Update on HERA: A New Role for the EU, New Opportunities for Companies

Introduction

HERA is the EU’s Health Emergency Preparedness and Response Authority, on which we already published an article on 21 September last year. Please click the following link to access this article: HERA: what business opportunities behind the new EU health authority?.

HERA is built on two pillars: first of all, the Commission Decision establishing HERA, and secondly, the Regulation the Joint Procurement of Medical Countermeasures in the Event of a Public Health Emergency. On Monday 20 December 2021, the Council of the EU reached a political agreement on a legislative proposal for this second pillar. The final text of this proposal will be submitted to the Council for adoption in the first months of 2022 and major changes are unlikely to occur.

By contrast, the establishment of HERA symbolises a change in the EU’s capacity in the field of public health. The mandate of HERA represents a shift towards actual, ‘hard’ governance in the field of public health. It is a departure from the previous institutional arrangements. Historically, the EU has only had limited capabilities in the field of public health. The EU typically engages with public health in two ways: through ‘soft’ governance, and through the ‘Health in All Policies’ principle. Illustrations of ‘soft’ governance are the exchange of best practices between Member States and the gathering and dissemination of scientific knowledge. The ‘Health in All Policies’ principle is expressed in Art 168 of the Treaty on the Functioning of the EU: “a high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities.” This means that every law, policy and strategy of the EU should pay adequate attention to preventing or mitigating negative effects on human health.

This article will take a closer look at the two pillars on which HERA is built, and analyse the business opportunities that it offers.

Pillar one of HERA: Commission Decision establishing the Health Emergency Preparedness and Response Authority

The first and primary pillar of HERA is the Commission Decision establishing the Health Emergency Preparedness and Response Authority. This Decision, adopted by the Commission on its own, creates HERA, and outlines its mission, composition, governance, tasks and responsibilities. All of HERA’s tasks must be executed in close cooperation with Member States. After all, health remains primarily a national competence.

Its tasks are as follows:

1. Assessment of health threats and intelligence gathering relevant to medical countermeasures;
2. Promoting advanced research and development of medical countermeasures and related technologies;
3. Addressing market challenges and boosting the Union’s open strategic autonomy in medical countermeasures production;
4. Swift procurement and distribution of medical countermeasures;
5. Increasing stockpiling capacity of medical countermeasures;
6. Strengthening knowledge and skills in preparedness and response related to medical countermeasures.

Pillar two: Council Regulation establishing a framework for the supply of crisis-relevant medical countermeasures in the event of a public health emergency

For tasks d. and e. of pillar one, HERA relies heavily on Member States. This is why a second pillar is needed to support HERA, namely, the Council Regulation on which political agreement was reached on 20 December 2021.

This Regulation only involves the European Parliament as an observer. In fact, the legal basis on which the Regulation is founded, Art. 122(1) TFEU, does not even require the Parliament to approve the regulation.

The contents of the Council Regulation are as follows:

1. The establishment of a Health Crisis Board;
2. The monitoring, procurement and purchase of crisis-relevant medical countermeasures and crisis-relevant raw materials; (connected to point D of the Commission Decision on HERA, see above)
3. The activation of emergency research and innovation plans, including the use of Union-wide clinical trial networks and data sharing platforms (connected to points A and B of the Commission Decision on HERA, see above);
4. Emergency funding and financing (connected to points D and E of the Commission Decision on HERA, see above);
5. Measures concerning the production, availability and supply of crisis-relevant medical countermeasures, including the establishment of an inventory of crisis-relevant production and production facilities, raw materials, consumables, equipment and infrastructure, and including measures aiming at increasing their production in the Union (connected to points d. and e. of the Commission Decision on HERA, see above).

The health emergency framework may be activated by the Council without interference by the European Parliament, acting on the basis of a proposal from the Commission.

Upon its activation, the Health Crisis Board (HCB) will be organised. This HCB is co-chaired by the Commission and the rotating Council president. It comprises a representative of each Member State. The EMA and ECDC are observers. The HCB is intended to coordinate the actions of health emergency-relevant institutions: the European Commission (HERA), Member States, Council, and other relevant EU agencies/bodies. For each of the tasks listed above (except, of course, A), the Commission (HERA) must consult the HCB. The HBC will help he Commission to inform HERA’s action and drive it. Therefore, it is both a political and a technical body.

