Faced with an ageing population and rising chronic disease rates, Europe wants to make its citizens healthier. It also needs to keep its most powerful industries happy. In the basket of health policies that EU lawmakers rushed to get across the line before Christmas, industry was the big winner: The pharmaceutical, food and drink sectors walked away with a set of major policy wins — and (potentially) healthier profits. While the pharma industry previously feared losing some of its monopoly rights on new drugs, the Commission this month offered it an extra year of patent protection for novel biotech drugs — among the most expensive treatments in the world. The food and drink sectors, meanwhile, successfully pushed back against proposals to tax ultra-processed foods and alcopops, for now. On Dec. 16 the Commission published its Biotech Act and Safe Hearts Plan, which landed just days after a long-awaited update of the pharmaceutical legislation. Taken together, they seek to incentivize industries to innovate and do business in Europe, improve access to medicines, and tackle the burden of cardiovascular disease. The pharma industry broadly celebrated the biotech proposal. The Biotech Act “reflects priorities we’ve intensively advocated to keep Europe globally competitive in life sciences,” Ognjenka Manojlovic, head of policy at European pharmaceutical company Sanofi, told POLITICO. That includes accelerating clinical trials, boosting intellectual property, and strengthening financing for Europe’s biotech ecosystem, Manojlovic said. The pharmaceutical sector had pushed for longer monopoly rights in the pharma legislation. In the end they were kept at the current standard eight years — instead of being cut by two years as the European Commission had initially proposed. For Europe’s public health insurers, who pay for drugs, the decisions taken to maintain and then extend market protections for medicines are hard to square. “We are puzzled by the Commission’s intentions,” said Yannis Natsis, director of the European Social Insurance Platform, a network of Europe’s social insurance organizations, warning that taxpayers will have to pick up the bill. Meanwhile, health campaigners are also unhappy at the Commission’s “missed opportunity” to tackle obesity and heart disease with junk food taxes — as proposed in an earlier draft of the Safe Hearts Plan. Samuele Tonello, at consumer organization BEUC, said the Safe Hearts Plan “lacks teeth” to better protect consumers from unhealthy foods, and flagged the “urgency of [cardiovascular diseases].”  A MAN ON A MISSION Health Commissioner Olivér Várhelyi has made no secret of his support for industry, and has championed the Commission’s competitiveness mantra since taking office in late 2024. Health Commissioner Olivér Várhelyi has made no secret of his support for industry, and has championed the Commission’s competitiveness mantra since taking office in late 2024. | Thierry Monasse/Getty Images The standout feature of his end-of-year bonanza was the 12-month patent extension in the Biotech Act I — legislation that was split in two late in the day, allowing Várhelyi to meet his end-of-year deadline for the pharma component. The proposal came just a week after the Commission, countries and MEPs clinched a deal to reform Europe’s pharmaceutical laws, in which IP rights were among the last issues to be settled. Updates to the pharma laws were a legacy of the last Commission, whereas the Biotech Act became something of a personal mission for Várhelyi. He repeatedly stressed that there was “no time to lose” in delivering a targeted policy aimed at revitalizing Europe’s flagging biotech industry, which risks being overtaken by competition from China and the U.S. Few commissioners are more vocal than Várhelyi about the premium they place on the competitiveness of European industry.  Industry insiders had heard whispers of his plans to expand IP incentives for the biotech sector, even if Council representatives were dismayed not to have been informed in advance — especially with the ink barely dry on the Pharma Package. That’s not to say pharma is happy with its lot. Industry lobby group the European Federation of Pharmaceutical Industries and Associations (EFPIA) tempered its praise of the Biotech Act, lamenting that the extra year of monopoly rights would only apply to a “limited subset of products.”  