How EU Price Cuts Are Fuelling a Global Drug Crisis

Experts warn that uncoordinated medicine price cuts across the EU are contributing to global drug shortages. In efforts to make healthcare systems more sustainable, many EU countries have independently reduced prices, putting pressure on manufacturers and prompting them to prioritise more profitable markets. This issue is the central focus of ongoing reforms of European pharmaceutical legislation, which is currently under debate.

“In Spain, these price cuts exceed the EU average, leading pharmaceutical companies to favour more profitable markets. Some medicines cost less than a piece of chewing gum, despite strict price regulations,” said Antoni Torres, M Pharm, president of the Federation of Associations of Pharmacy of Catalonia, Barcelona, Spain.

In response to cost strain, many manufacturers have centralised production or relocated operations to countries with lower costs, increasing their vulnerability to supply chain disruptions. “Most active pharmaceutical ingredients (APIs) used in Europe are produced in China and processed in India. As China’s economy is growing, more of this manufacturing is being outsourced to other countries.” Torres said.

This set-up creates vulnerabilities. If logistical problems arise, as seen during the pandemic, or if domestic demand increases in China, as it did after the end of the zero-COVID policy, shortages quickly ripple across the globe. According to a European Commission survey, over 50% of medicine shortages are caused by manufacturing disruptions, often linked to limited API supply chains.

Local Constraints

In Spain and Portugal, extremely low medicine prices and rules preventing pharmacists from substituting different formulations during shortages further widen supply gaps. However, changes in this regard are underway.

In April, EU health ministers endorsed a draft revision of pharmaceutical and medical device legislation that allows member states to expand prescribing rights to nurses and physiotherapists and enables pharmacists to dispense approved therapeutic alternatives when the original medicine is unavailable.

Sudden spikes in demand, such as those during the winter of 2022 with paediatric amoxicillin, contribute significantly to medicine shortages.

Critical List

To improve preparedness, the EC, European Medicines Agency (EMA), and national regulators published the first EU critical medicines list in 2023.

The EMA’s updated critical medicines list (2024) includes over 270 essential APIs used to treat infections, cardiovascular diseases, mental health disorders, and cancer.

Most of these drugs are off patent, allowing broad manufacturing, but manufacturing is often dominated by just one or two suppliers. To reduce costs, many companies have outsourced manufacturing outside the EU, increasing their dependence on small groups of suppliers.

Industry organisations such as Farmaindustria agree with this assessment, but caution should be exercised because procurement systems based solely on price could weaken local manufacturing and Europe’s pharmaceutical autonomy. Farmaindustria argued that ensuring a stable supply requires incentives for investment, innovation, and sustainable industrial capacity in the EU.

Current supply chains face several risks, such as sudden demand surges, manufacturing interruptions, quality control failures, and supplier withdrawals.

New Legislation

To address these issues, the EU introduced the Critical Medicines Act as part of its broader pharmaceutical reform. Legislation aims to strengthen drug availability across the pharmaceutical value chain, from quality control and manufacturing to competitiveness and accessibility.

The EMA’s newly expanded mandate includes monitoring, coordinating, and responding to drug shortages across the EU. According to the EC, the pharmaceutical sector employs approximately 800,000 people in the EU and is critical to both health systems and economic resilience in the region.

Key goals include:

• Ensuring reliable access to essential medicines.
• Reducing reliance on single- or third-country suppliers.
• Addressing market failures that hinder equitable access across EU member states.
• Improving access to treatments for rare and high-priority conditions, especially in countries facing the most severe access challenges.

“Europe’s plans to take measures to address medicine shortages is a major step in the right direction and confirms the correct direction and demands of the pharmaceutical sector. As a business, we hope these measures will ensure that patients have access to the medicines they need and contribute to more efficient and equitable healthcare in Europe, with pharmacies and pharmacists being the most effective means of achieving this due to their widespread availability and accessibility,” said Torres.

Strategic Support

As part of the pharmaceutical reform, the EU plans to support strategic projects to increase the production of essential medicines and their active ingredients. These projects will focus on creating, expanding, or upgrading manufacturing capacity and will benefit from incentives such as faster permits, simplified environmental assessments, technical assistance, and easier access to EU funding, particularly through the Strategic Technologies for Europe Platform.

Public procurement will be used as a tool to strengthen supply chain security and encourage manufacturers to invest in Europe. Requirements such as source diversification and regular supply monitoring will apply. In situations where there is heavy reliance on imports, criteria favouring EU production could be prioritised. These measures can also be applied to other essential medicines.

The reform also proposed a voluntary joint procurement system, allowing Member States to work with the European Commission to purchase essential medicines and others of shared interest. The mechanism offers three options: cross-border procurement between countries, commission-led procurement on behalf of Member States, and joint procurement with voluntary participation. All options were designed to respect the EU principles of subsidiarity and proportionality.

With these measures, the EU aims to improve equitable and reliable access to essential medicines, thereby protecting public health during future supply crises.

This story was translated from El Medico Interactivo.