National resistance to joint medical procurement: fractures in the European Health Union?

As European governments reflect on lessons from covid-19 to improve pandemic preparedness, the European Parliament and the Council of the European Union (EU) recently reached a provisional agreement on a new EU law on serious cross-border threats to health (CBTH). The legislation, which is part of a package of regulations for a European Health Union that aims to reinforce health security, poses a range of questions, most notably around the future of procurement negotiation dynamics between suppliers and EU buyers.

Among its provisions, the CBTH regulation provides the European Commission with the power to declare a public health emergency at the EU-level, triggering a range of emergency measures including the joint procurement of medical countermeasures. Based on the centralised Covid-19 vaccines procurement model employed by the Commission, the arrangement will be spearheaded by the newly established directorate-general Health Emergency Preparedness and Response Authority (HERA) and crucially, will prohibit member states from pursuing parallel negotiations with manufacturers directly.

Recent negotiations between HERA and the monkeypox vaccine producer, Bavarian Nordic, provide an early example of how the new dynamics could work in practice. The pricing negotiations in this case were relatively simple, in part due to EU4Health funds granting HERA more autonomy and flexibility. However, some member states felt that HERA’s processes were slow and inefficient compared to national levels of emergency. As a result, France moved independently to purchase a large portion of the limited supply of the vaccine, notably demonstrating that, in the first exhibition of the directorate-general’s mandate post-Covid, HERA failed to break the preference of a major member state for driving national procurement.

This example illustrates some of the basic challenges that HERA is likely to face. In principle, its capacity to purchase for the bloc as a whole confers more bargaining power for HERA and a very large market for manufacturers that are able to provide the requisite quantity of supplies. However, the resistance from countries with higher demand volumes and larger economies, such as France and Germany, is likely to work against HERA. It was the resistance from such markets that has ensured that the CBTH regulation is built around joint procurement participation only on a case-by-case basis. Countries with larger populations, bigger economies and efficient infrastructure to distribute medical countermeasures may be more likely to favour procurement at the national level if HERA’s joint process continues to be perceived as slow and inefficient.

With the CBTH regulation set to be formally adopted this autumn, vaccine, therapeutics and diagnostics manufacturers should thus begin to anticipate a possible mix of negotiators at the EU table. HERA’s current limitations likely mean that any shift to joint procurement will be sporadic. Accordingly, the factors that will predict joint versus national procurement are likely to be the rates of infection spread and the extent of political imperative around rapid deployment in larger member states. A few more successful HERA case studies may also shift views in Europe’s capitals, while smaller member states will continue to argue for a collective process, not least from the perspective of price equality.

Thus, while the Commission and some Members of the European Parliament increasingly hope to move towards harmonisation across the bloc, the technical and bureaucratic hurdles – as well as resistance from some member states – will nonetheless likely impede major changes in the immediate future. As industry looks to navigate the future supply and procurement landscape in Europe, it will need to be proactive in anticipating the swings between joint versus individual procurement in the short- to medium-term, while preparing to adapt to a more harmonised EU approach in the long-term.