The extra year of protection is tied to the Commission’s efforts to locate more pharma research and manufacturing in Europe. It would apply only to new products, tested and at least partially made in Europe.  But the generics sector, which makes cheaper, off-patent drugs to compete with branded medicines, sees the Biotech Act as a further sweetening of what is already one of the world’s most generous IP systems. Lobby group Medicines for Europe claims each year of delayed competition for the top three biologic drugs would cost countries €7.7 billion. Longer IP “will have a dramatic impact on healthcare budgets and delayed patients’ access to essential medicines,” said Adrian van den Hoven, head of the lobby. These kinds of estimates would normally be included in an impact assessment published alongside the proposal, but in its haste to get the Biotech Act out the Commission didn’t do one. POLITICO asked the Commission for an estimate of what the extra year of patent protection would cost. A Commission spokesperson would not give a figure but said they had used the impact assessment for the pharma legislation as a reference. “It is also important to stress that the number of products eligible for an additional year of SPC will be limited to only those that are truly innovative and tested and manufactured in the EU. The approach is deliberately targeted to incentivise genuinely innovative therapies that deliver a clear added value for patients and support European innovation,” the spokesperson said. LUCKY ESCAPE FOR UPFS The big food and drink sectors are on shakier ground with Várhelyi. The commissioner has repeatedly made known his distaste for ultra-processed food, and an early leaked version of the Safe Hearts Plan included new taxes on unhealthy highly processed foods and alcopops. But the final proposal showed the Commission had undertaken a significant climbdown. Concrete targets to tax unhealthy food and drink in 2026 were gone, replaced with a much woollier commitment to “work towards” such a levy. Alcopops were excluded altogether.  Industry lobby FoodDrinkEurope took a far more measured tone on the final plan than its explosive reactions to the earlier leaks, but that may well ramp up again if and when health tax proposals emerge. The text suggests the soft drinks industry may be the Commission’s first target if it does decide to pursue new levies, while UPFs remain in Várhelyi’s sights. “In the next couple of years, we will need to tackle the issue of ultra-processed food much more,” he told MEPs in December. For now, though, the plan seems to have let industry off easy. Health NGOs saw it as a disappointment, given its lack of hard-hitting policies to reduce consumption of UPFs and other unhealthy products. While the pharma legislation is all wrapped up, the Biotech Act still needs to win the approval of EU countries and the European Parliament. For the food and pharma sectors, the proposals set out this month are confirmation they have allies in the Berlaymont.

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BRUSSELS — EU lawmakers have clinched a long-awaited agreement on the bloc’s overhaul of its two decades-old pharmaceutical rules — one of the EU’s biggest health files. The revamp is designed to restore Europe’s competitive edge and give companies more certainty that the EU remains an attractive market, while also pushing for more equal access to medicines across member countries. The deal between the Parliament and the Council was struck at 5 a.m. on Thursday, more than two years after the Commission tabled the proposal, which consists of directive and regulation, in spring 2023.  It marks a major victory for the Danish presidency, which pledged to wrap up the file before the end of the year, and for Health Commissioner Olivér Várhelyi, who has pushed to seal the reform amid growing geopolitical uncertainty.

