EU plan to shift drug production to Europe could raise prices at first
The EU's plan to bring drug production back to Europe may slightly raise prices initially, but stronger supply chains could offset that rise, Estonian officials say.
EU health ministers have agreed on new rules prioritizing medicines made in Europe, aiming to reduce shortages during crises. If approved, the move would return production to the continent and improve supply security.
Kärt Veliste, head of pharmaceutical and medical device policy at the Ministry of Social Affairs, said efficient production — via large factories, automation, government support and a robust regulatory framework — may prevent major price hikes.
"In some contexts, proximity of production and a stable supply chain may actually reduce costs," she said. "Price increases linked to logistics and supply issues, for example, will be easier to avoid."
Better supply security could also cut the need to source often more expensive substitute drugs during shortages.
"In the long run, this may partially or fully offset the initial rise in prices," Veliste said. And when medicines are more readily and consistently available, "patients get better treatment, and doctors and pharmacists spend less time managing supply issues."
The changes would affect only essential drugs — those considered critical across all EU member states, the shortage of which could cause serious harm to patients.
The regulation provides a legal framework for joint procurement, pooling demand to improve buying power. Veliste said Estonia could even secure better deals, since higher volumes encourage manufacturers to offer improved terms.
Member states will still have flexibility if competition is limited or prices rise too high. "Thus, it's not inevitable that reshoring — bringing production back to Europe — will drive up healthcare costs," she said.
Drug wholesaler: Joint procurements double-edged sword
Mari Krass, CEO of drug wholesaler Magnum AS and vice president of the European Healthcare Distribution Association (GIRP), said joint procurements work well in crises, like the COVID-19 pandemic, to secure vaccines for all EU countries.
But outside acute situations, she continued, joint procurements can actually limit access. In Estonia, COVID vaccines are currently only available to patients covered by the EU's large-scale purchase.
"Due to the EU's joint procurement, manufacturers aren't selling extra doses for the Estonian market," she said.
Even so, Krass said strengthening European production — especially of raw materials — is the right long-term move, as lessons from the COVID pandemic and the current security environment have shown the need for resilient supply chains.
She noted local production exists in Europe, though Estonia's output is modest. "But Estonia is part of the EU, and better availability in Europe will certainly benefit Estonian patients as well," Krass added.
The planned EU changes are a long-term process affecting the U.S., Asia and other regions. Much of today's pharmaceutical ingredients, and some over-the-counter (OTC) medicines, still come from Asia. According to the Magnum CEO, the U.S. wants to narrow the price gap with Europe.
Krass said the management of medicine stockpiles will be critical. National and EU stockpiles need to be sensible; excessive or short shelf-life stockpiles could otherwise worsen access and create waste.
"Every medicine should reach a patient, not sit in warehouses until it expires," she said.
At the ministry, Veliste stressed the regulation is not yet final. The European Parliament is still forming its position, with three-way talks between the European Commission, EU Council and European Parliament to follow.
Krass added that European wholesalers are closely monitoring the regulation and actively participating in the process through GIRP and Estonian industry organizations.
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Editor: Aili Vahtla