The Commission (HERA) shall, after seeking the advice of the HCB, draw up a list of crisis-relevant medical countermeasures and raw materials. The Commission (HERA) shall also monitor their supply and demand. When Member States take steps to procure or support manufacturing of crisis-relevant products, they may do so, but they must inform and consult the HCB.

Member States may choose to be represented by the Commission, acting as a central purchasing body for crisis-relevant medical countermeasures. A negotiating mandate shall be established by the Commission on their behalf. This includes not only direct procurement, but also Advance Purchase Agreements (APAs)and the activation of ‘ever-warm’ production facilities. Where the Commission intends to conclude a contract, it must inform the participating Member States. They also have the opportunity to express their comments on the draft contracts, which the Commission should take into consideration.

The Commission shall, after seeking the advice of the HCB, keep an inventory of supplies. Suppliers of crisis-relevant medical products will have to notify the Commission of their stocks and manufacturing capacity. The Commission shall, in turn, inform the Council and the European Parliament of its findings. This not only applies to crisis-relevant medical products, but also to raw materials and related infrastructures. The Council Regulation defines that, if a risk to medical product supply chains is identified by the Commission, measures to improve or re-organise supply chains will be implemented by the Commission together with the Member States.

The new role of the EU

The EU is taking a much more active, ‘hard’ governance role with the introduction of HERA. It is clear that the EU’s competences in the field of public health are no longer limited to gathering scientific knowledge, promoting best practices and avoiding harm to human health in its Single Market policies. During the current and in future health emergencies, the EU will be taking an active managerial role in the field of public health and act as a central purchaser of crisis-relevant medical products.

At the same time, the image of a more active and influential EU in the field of is complicated by two factors. The first is the fact that the Member States agreed to maintain strong oversight and steering power through the HCB and the HERA Board. The role of the European Parliament will be limited to monitoring HERA, and observing the decisions of the HCB.

The second factor is the fact that the new institutional arrangements are meant to come into force only during public health emergencies. Health emergencies are seen as a threat to public security. This justifies certain exceptional measures that would not be taken during non-emergency situations. In this case, the EU’s involvement in the domain of public health is the exception, while the pre-pandemic situation remains the general rule. On the one hand, this ‘public security’ perspective on health builds on the EU’s strengths. It takes full advantage of the EU’s ability to coordinate the actions of Member States and uses the EU’s capacity to manage the Single Market in order to improve vital medical supply chains. On the other hand, the ‘public security’ perspective on public health imposes certain limitations on the EU’s ability to act in the domain of health. The institutional arrangements mean that EU may only act on large, immediate threats to public health. Latent, smaller or ‘slow’ threats to public health, which are typically addressed through preventative measures or public health campaigns, will not fall within the remit of HERA.

Business opportunities

Now that the EU is taking a new role in the field of public health, many businesses have come to the realisation that they should anticipate the opportunities and challenges of the new situation.

The size of HERA’s budget automatically creates sizeable business opportunities. As outlined in the previous article on HERA, the new agency will have a budget of EUR 50 billion for the financial period 2022-2027. This budget is divided in two parts: an annual budget of slightly above EUR 1 billion/year and another EUR 24 billion coming from already existing programmes. On top of that, EUR 20 billion from national coffers will be used for projects aimed to improve national preparedness.

There are challenges too. Many businesses have not yet investigated the potential effects and opportunities created by HERA. Businesses should deepen their understanding of the EU’s capabilities in the domain of public health, in order to obtain European advance purchase agreements. In addition, the legal structure described above means that a different approach to lobbying is required when engaging with HERA.

Lykke Advice can help you with this. Our team has years of experience in lobbying the various EU institutions. Our services can support you in setting up and expanding your network in Brussels, to stay up to speed with the future initiatives under HERA and be ahead of the curve. ­­­Feel free to reach out to us for more information.

For further details, the text of the proposed Council Regulation can be found here: Proposal for a Council Regulation