Europe has a plan to avert drug shortages — to make more of them and tie their contracts to their availability. The Critical Medicines Act, to be presented Tuesday afternoon in Strasbourg by European Health Commissioner Olivér Várhelyi and Commission Executive Vice President Teresa Ribera, will set out plans on medicines procurement, subsidies for drug production and forging new global partners to avoid supply dependencies. Europe is heavily dependent on India and China for supplies of medicines and their ingredients, particularly for cheaper generic drugs. This over-reliance has made EU supply chains more vulnerable, with any disruption potentially leading to shortages in Europe. At the heart of the European Commission’s proposal is an overhaul of procurement rules so that countries don’t simply opt for the cheapest available product and instead prioritize security of supply, according to a draft of the document, obtained by POLITICO on Monday. Under the act, countries would procure drugs based on new criteria — beyond price-only awards — including stockholding obligations, the number of diversified suppliers, monitoring of supply chains, transparency and performance clauses. Countries would also procure from multiple suppliers where appropriate. Where the EU is reliant on a single third country for a critical product, authorities should favor suppliers that manufacture a significant proportion in Europe. The act also includes plans for joint procurement of critical medicines by countries or by the Commission on their behalf. On subsidies, the proposal says countries can financially support “strategic projects” — those located in the EU that will create, increase or modernize manufacturing capacity for critical medicines or their components. In such cases, supplies to the EU market should have priority, and both countries and the EU could fund these manufacturing projects. State support normally goes to “first-of-its-kind” projects, meaning many manufacturers of critical medicines — commonly prescribed, everyday medicines — wouldn’t ordinarily qualify. A new Critical Medicines Coordination Group, featuring two representatives from each country, would share information on manufacturing capacity, projects in line for state support and vulnerability in supply chains. The draft is lighter on detail when it comes to new international partnerships. It says the Commission will “explore possibilities” to diversify supplies of critical medicines, active ingredients and starting materials. The Critical Medicines Act is the Commission’s attempt to tackle manufacturing supply chain vulnerabilities from dependencies on India and China. It is meant to complement the revision of the pharmaceutical legislation to re-establish the bloc’s independence and boost its competitiveness in the pharmaceutical field, while ensuring access to medicines for its patients.

After raising tariffs on steel and aluminum, U.S. President Donald Trump had a clear message for the pharmaceutical industry — you’re next. “It’ll be 25 percent and higher, and it’ll go very substantially higher over [the] course of a year,” he said when asked about semiconductors and pharmaceuticals during a press conference at his Mar-a-Lago residency in Palm Beach, Florida on Feb. 18. He later doubled down on his 25-percent tariff plan for Europe on Feb. 26. Generic drugmakers say that will lead to price increases for American patients, while analysts believe tariffs could also disrupt the delicate drug supply chain at a time when both the U.S. and the EU are trying to boost domestic medicine production after years of relying on cheaper Asian drugs. “Tariffs would affect both sides of the ocean,” Elisabeth Stampa, board chair at Spanish generics and active pharmaceutical ingredients firm Medichem, told POLITICO, underlining that Europe, which is a major supplier of medicines and their ingredients to the U.S., would experience export disruptions. Analysts also warn that counter-measures from Brussels — which the EU has promised — could end up exacerbating the continent’s supply problems. Whatever the consequences, tariffs on the industry would signify a new frontier in a trade war. Pharmaceutical products are normally excluded from tariffs because of a World Trade Organization agreement that dates back to 1994. “The general trend of the last decades has been to lower tariffs on pharmaceuticals globally to promote better access to medicines. Pharmaceuticals have not been at the forefront of recent tariff disputes,” said Justine Fassion, an international trade lawyer at Sidley. Many pharma companies have shrugged off tariff fears because of that text. GSK’s Chief Executive Emma Walmsley name-checked it last month when she said that medicines are typically exempt “in recognition of the fact that it matters for patients.” THE IRISH CASE Ireland’s investment agency, IDA Ireland, is also banking on that convention. Its chief executive Michael Lohan said this week that “one would hope that [WTO protocol on pharmaceuticals] would continue.” The Irish industry is particularly exposed: In 2023, the U.S. was