I. Introduction
The COVID-19 pandemic has caused an unprecedented demand for health goods and services, requiring Member States to ensure access to medicines, medical equipment and devices and relevant technologies in a context of disrupted demand–supply chains. At the beginning of the outbreak, a shortage of personal protective equipment (PPE) and ventilators deepened the already harsh crises facing several (if not all) national health systems, making it even more difficult to treat surges of critically ill patients.Footnote 1 For example, it has been reported that a lack of access to appropriate PPE resulted in high rates of infection and death amongst Italian, Spanish, Irish and UK healthcare workers.Footnote 2 It has never been so urgent for Member States to pool their purchasing power in order to secure timely and fair acquisitions of appropriate medical devices as well as medicines and virus-testing kits.
At the beginning of April 2020, the Commission recognised that the pandemic required “swift and smart solutions and agility in dealing with an immense increase of demand for similar goods and services while certain supply chains are disrupted”, and quickly provided guidance on how Member States can best secure urgent medical supplies.Footnote 3 The Guidance acknowledged the need to exploit all of the flexibilities of the European Directives on Public Procurement,Footnote 4 with a view to allowing “public buyers to purchase goods and services directly linked to the COVID-19 crisis as quickly as possible”.Footnote 5 It also sought to highlight which options “are available under the EU public procurement framework for the purchase of the supplies, services, and works needed to address the crisis”.Footnote 6 Since the beginning, it was clear, however, that those flexibilities were not sufficient to tackle the limited purchasing power yielded by individual Member States. The Guidance, hence, not only offered clarity on the use of accelerated urgent national public procurement procedures,Footnote 7 but also encouraged Member States to participate in joint procurement actions. In a similar vein, the Communication on the Global EU response to COVID-19 also highlighted the intention to invite Western Balkans countries to join the EU’s Joint Procurement Agreement (JPA) to enable them to participate in EU joint procurement processes for medical equipment.Footnote 8
Within the framework of a coordinated EU health response, together with the “rescEU stockpile”,Footnote 9 adopted under the EU Civil Protection Mechanism,Footnote 10 the JPA has emerged as a core instrument to support a pan-European purchasing of PPE, ventilators and devices necessary for coronavirus testing. The JPA was introduced in 2014 in order to improve Member States’ purchasing power for vaccines and medications in preparation for and during serious cross-border health crises, after the H1N1 pandemic influenza shone a spotlight on the inefficiency of Member States competing against each other for scarce medical resources, resulting in stark price increases.Footnote 11 In the aftermath of the H1N1 pandemic, the European Council requested the Commission to commence the preparations for conducting centralised procurement actions, focusing on the procurement of vaccines in the context of a future pandemic. On the basis of Article 168(5) TFEU,Footnote 12 Decision 1082/2013/EU on serious cross-border threats to health was then adopted. That Decision includes a specific provision allowing the EU institutions and the Member States to engage in joint procurement procedures “with a view to the advance purchase of medical countermeasures for serious cross-border threats to health”.Footnote 13 As noted by Azzopardi-Muscat et al, the JPA was conceived of as an “instrument aimed at encouraging [Member States] to increase forms of health system cooperation on a voluntary basis to ensure better public health protection at European level”.Footnote 14
After the COVID-19 pandemic, which has been consistently referred to as the most serious global health emergency since the Spanish Flu,Footnote 15 the time seems ripe to evaluate whether the JPA has proven to be an effective tool in response to the COVID-19 pandemic and to understand whether the use of this voluntary mechanism should be further extended to support the development of a European Health Union. In that regard, we contend that improving a centralised procurement mechanism via the JPA would carve out an important role for the EU in ensuring that all EU citizens have equitable access to high-quality and affordable healthcare. This article will also tentatively suggest that the JPA should be used to procure health technologies, such as innovative health medicines and medical equipment, to prevent a future health crisis. Further to these introductory remarks, we will first recall the core legal tenets of the JPA (Section II), which have been largely understudied. We will then survey and critically discuss the use of the JPA during the current pandemic (Section III). We will go on to examine the extent to which the JPA might support the development of a European Health Union (Section IV). Recent developments in the response to the COVID-19 pandemic have intensified the need to revise the way healthcare is delivered. As other articles in this special issue suggest, it has never been timelier to review the EU’s commitment to developing a broad and deep healthcare policy. In that vein, the concluding section of this article assesses whether the JPA should be extended to support the functioning of a European Health Union, and it will consider the implications of an extended use of JPA (Section V).
