Supply shortages of vital medicines and medical devices have the potential to cause otherwise avoidable damage to individuals and even deaths. We can all read stories in the press of patients going from pharmacy to pharmacy to find a supply of their needed pharmaceuticals. Individuals are traumatised if they cannot find a ready source for their daily medication and, generally in Europe, expect to be able to attend a local pharmacy to obtain any medicines prescribed for them.
Not having available lifesaving, life-preserving, life-prolonging and life-improving medicines and medical devices shows a failure of a government to be organised and care about its people. In short, supply shortages of these products do not look good for politicians.
Furthermore, individuals in Europe have come to expect their healthcare systems to be set up to provide these products to the point of it being a fundamental right. The expectation of patients is that their health will be taken care of, and even prioritised. Indeed, the right to healthcare is enshrined in Article 35 European Charter of Fundamental Rights of the European Union:
"Everyone has the right of access to preventive health care and the right to benefit from medical treatment under the conditions established by national laws and practices. A high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities"
Supply issues
It is reported by the EU's Critical Medicines Alliance that shortages of critical medicines are on the rise globally and have been for several years. To date, these shortages have led individual governments to take steps to manage them on an ad hoc medicine-by-medicine approach rather than looking at the overall issue of supply and attempting to manage supply chains as a matter of policy. The market for medicine supply in Europe is, after all, intended to be a (kind of) free market.
Medical device shortages have received less attention, but they are nevertheless the subject of a European Medicines Agency (EMA) steering committee.
Reporting supply issues
In order to be aware of, and to take steps to mitigate, any supply shortages, there is a divide between countries that:
- place obligations on suppliers
- place obligations on the healthcare system
- place obligations on both.
The UK and Germany both place the obligation on suppliers to notify of supply shortages. In the UK, the reporting is to the Government via the DHSC DaSH where marketing authorisation holders (MAHs) submit notifications of potential shortages, discontinuations or updates on medicine supply issues. In Germany, notifications must be made to individual hospitals, making the task rather more arduous. The German industry has also voluntarily agreed to additional reporting obligations to the authorities (BfArM), although not required by law, making these mandatory. In France, suppliers have equivalent obligations. France and the Netherlands also take the alternative position by maintaining, respectively, a dedicated national observatory which continuously monitors and evaluates supply chain pressures and a national list of critical medicines.
Governments that are so informed can take steps with the perhaps limited tools available to try to prevent or mitigate foreseen shortages. The Department of Health and Social Care (DHSC) in the UK takes an active role in monitoring and acting in the event of shortages. On the basis of current legislation, governments can set quotas or allow stockpiling to prevent shortages, or they can prohibit exports, as is the case in the UK for specific medicines. The Netherlands requires health insurers to structure their agreements with manufacturers to disincentivise discontinuance of products.
The Netherlands is looking at stockpiling obligations for critical medicines, but also of APIs and whether manufacturing could take place in or close to the Netherlands. A group of EU countries have together drafted a Manifesto for a coordinated Industrial policy to address critical medicines shortages in the European Union, which calls for the Critical Medicines Act to address the security and resilience of medicines supply via a European strategy to address what are perceived to be market failures. It proposes two priorities:
- incentives to manufacture critical medicine ingredients in Europe
- financial incentives to build the required production capacity in Europe in a sustainable manner.
Recent amendments to the EU medical device and IVD regulations by the addition of a new Article 10a have brought medical device shortages into the purview of all member states, where previously only a few, such as France, had any system in law for notification of medical device supply issues. Individual countries in the EU have instituted notification systems, as discussed in our article. The legislation, though, only provides for a system of notification and looks no more than 6 months ahead. Individual governments are left to decide how to respond to the potential shortages or discontinuations so notified. In the UK the alternative position is taken and the NHS is responsible for monitoring supply issues with medical devices, rather than the manufacturers.
How supplies might be controlled
As currently formulated, the required notification systems for supply issues allow individual countries to react to their local and relatively immediate supply issues. These systems do not prescribe any longer-term planning or market interventions in supply chains to avoid the shortages of medicines or medical devices in the first place.
A more interventionist model for medicinal products in the EU is planned via the EU's proposed Pharmaceutical Package, with the ability to encourage supply through a series of carrots and sticks as set out in our article Part 2 of EU and medicine supply issues. The proposed Critical Medicines Act looks to use procurement processes to encourage resilience in the supply chain, which is likely to lead to more onshoring and near-shoring of product and active pharmaceutical ingredient (API) manufacture in the EU.
Conclusion
Supply shortages of medicines and medical devices are documented to be increasing and this position is likely to worsen with geopolitical events. The effect of the US imposing a most favoured nation (MFN) requirement on medicines pricing will likely cause a reconfiguration of supplies and pricing. It is too early to know how this will play out. Where the US wins though, Europe will certainly lose. The US is additionally threatening tariffs on the import of pharmaceuticals currently said to be zero for generic medicines, 15 for on-patent medicines manufactured in the EU or Japan, or zero for patented pharmaceuticals if the company is building manufacturing sites in the US, although various definitions are yet to be worked on the application of these tariffs. When the most favoured nation (MFN) is combined with US tariffs, there will be, for some time to come, a huge amount of uncertainty in the world supply for medicines. We can expect that the eventual outcomes will cause some perhaps significant further upset to supply chains.
European governments and the EU are looking to proactively ensure supplies of the most critical products. Whereas to date there has been a relatively free market in supply of medicines in Europe, the response of the EU via its pharmaceutical package and draft Critical Medicines Act, provides for an increasingly interventionist stance. The EU wants to achieve the security of supply of medicines to the EU partly through the reshoring of some medicines manufacturing. It has proposed legislation to both encourage and compel this response from manufacturers.
The UK on the other hand has not shown a willingness to engage in a more interventionist approach and in the event of supply issues the country is limited to holding onto supplies which have already entered the country and negotiating with suppliers. If manufacturers choose to withdraw their products from the market, the UK has no mechanisms in law to compel supply. This free market approach, combined with holding firm on pricing negotiations via the system of rebates known as the Voluntary Scheme for Branded Medicines Pricing, Access, and Growth (VPAG), which has been partly responsible for some innovators pulling production and research investment from the UK, leaves the UK particularly vulnerable to future supply shortages. These will be exacerbated by others such as the US and the EU taking a more protectionist stance.
The supply chains for medicines are global, and with countries in the EU engaging in reshoring and compelling supply as well as stockpiling, the supply of critical medicines to other parts of the world, often those which are disadvantaged, will be compromised. The EU's proposals for new medicines legislation are thus likely to exacerbate global health inequalities that already exist. MAHs which have an eye to social responsibilities might want to consider these effects in their supply planning.
Some additional thoughts on national obligations are found here:
France
Germany
Netherlands