the No. 1 country for Irish goods exports, with the United States buying products worth €54 billion. Of that, some €36 billion related to pharmaceuticals and chemicals. Lohan also played down the risk, saying the point in the supply chain at which a levy was applied was an important consideration. GSK’s Chief Executive Emma Walmsley name-checked it last month when she said that medicines are typically exempt “in recognition of the fact that it matters for patients.” | Leondardo Munoz/Getty Images “If you have an unfinished product, it needs to be finished and completed before it is turned into revenue and sale,” he said. “So the point at which the tariff is applied — is it the point of sale, or the point of transfer as it goes through a supply chain? I think that is a distinct difference.” A spokesperson for Ireland’s Department of Foreign Affairs said in an emailed statement that it “will work with EU partners to measure the impact of tariffs across all sectors, and calibrate our response on that basis.” “Increased protectionism is not in the interests of businesses or the global economic environment, and would not benefit the EU, Ireland or the U.S.,” it added. COUNTING THE COST Larger pharmaceutical companies with a big presence in Europe have also played down their concerns, saying they would be able to absorb the cost of any tariffs. Novo Nordisk CEO Lars Fruergaard Jørgensen said that while the company was “not immune” to the effects of tariffs, it is “confident” the business could weather the storm.  That’s despite Novo’s producing all of its weight-loss drug Wegovy’s active pharmaceutical ingredient, semaglutide, in Europe, from where it is exported to the United States. But smaller companies say they’re concerned about the potential impact on their business. “Such uncertainty complicates investment decisions and strategic planning, making it essential to prepare for various scenarios,” Jacopo Andreose, CEO at Angelini Pharma, told POLITICO in an email. The Italian firm makes products including eye drops and heat pads. The U.S. is the largest export market for European pharmaceutical products, accounting for 33 percent of the sector’s exports, he said, adding that “any trade barriers would impact supply chains, increase costs, and ultimately limit patient access to essential medicines” in the U.S. “Moreover, tariffs would drive up pharmaceutical prices in the U.S., affecting both patients and the entire U.S. health care sector.” “The climate of uncertainty is already damaging an EU that is struggling with competitiveness,” he added. The continent’s drug shortage problem complicates any decision by Brussels to impose countermeasures on the U.S. | Carlos Alvarez/Getty Images And pharma isn’t an agile industry. “You don’t move manufacturing overnight,” said Fassion, the Sidley lawyer. “Manufacturing in the pharma industry is subject to various regulatory constraints, so it can take time before you can move production from one country to another.” RETALIATION CONUNDRUM The big question is — would the EU retaliate? The European Commission said earlier this month it would react “firmly and immediately” to any levies, but when it comes to drugs, European patients could end up in the cross-hairs. Both the EU and the U.S. are drawing up measures to bolster their domestic drug production, but both are currently hugely reliant on Asia for medicines and their compounds, especially cheaper generics. The U.S. has one advantage: When supply issues arise in China or India, “pharmaceuticals tend to go to the U.S. over the EU because they pay more,” said Diederick Stadig, health economist at Dutch bank ING. Medicines for Europe, a lobby group for the continent’s generics sector, wants to use the moment to work together. “Europe or the U.S. (alone) will struggle to build competitive manufacturing,” its Director General Adrian van den Hoven said in an email. “We would be happy to work with the U.S. industry and government to tackle jointly concerns over dependence.” He added that Europe is a “major supplier” of generic medicines and active pharmaceutical ingredients.  Nevertheless, the continent’s drug shortage problem complicates any decision by Brussels to impose countermeasures on the U.S. “I assume the Commission is thinking about this, thinking ahead and preparing counter-tariffs,” Belgium’s Health Minister Frank Vandenbroucke said at a Polish presidency event in Brussels this month.  He cautioned: “I think we should be very careful because of unintended impacts on the supply chain.” In many European countries the price is fixed, so if a tariff is levied the product may simply disappear, he said. “I think we should be very careful.” Aging populations in Europe are creating increasing demand for medicines, and cheaper medicines in particular, said Stadig, the ING economist. But tariffs generally drive prices up. “This, and shortages, may inform the EU response when it comes to tariffs. This poses many complex questions to policymakers,” he said.  “I wouldn’t want to be the person making that decision.” Helen Collis contributed reporting to this article.