II. The EU JPA: an overview
As mentioned above, the JPA, provided for in Article 5 of Decision 1082/2013/EU,Footnote 16 is a collaborative mechanism aimed at securing high-quality public medical services and goods, while ensuring the efficient use of public finances in preparation for and during instances of cross-border health crises. This provision refers to medical countermeasures, defined as any medicines, medical devices or any other related goods or services that are aimed at combating serious cross-border threats to health. The latter term is defined in Article 3 lett. g) of the Decision as “a life-threatening or otherwise serious hazard to health of biological, chemical, environmental or unknown origin which spreads or entails a significant risk of spreading across the national borders of Member States, and which may necessitate coordination at Union level in order to ensure a high level of human health protection”. This broad definition is commonly used in governance, public health and security studies.Footnote 17
As noted in the Explanatory Note,Footnote 18 the JPA itself “is not an international treaty, in the meaning of the Vienna Convention on the Law of Treaties”, and it is not a pure EU legal act. It is an agreement, concluded between the Commission and the participating Member States that implements “a provision of a legislative act, namely, Article 5 of Decision 1082/2013/EU”. However, interestingly, Article 5 is not the JPA’s legal basis. Rather, the JPA is “considered by the Commission as a budgetary implementing measure of Decision 1082/2013/EU”. It is worth recalling that the JPA is governed and operated by two Steering Committees: the Joint Procurement Agreement Steering Committee (JPASC) and the Specific Procurement Procedure Steering Committee (SPPSC).Footnote 19 The JPASC, composed of representatives from all signatories to the JPA, is tasked with the administrative matters relating to the agreement. The SPPSC is charged with the organisation of specific procurement procedures and is composed of participating members of planned competitions and the European Commission.Footnote 20 In spite of such a sui generis nature, the JPA is fully governed by EU law and is under the jurisdiction of the Court of Justice of the European Union (CJEU).
The Commission has been keen to highlight that the JPA does not entail the exercise of “the public law powers related to health policy conferred under Article 168 TFEU”, but that it is an arrangement that entails executive functions. The JPA has a primarily administrative function in that it provides for the Commission to determine and manage the procedures for concluding aggregated medical supplies and medical countermeasures contracts,Footnote 21 streamlining the procedure, but also, as Sanchez-Graells contends, generating buying power.Footnote 22 Furthermore, from a merely legal perspective, being voluntary and complementary to national procurement procedures, the JPA still falls squarely within the scope of pure “incentivisation” measures, and it could be considered somewhat exemplary of the EU’s supporting role in the health field. However, it is evident that the JPA, being a sui generis legal instrument rooted in Article 168 TFEU, demonstrates the reach of the latter legal basis. Hervey and de Ruijter in this special issue,Footnote 23 as well as Purnhagen et al, suggest that EU competences to support and coordinate Member States’ action and “resource activities” in the health field are significant.Footnote 24 In that vein, the JPA can be seen as another way to support a more collaborative pan-European system of healthcare (or to create one). It complements other financial mechanisms, such as the “EU4Health” initiative adopted to boost the EU’s preparedness for major cross-border health threats. Furthermore, the JPA provides evidence that the teleological approach to cross-border health has a deep economic backlash and tallies with the exercise of (extremely wide) Internal Market powers.Footnote 25
In practice, the JPA assists participating Member States in accessing high-quality, in-demand medicines and medical supplies by organising procurement at a regional level. EU funds are not used to purchase the supplies on behalf of the participating Member States. Instead, the JPA is a centralised and quick procurement mechanism that facilitates the purchasing competition, including managing the call for competition notices and the acceptance and evaluation of submitted bids. Participating States can then purchase from the concluded contracts, but only if they had agreed to participate in the centralised agreement at the launch of the procurement procedure. At present, a total of thirty-seven countries, which include EU Member States, European Economic Area (EEA) countries and candidate countries, have signed the JPA to procure medical countermeasures.Footnote 26
It is evident that an overriding objective of the JPA is to secure equitable access to medical supplies at a reasonable price for participating countries. It is well known that competition in the pharmaceuticals and medical technologies market is limited due to the mergers of global companies in the 1990s.Footnote 27 Furthermore, EU multilateral and bilateral trade deals limited the negotiating power of individual States and paved the way for the now embedded use of set “managed entry agreements” (MEAs).Footnote 28 Hence, individual Member States have limited purchasing power when procuring patented or innovative medicines and technologies or limited in-demand medicines, which often results in Member States procuring medical supplies at a price that is significantly higher than the market cost.Footnote 29 The JPA has been conceived of as a tool to overcome those issues by strengthening buying power, relying on the sharing of best practices to improve the transparency of pricing structures and ultimately deriving benefits from risk-sharing and economies of scale.Footnote 30 Sánchez-Graells reminds us that, while the JPA boosts participating States’ buying power, securing financial savings and access to in-demand medicines, it is “highly dependent on the supply-side structure of the relevant markets”.Footnote 31
