This article is the first part of our series on "European Healthcare Autonomy". In the coming weeks and months, we would like to shed light on the measures that need to be taken to ensure EU-wide autonomy in the healthcare sector from the perspective of various actors from politics, business and the healthcare sector. The first article is dedicated to the current situation surrounding bottlenecks in the supply of medicines during the Corona crisis.
Munich, 30 April 2020 by Moritz Haucke.
In many pharmacies across Europe, the picture is currently the same: once the waiting time is over, the required medication is often not available. The reason: supply bottlenecks.
In 2019 - i.e. before the current crisis - the number of supply shortages had almost doubled to 18 million cases compared to 2018. The entire range of pharmaceutical products was affected, from antidepressants to blood pressure medication and painkillers.
Oligopoly market and rebate contracts.
In order to reduce costs for production and disposal, production, especially of pharmaceutical raw materials, has been almost completely relocated outside Europe. Fewer and fewer large Asian producers of active ingredients supply the globalised world. A supply oligopoly emerged and made especially manufacturers of generic drugs, which secure 80% of the drug supply in Germany, dependent on Asian manufacturers. The vulnerability of this highly complex and sensitive industry and its global supply chains is growing.
So-called discount contracts, which health insurance companies conclude exclusively with companies, also contribute their share to the worsening situation. In this model, a single manufacturer is responsible for supplying all those insured with a health insurance company. Although the price falls, it no longer makes the production of vital medicines profitable for other manufacturers. If there are supply bottlenecks, other manufacturers cannot cushion this, as it takes up to half a year to get production up and running. If stocks are insufficient, this has a direct impact on the supply of pharmacies and hospitals.
The Corona crisis shuts down plants and disrupts supply chains.
Due to the Corona crisis, Chinese producers of basic materials had to shut down their production for weeks or even close down completely. The supply chain to India also came to a standstill. The world's largest producer of generic drugs suddenly stopped receiving raw materials. Fearing that it could no longer supply its own population, the Indian government banned exports of 26 substances and the medicines made from them. As a result, medicines became scarce worldwide..
Some generic drug manufacturers tripled their production to compensate for the supply shortages. Raw materials have to be procured at short notice from other manufacturers and transported as quickly as possible. Expensive air freight replaces the cheaper but more time-consuming transport by sea. Higher prices for raw materials and logistics lead to higher prices for medicines.
Why a rethink is necessary.
While the EU remained inactive, the American president put pressure on the Indian government and thus caused the partial lifting of the Indian export ban. Here it becomes clear that the European Union must do considerably more in the future to ensure the supply of medicines for its own population. There have been many impulses in this direction from politics, business and the health sector in recent years. The Corona crisis shows that they must also be implemented in order to ensure the supply of medicines within the EU in the future.
In the coming weeks, we would like to devote the series "European Healthcare Autonomy" to the question of how care could be ensured for Europe. In doing so, we would like to shed light on the entire spectrum of stakeholders from pharmaceuticals, medical technology and diagnostics and let voices from politics, business and healthcare have their say.