PARIS — Could it be a case of all bark but no bite? Paris has threatened to use all its heft to ensure the sell-off of part of Sanofi’s over-the-counter business remains producing certain medicines in France. But, during a visit to Sanofi’s factory in Normandy on Monday, France’s economy and industry ministers seemed more focused on reassuring workers and citizens that they had little to fear from the takeover by American fund CD&R, than threatening to block the deal. In previous controversial takeovers, France’s powerful economy ministry didn’t hesitate to threaten a veto in the name of French interests. This time things looked different. Following a cross-party backlash against the deal, the two ministers traipsed out at the Lisieux paracetamol factory and announced alongside Sanofi’s top brass that the American takeover should have no impact on French jobs and medicine supplies. “We will be asking for extremely precise, strong and intangible conditions regarding what happens next,” said Economy Minister Antoine Armand as he visited the paracetamol factory with Junior Minister for Industry Marc Ferracci on Monday. The economy ministry told reporters that Paris will launch an investment screening procedure into the planned sale of Sanofi subsidiary Opella to the American private equity firm for €15 billion. The government is seeking to conclude a deal between Sanofi, CD&R and the state, to force the buyer to maintain jobs and investments in France. “We will be asking for extremely precise, strong and intangible conditions regarding what happens next,” said Economy Minister Antoine Armand as he visited the paracetamol factory. | Lou Benoist/AFP via Getty Images The two ministers promised to keep production of over-the-counter drugs in France by threatening economic sanctions if those commitments are not respected. And, if needed, the state could also buy up shares of Opella and influence the company’s decisions as a shareholder, Armand added. In a sign that Sanofi and the government are on the same page, Armand and Ferracci visited the factory with Sanofi Chair Frédéric Oudéa, a heavyweight financial services veteran who, until last year, was CEO of French bank Société Générale for 15 years. French President Emmanuel Macron also backed up this position, when asked at a separate event on Monday. “I would distinguish two things: activity in France and capital ownership,” he said, referring to commitments to maintain jobs, production and medicines in France. “On capital ownership, the government has the instruments to guarantee that France is protected. And so it’s up to the government to look at that.” But workers aren’t buying it. Employees at the Lisieux factory, which produces paracetamol, are on strike as they oppose the deal which they fear could threaten their jobs and France’s medicine supply. And French politics is on their side. On Friday, politicians from the whole political spectrum reacted with outrage to the news that Sanofi was in talks to sell a majority stake of Opella to CD&R, de facto putting Sanofi’s production of over-the-counter drugs into American hands. Big Pharmas selling off their over-the-counter drugs businesses isn’t a new concept. Back in 2018, Sanofi off-loaded its cheaper medicines business Zentiva to a U.S.-based private equity firm for €1.9 billion. The difference this time aside from the location — Zentiva was based in the Czech Republic, while Opella is in France — is that French citizens still recall harrowing memories of drug shortages from the pandemic. STRATEGIC AUTONOMY TESTED The omnipresent yellow boxes of Doliprane, the brand name of Sanofi’s paracetamol, are the most sold drug in France. Shortages of medicines, including paracetamol, during the coronavirus pandemic marked French people and fueled Paris’ push for more strategic autonomy. “Doliprane will continue to be produced in France, and not just because it’s a drug that’s popular with all French people, not just because it’s an industrial success story, but because our country’s sovereignty and the supply of sensitive and critical medicines is at stake,” Armand promised. France has been the front-runner in the European push to reshore medicine production back to the Continent and has given generous subsidies to bring to France the full supply chain of key medicines like paracetamol. The country currently produces paracetamol only thanks to the imported active ingredient. It is planning to produce the active ingredient as of 2026 in a new French factory to be opened by Seqens, also controlled by an American fund, that will supply Opella. An economy ministry official said the government will require the American buyer to keep the engagements with suppliers for several years and to buy the active ingredient from Seqens. While promising to do everything to keep medicine production in France, the French government doesn’t sound hostile to the deal. In the past, the French economy ministry publicly expressed its opposition to transatlantic takeovers, from supermarkets to nuclear components, killing off those deals. This time, however, the tone is very different; the government described the buyer as “a serious investment fund that presents positive prospects for the overall development of Opella as well as for the sites located in France.”