two-fold. Firstly, it introduces measures for supporting and encouraging private investments in projects which would play a role in enhancing the Union's manufacturing capacity for critical medicinal products. Secondly, it provides for demand-side measures relating to the public procurement of critical medicinal products and medicines of common interest. 

Strategic projects

The CMA outlines specific benefits for projects located within the Union that are designated as 'Strategic Projects'. Strategic Projects are undertakings aimed at establishing or expanding EU manufacturing capacity for critical medicines, their active substances, or key inputs. A project may qualify as a strategic project if it meets at least one of the following criteria:

(i)                 it creates or increases manufacturing capacity for one or more critical medicinal products or for collecting or manufacturing their active substances;

(ii)               it modernises an existing manufacturing site for one or more critical medicinal products or their active substances to ensure greater sustainability or increased efficiency;

(iii)             it creates or increases manufacturing capacity for key inputs necessary for the manufacturing of one or more critical medicinal products or their active substances; or

(iv)             it contributes to the roll-out of a technology that plays a key role in enabling the manufacturing of one or more critical medicinal products, their active substances or key inputs.

The CMA aims to ensure that Strategic Projects designated as such by a Member State would be granted priority status and would benefit from expedited permitting processes. Furthermore, upon request from the project's promoter, Member States would be obliged to provide administrative and regulatory support. This includes, for example, prioritising inspections for good manufacturing practices at new, expanded or modernised manufacturing sites, and an expedited and streamlined process for any necessary environmental impact assessments.

The CMA further permits Member States to prioritise financial support for strategic projects aimed at addressing vulnerabilities in the supply chains of critical medicinal products, provided such vulnerabilities are identified through a formal evaluation and aligned with the strategic guidance issued by the Critical Medicines Group. Such financial support must nevertheless adhere to the state aid restrictions set out in Articles 107 and 108 of the TFEU. In this respect, it is important to note that the European Commission has already issued a working document which provides guidance on how Strategic Projects can receive financial support from Member States while remaining within the bounds of EU state aid rules.

Undertakings receiving such financial support must prioritise EU market supply for as long as the product in question remains on the Union List of Critical Medicinal Products. They are also required to use their best efforts to ensure continued availability in the Member States where the product is marketed. Where necessary to prevent shortages, the supporting Member State may require the beneficiary to supply the EU market with the relevant product, active substance, or key input. Additionally, other Member States facing imminent shortages may request the supporting Member State to act on their behalf.

The CMA also provides for EU financial support to strategic projects under programmes such as EU4Health, Horizon Europe, and the Digital Europe Programme. However, Article 16 of the proposal limits such funding to the current Multiannual Financial Framework (2021-2027). The absence of long-term EU budget commitments raises concerns about the effectiveness of this provision - especially considering that the investment required to meet the CMA's strategic objectives is expected to be significant. This is particularly relevant given existing concerns about the profitability of manufacturing medicines within the Union, as well as the potential for increased medicine prices resulting from efforts to reduce dependency on third country suppliers.

Mandatory use of most economically advantageous tender criteria

From a public procurement perspective, the CMA introduces a requirement for contracting authorities to apply the most economically advantageous tender criteria, rather than awarding contracts based solely on price, in procurement procedures for critical medicinal products. These award criteria may include factors such as stockholding obligations, supplier diversification, or supply chain monitoring.

In addition, the CMA also introduces a preference for EU-based manufacturing. For critical medicinal products identified as vulnerable due to a high dependency on a single or limited number of third countries, contracting authorities are, where justified, required to favour suppliers that manufacture a significant portion of these critical medicinal products within the EU. This measure, while intended to enhance supply security and autonomy, raises concerns regarding its long-term impact on drug prices, as production within the EU may be more expensive than sourcing from lower-cost countries.

Furthermore, although the CMA mandates that these procurement rules must be implemented in compliance with the EU's international obligations, including the WTO Agreement on Government Procurement and applicable Free Trade Agreements, the preference for EU manufacturing could nonetheless provoke trade tensions. There is a risk that such a policy may be perceived as discriminatory by third countries, potentially leading to retaliatory measures or reduced market access for European companies in non-EU markets.

Collaborative procurement mechanisms

The CMA also provides for collaborative procurement across Member States and outlines three distinct models through which such cooperation may take place. Collaborative procurement is completely optional for Member States to participate in. It is not mandatory.

Firstly, upon a reasoned request by at least three Member States, the Commission may act as a facilitator for cross-border joint procurement of medicinal products of common interest by such Member States. Once such request is received, the Commission is required to notify all other Member States of the initiative and invite them to declare their interest within a specified timeframe. If the Commission accepts such a request, it will provide secretarial and logistical support to the interested Member States by facilitating cooperation and providing advice on the applicable rules.

Secondly, where there is a request from nine or more Member States, the Commission may, in certain scenarios, procure on behalf of the Member States opting to participate. Such a procedure can be adopted where the procurement relates to critical medicinal products for which an evaluation has identified a vulnerability in the supply chains or for which the Executive Steering Group on Shortages and Safety of Medicinal Products within the European Medicines Agency has recommended a common procurement initiative or where it relates to a medicinal products of common interest, for which a joint clinical assessment report or a clinical assessment carried out under the voluntary cooperation among Member States has been undertaken in terms of Regulation (EU) 2021/2282 on Health Technology Assessment.

Thirdly, where a contract is necessary for the implementation of joint action between the Commission and Member States, the Commission and at least nine participating Member States may jointly engage as contracting authorities in a joint procurement procedure. This mechanism is limited to the scenarios defined above as well.

On an EU level, concerns persist that joint procurement may be used excessively as a cost-containment tool. Excessive downward pressure on prices could undermine incentives for European pharmaceutical companies to invest in R&D, potentially stifling innovation within the Union. This underscores the need for a balanced application of joint procurement mechanisms, which should be targeted to facilitate genuine access and supply vulnerabilities rather than as a default pricing strategy.

Conclusion

The CMA represents a significant step toward ensuring the strategic autonomy of the EU in the field of pharmaceuticals. Through the recognition of strategic projects, modernised procurement practices, coordinated planning, and potential joint procurement initiatives, it aims to improve the availability and security of supply of critical medicinal products within Europe. Nevertheless, the proposal's modest indicative budget, its omission of a unified stockpiling strategy, and its potential to trigger international trade tensions may undermine its effectiveness. Ultimately, its success will undoubtedly depend on thoughtful implementation, sustained investment, and ongoing dialogue among Member States, industry stakeholders, and international partners.

Kelly Cini is an Advocate at Ganado Advocates