It is also worth recalling that the JPA provides for the distribution of supplies on a needs basis.Footnote 32 Centralised procurement actions must not result in a distortion of competition or a restriction of trade, and they must not create a discriminatory direct financial impact on the budgets of non-participating Member States.Footnote 33 Concluded contracts may not be used to create a barrier to trade or hinder access to the procured medical supplies, and as such, no exclusivity agreements may be included in the terms and conditions. Indeed, participating Member States may independently procure similar supplies simultaneously to the centralised contracts.Footnote 34
Critics of centralised procurement argue that large aggregation of contracts can often result in the awarding of extremely high-value contracts to single suppliers or to a small number of large multinational companies, who have often submitted the lowest-priced tender.Footnote 35 Single-supplier contracts may, thus, hinder competition in the marketplace, as competitors and small innovative companies are essentially locked out of a public market for a set period, which is generally around four years.Footnote 36 While these concerns should not be dismissed and should be addressed in the centralised acquisition policies and procurement activities, there are many benefits to the use of the JPA. Firstly, since the H1N1 outbreak demonstrated Member States’ inability to access cost-effective medical supplies and vaccines,Footnote 37 the JPA enhances smaller States’ buying power and assists with the fair distribution of in-demand medicines and medical supplies during times of health emergencies. Participating Member States also benefit from reduced administrative costs and reap financial benefits from economies of scale secured by suppliers. While an unintended outcome of the use of the JPA is its potential to curb protectionist purchasing, incentives for protectionist purchasing will be diluted if the agreement is successfully used to achieve cost-savings through competitive cross-border tendering and price convergence.Footnote 38 Secondly, while suppliers of medical equipment and the pharmaceutical sector may have diverging opinions on the use of centralised contracts, the JPA may provide economic operators with an opportunity to expand their customer base. Even though the pharmaceuticals sector may lose out on the financial benefits gained from the use of individual pricing agreements, the centralised contracts open or create new opportunities for interested economic operators.Footnote 39 In particular, small innovative start-ups might benefit from the centralised approach. However, this is only so if it is managed in a strategic manner; namely, through the division of larger contracts into smaller, more manageable lots.Footnote 40 Thirdly, participating in the agreement requires strong political trust and willingness to share expertise and skills.Footnote 41 Continued use of the JPA will embed mutual trust between signatories, as the mechanism is used to pool resources for the collective benefit.Footnote 42
III. Use of the JPA in response to the COVID-19 pandemic
To date, the centralised procurement actions have focused on the procurement of vaccines, antivirals and medical countermeasures for serious cross-border threats to health.Footnote 43 Since February 2020, the Commission launched six procurement competitions to purchase medical supplies and equipment.Footnote 44 Two procurement competitions related to PPE were conducted in February and March. The first one did not lead to the awarding of a contract.Footnote 45 The second tendering attempt was, by contrast, successful, and a framework agreement was awarded in March with an estimated budget ceiling of €97 million.Footnote 46 A framework agreement was awarded to two companies, with twenty Member States participating in the procedure.Footnote 47 In March, three further competitions were concluded for ventilators, goggles, face shields, masks and laboratory equipment, including testing kits. Up to twenty-six Member States are participating in these framework agreements, with a budget ceiling of over €2.8 billion.Footnote 48 A final competition for intensive care unit medicines was initiated in June and is ongoing.Footnote 49 On the whole, the Report on the EU budget, released in June 2020, stated that joint procurement for gloves and coveralls (for a maximum amount of €1.4 billion), eye and respiratory protection (for a maximum amount of €150 million), ventilators/respirators (for a maximum amount of €790 million) and laboratory equipment was concluded.Footnote 50
It was already highlighted that increased voluntary collaboration between countries in the procurement of health technologies enables cross-country sharing experience and strengthens bargaining power, mitigating overly high transaction costs by pooling skills and capacities and through joint negotiations.Footnote 51 The COVID-19 pandemic has shown that those strengths have been appreciated by Member States, and there is a growing acceptance and use of centralised cross-border procurement in the health sector. This is also evident in the participation of countries that were initially reluctant, such as Poland and Sweden. The number of signatories to the JPA has increased from six to thirty-seven since its adoption in 2014.Footnote 52 There have been no legal challenges to the CJEU to date on the awarding and management of contracts organised, which would loosely indicate that the agreement is not endangering the integrity of the Internal Market and is not perceived of as a challenge to the organisation of national healthcare systems, nor to the public procurement structures.Footnote 53 While the States have the right of withdrawal at any time and to pursue national procurement strategies, the pandemic seems to show a convergence towards such a centralised mechanism. This is possibly an important step towards fostering cooperation in future coordinated health sector activities.
