Europe's medicine supply crisis: How the EU's bold new act aims to address supply chain vulnerabilities

The EU is taking action to address the long-standing problem of serious disruptions to supplies of certain medicines in EU Member States. Over the past decade, critical shortages have repeatedly threatened patient care across Europe, with vulnerabilities particularly exposed during the COVID pandemic. Recent geopolitical tensions have only increased concerns, given the current heavy reliance on third country manufacturing. Reasons for shortages of both finished products and active ingredients are complex, but include manufacturing problems, scarcity of resources and labour, and unforeseen spikes in demand for certain products. Encouraging more EU-based manufacturing and the diversification of supply chains will help to guard against potential public health crises due to product shortages.

The EU pharmaceutical legislation already contains provisions to ensure monitoring of product shortages and reporting and management of critical shortages, and these will be further strengthened in the ongoing Pharmaceutical Strategy reforms. However, the European Commission and Member States consider that regulatory provisions alone are not sufficient, and a range of new industrial policy measures is needed to effectively address these issues. Hence, the proposed Critical Medicines Act (CMA) which was published in March 2025.

The draft CMA aims to boost investment in EU manufacturing capacity, reducing the EU’s dependence on third-party manufacturing and diversifying supply chains. It also proposes the introduction of procurement-related measures to strengthen supply chains and leverage aggregated demand for products. It is based on the following key elements:

Key Elements of the Critical Medicines Act:

• Support for “Strategic Projects”
• Significant changes concerning public procurement to incentivise supply chain diversification and resilience
• Collaborative procurement approaches
• Strategic partnerships to support supply chain diversification

The primary target of these measures will be the key medicines identified in the Union list of “critical medicines”, which currently lists over 270 active substances, with the aim of strengthening their availability and security of supply. However, some of the CMA proposals go further, aiming to improve the availability and accessibility of other medicines of “common interest” which are experiencing market failure (namely, availability issues in three or more Member States), such as certain orphan drugs and novel antimicrobials.

“Strategic projects” are those that create, increase or modernise EU manufacturing capacity for critical medicines and active substances. The aim is to allow them to benefit from fast-tracking of administrative procedures such as permits and environmental assessment, and regulatory and scientific support. Easier access to EU funding for projects which address supply chain vulnerabilities is proposed. Member States will also be able to prioritise financial support, and the Commission has published guidance on the use of state aid to support such projects. Where financial support has been received, companies would be obliged to prioritise EU supply of products.

Other provisions provide safeguards in relation to national measures to secure “contingency stocks”, where obligations to establish buffer stocks of certain medicines to mitigate risks of supply disruption are imposed on supply chain actors. Such national measures must not have a negative impact on other Member States and must respect the principles of proportionality, transparency and solidarity.

The draft CMA also envisages that the Commission will explore possibilities for establishing strategic international partnerships aimed at supply chain diversification and build on existing cooperation.

In addition, the draft proposes fundamental restructuring of critical medicines procurement  frameworks. Beyond mandating evaluation criteria that prioritize supply chain resilience and continuity of availability, it establishes comprehensive provisions for coordinated cross-border procurement mechanisms that enable Member States to leverage collective purchasing power and harmonize acquisition strategies.

These proposed industrial policy solutions, alongside the strengthened regulatory legislation, aim to ensure a more stable supply of “critical medicines” and improved, more uniform access to medicines of “common interest”. The Commission has fast-tracked the CMA, without conducting an impact assessment or public consultation. However, at a recent meeting of the European Medicines Agency’s Executive Steering Group on Shortages and Safety of Medicinal Products, concerns were raised about the capacity for the Executive Steering Group, national authorities and the EMA to carry out the proposed CMA activities, especially because procurement processes are highly decentralized. We will be monitoring the CMA proposal with interest.