Furthermore, one of the key characteristics of the JPA is its transparent nature:Footnote 54 calls for competition notices are freely and openly advertised on the Official Journal; interested economic operators are provided with sufficient information in the call for competition notices to assess whether it is appropriate to tender for the contract;Footnote 55 selection, evaluation criteria and the award procedure are made fully available to interested companies;Footnote 56 and, at the end of the competitive process, a contract award notice is published in the Official Journal.Footnote 57 Furthermore, additional information on the cost and contract type is published on the Commission’s official website. Transparency supports trust in the centralised procurement, alongside being necessary (albeit arguably insufficient) to ensure the accountability and legitimacy of the procurement decision-making.
Even though some scholars suggest that there are operational gaps that require urgent reasoning and intervention by Union institutions,Footnote 58 we contend that procedures set out in the JPA have facilitated a balance between promoting competition in the marketplace and securing reasonable-cost and high-quality medical supplies and services.Footnote 59 All of the recent COVID-19 response contracts were awarded to more than one supplier, and the contract for laboratory equipment was divided into twenty-nine separate lots. Subdividing large contracts into manageable sections offers smaller companies and innovative start-ups the opportunity to bid for a lot of the overall contract. Furthermore, the competitive decision-making processes and the administrative management of the procurement competitions appear to enhance price transparency. At this time, there is little evidence to demonstrate how the JPA promoted access to the relevant medical supplies required to manage the COVID-19 pandemic, and, as already noted by Sdanganelli,Footnote 60 it will be essential to gather data on this point. Nonetheless, there is anecdotal evidence that the joint procurement of masks, gloves, goggles, face shields and surgical masks provided relief to Italy and Spain, the countries first affected by the pandemic.
While this section has focused on the administrative actions of the JPA, its overall political and economic importance within the EU should not be underestimated. Procurement plans are “at the frontline of countries’ responses to the COVID-19 crisis”.Footnote 61 Initial procurement responses to the pandemic in February were less than desirable, with countries engaging in temporary nationalistic market behaviours and delayed use of the JPA. Improvements were quickly made, and nationalistic behaviours were replaced with acts of solidarity amongst Member States, which respond to the principle of sincere cooperation enshrined in Article 4 TEU.Footnote 62 Participating countries to the JPA pooled their purchasing power to leverage market control in order to secure acutely scarce PPE, diagnostics and clinical management. Early research indicates that public bodies that procured medical supplies at a local or national level were at greater risk of price gouging and not securing access to crucial medical goods.Footnote 63
The JPA stands out as an example of sincere cooperation, while global solidarity on the equitable distribution of scarce medical supplies has been far less evident. There have been worrying reports that the USA has purchased significant volumes of the drug remdesivir – a drug that clinical trials have shown, if intravenously administered, can help shorten hospital recovery times for patients suffering from COVID-19 – with that de facto preventing of other States from accessing that medicinal product.Footnote 64 In particular, in June 2020, the US Department of Health and Human Services announced that it concluded a significant contract with Gilead, the company that produces remdesivir, securing all of the company’s production of the drug for July and 90% of its production in August and September.Footnote 65 Other nations’ and regions’ public procurement actions were stalled or delayed due to the US’s efforts to “obtain political advantage”.Footnote 66 In fact, European Member States have only been able to access new supplies of remdesivir since August 2020.Footnote 67 The US’s unwillingness to support global equitable access to in-demand medicines and medical equipment is further witnessed by its non-participation in emergency COVID-19-related international measures.Footnote 68 Atkinson et al claim that the US’s dominant purchasing adversely affected markets “in ways that caused avoidable shortages of critical goods and supplies”.Footnote 69
As waves of the pandemic continue to wash over the world, recently, the World Health Organization (WHO) at the request of the United Nations (UN) Secretary-General and in support of the UN Crisis Management Team, established a Supply Chain Task Force that implements the COVID-19 Supply Chain System (CSCS) and oversees a coordinated approach of the procurement of supplies to ensure maximum market access.Footnote 70 While this is an important step at the global level, the role of the JPA within the EU and, more broadly, in the EEA, remains key. Global measures are important, but they are unlikely to remove the difficulties individual countries may face in securing scarce medical supplies, and we contend that the JPA will continue to play a vital role in securing competitive access to medical goods and services as it has been doing in the last few months.
IV. The JPA as a stepping stone towards a European Health Union?
After a short overview of the JPA and a critical survey of its use during the COVID-19 pandemic, we now move on to question whether the current scope and administrative functions of the JPA are sufficient or could be extended further, and whether this would be possible under the current legal basis of Article 5 of Decision 1082/2013/EU. As it stands, the JPA framework and legal basis focus on the organisation for the procurement of vaccines and medications in the preparation for and management of cross-border health crises. A broad interpretation of what constitutes serious cross-border threats to health could possibly support centralised procurement for the acquisitions of health technologies, aimed at managing (and possibly preventing) another pandemic (should it occur) and increasing the degree of interoperability between healthcare systems. Such a broad interpretation, in light of Article 168 TFEU as a whole (but, arguably, also in light of Article 35 of the Charter of Fundamental Rights), would inevitably give rise to risks of challenge in front of the CJEU. It would hence be important to build on the momentum and the convergence achieved through the current JPA to enact another decision (or to amend the current one) in order to allow for the purchasing of advanced health technologies.Footnote 71 At the time of its approval, “the strong normative public health basis for action” was the main driver that led to a “quasi-unanimous agreement to the principle of pursuing a mechanism for joint procurement for cross-border threats”.Footnote 72 In the current context, where we have fragile national healthcare systems, the pandemic has heightened the need for European (and global) collaboration.Footnote 73 Joint purchase of those technologies would support the digital transformation of national healthcare systems,Footnote 74 would increase cross-border cooperation and would complement the realisation of the objectives pursued by the Patients’ Rights Directive. Collaborative cross-border healthcare will also assist with reducing the costs associated with new technologies: it can be conducted in a manner that ensures that the technology can be developed and updated in partnership with the participating Member States. More digitally integrated healthcare would also improve access to healthcare for vulnerable groups,Footnote 75 which have been particularly affected by COVID-19.
Even if an extended JPA remains voluntary, and hence fully dependent on the political will of the Member States, the fear of future pandemic shocks might prompt the Member States to prepare in advance and enhance their coordination. As noted above, the COVID-19 experience seems to show that participating Member States and contracted economic operators benefit financially from the potential economies of scale and that extended use of centralised procurement can limit suppliers’ discretion in price variances between States. It is clear, however, that in order for Member States to voluntarily agree to centralised procurement, there needs to be a level of trust and confidence in the process used to ensure that the centralised procedures will provide improved costs and access to a wider variety of medical supplies.Footnote 76 In particular, we argue that a new centralised procurement regulation could promote the use of an “Innovation Partnership Procedure”, which would mirror the procedure set out in the Public Sector Directive.Footnote 77 This procedure assists procurers in purchasing innovative solutions that require significant sums of public investment.Footnote 78 The innovation partnership procedure is suitable for contracting authorities that require the design and development of an innovative product or service that is not commercially available on the market.Footnote 79 A demand-led innovation procedure is appropriate for the procurement of potential devices, equipment and health information technologies.Footnote 80
The use of the JPA to enhance a technological revolution in healthcare would solve at least some of the problems associated with the acquisition of health technologies, but it could be a practical stepping stone towards a closer “Healthcare Union”. It might be argued that this would bring EU health law even more within the Internal Market domain and would increase the level of economic considerations in such a politically sensitive policy area. However, an economic instrument like the JPA, which, as yet, has attracted very little attention in legal scholarship, might be the key to unlocking further cooperation between Member States’ healthcare systems, supporting the creation of an innovative, accessible and inclusive European Health Union.
V. Conclusion
It is quite early to fully appreciate the economic benefits of the recent acquisitions conducted through the JPA. The contracts for the provision of PPE and ventilators only came into operation in April 2020, and it will be necessary for the Commission to assess the use, availability and costs of the supplies. It is also imperative for the Commission to conduct an assessment on whether the ongoing contracts do preserve competition in the Internal Market in a disrupted demand–supply environment. However, while the information on the actual economic effects of the aggregated contracts is limited, we contend that there are some important lessons to be drawn from the procedures used during the COVID-19 pandemic. Concluded contracts are assisting with the fair distribution of in-demand medicines and medical supplies. Furthermore, the early findings discussed in this article suggest that the use of the JPA is underpinned by a growing level of political willingness and mutual trust. It is this willingness to pool overstretched national resources for the collective good that suggests that the EU should now push the JPA further. A centralised procurement system, aimed at the acquisition of health technologies, would not only enhance the EU’s preparedness for future pandemics, but arguably bring Member States closer to the creation of a European Health Union.
