COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL laying down Union procedures for the authorisation and supervision of medicinal products for human use and establishing rules governing the European Medicines Agency, amending Regulation (EC) No 1394/2007 and Regulation (EU) No 536/2014 and repealing Regulation (EC) No 726/2004, Regulation (EC) No 141/2000 and Regulation (EC) No 1901/2006
Date: 2023-04-26
Institutions: Directorate-General for Health and Food Safety, European Commission
Subjects: European Medicines Agency, consumer information, labelling, market approval, marketing standard, medicinal product, operation of the Institutions, pharmaceutical legislation, public health, security of supply

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  EN 

   EUROPEAN COMMISSION  Brussels, 26.4.2023  SWD(2023) 194 final  COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL laying down Union procedures for the authorisation and supervision of medicinal products for human use and establishing rules governing the European Medicines Agency, amending Regulation (EC) No 1394/2007 and Regulation (EU) No 536/2014 and repealing Regulation (EC) No 726/2004, Regulation (EC) No 141/2000 and Regulation (EC) No 1901/2006 {COM(2023) 193 final} - {SEC(2023) 390 final} - {SWD(2023) 192 final} - {SWD(2023) 193 final}  
 
 
Subsidiarity Grid 

-  As proposed by the Committee of the Regions with guidance in blue  

-  Obviously, the answers to the questions below, the explanatory memorandum and – if 

applicable – the impact assessment should be consistent. This may require some iterations.  

-  Please try to stay under 10 pages.  

1.  Can the Union act? What is the legal basis and competence of the Unions’ intended action? 

1.1 Which article(s) of the Treaty are used to support the legislative proposal or policy initiative? 

The proposal is based on Articles 114(1) and 168(4)(c) of the Treaty on the Functioning of the 
European Union (TFEU). 

1.2 Is the Union competence represented by this Treaty article exclusive, shared or supporting in 
nature? 

While the internal market and common safety concerns in public health matters fall within a shared 
competence  of  the  EU  and  Member  States,  once  the  EU  adopts  harmonised  legislation  in  such  an 
area,  Member  States  can  no  longer  exercise  their  own  competence.  This  is  the  case  for  the  EU 
pharmaceutical legislation. 
The  proposal  respects  Member  States’  exclusive  competence  in  the  provision  of  health  services, 
including pricing and reimbursement policies and decisions as well as the prescription of medicines 
(cf. Article 168(7) of the TFEU). 

2.  Subsidiarity Principle: Why should the EU act? 

2.1 Does the proposal fulfil the procedural requirements of Protocol No. 21: 

-  Has there been a wide consultation before proposing the act? 
- 

Is there a detailed statement with qualitative and, where possible, quantitative indicators 
allowing an appraisal of whether the action can best be achieved at Union level? 

- 

- 

To collect all relevant views and engage with stakeholders as much as possible, different 
consultation methods were combined. DG SANTE consulted with stakeholders via (i) the 
publication of inception impact assessments for feedback, (ii) two online consultations (one 
concerning general medicines, the other one targeted at medicines for children and rare 
diseases), (iii) targeted stakeholder surveys, (iv) interviews, (v) focus groups to discuss some 
of the main issue of the revision of the provisions relating to medicines for children and rare 
diseases, (vi) a validation workshop on the impact assessment findings.  Summaries of all 
consultation activities and their outcomes are provided in Annex 2 – Synopsis report of the 
respective Impact Assessment SWDs.  
The explanatory memorandum and the impact assessment SWD (chapter 3) contain a section 
on the principle of subsidiarity (see also question 2.2 below). 

1 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12016E/PRO/02&from=EN  

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2.2 Does the explanatory memorandum (and any impact assessment) accompanying the 

Commission’s proposal contain an adequate justification regarding the conformity with the 
principle of subsidiarity? 

Common  standards  of  quality,  safety  and  efficacy  for  the  authorisation  of  medicines  constitute  a 
cross-border  issue  for  public  health  that  affects  all  Member  States  and  thus  can  effectively  be 
regulated only at EU level. EU action relies also on the single market to achieve a stronger impact as 
regards access to safe, effective and affordable medicines, as well as the security of supply across the 
EU. Uncoordinated measures by Member States may result in distortions of competition and barriers 
to intra-Union trade for products that are relevant for the entire EU, and would also likely increase 
administrative  burden  for  the  pharmaceutical  companies  which  often  operate  in  more  than  one 
Member State. 
At the same time, the proposed revisions of the pharmaceutical legislation respect Member States’ 
exclusive  competence  in  the  provision  of  health  services,  including  pricing  and  reimbursement 
policies and decisions. 

2.3 Based on the answers to the questions below, can the objectives of the proposed action be 

achieved sufficiently by the Member States acting alone (necessity for EU action)? 

While the internal market and common safety concerns in public health matters fall within a 
shared  competence  of  the  EU  and  Member  States,  once  the  EU  adopts  harmonised 
legislation in such an area, Member States can no longer exercise their own competence. 

As  diseases  do  not  know  borders,  common  provisions  for  the  authorisation  of  medicine 
are  necessary.  Uncoordinated  measures  by  Member  States  could  result  in  distortions  of 
competition and barriers to intra-Union trade for products that are relevant for the entire 
EU,  and  would  also  likely  increase  administrative  burden  for  the  pharmaceutical 
companies which often operate in more than one Member State. Furthermore, a specific 
objective of the revisions is to ensure timely patient access in all Member States, including 
in  smaller  Member  States,  which  can  partially  be  impacted  by  the  EU  pharmaceutical 
legislation.  

1.  Are  there  significant/appreciable  transnational/cross-border  aspects  to  the  problems 

being tackled? Have these been quantified? 

Diseases  do  not  know  borders.  Common  provisions  for  the  authorisation  of  medicines 
constitute a cross-border issue for public health that affects all Member States and thus can 
effectively  be  regulated  only  at  EU  level,  given  that  the  authorisation  of  medicines  is  fully 
harmonised at EU level. 
Data  collected  in  the  impact  assessment  SWD  have  shown  that  concerning  access  to 
medicines no major improvement over the last years have been observed. Indeed, there is a 
90% variance between Northern and Western European countries and Southern and Eastern 
European  countries  in  terms  of  patient  access  to  new  medicines,  which  also  largely 
corresponds to the launch patterns according to market size and purchasing powers of these 
countries. The average delay between market authorisation and patient access can vary from 
as little as 4 months to 29 months. 

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(a)  Would national action or the absence of the EU level action conflict with core objectives of 

the Treaty2 or significantly damage the interests of other Member States? 

Uncoordinated  measures  by  Member  States  could  result  in  distortions  of  competition  and 
barriers to intra-Union trade for products that are relevant for the entire EU, and would also 
likely increase administrative burden for the pharmaceutical companies which often operate 
in  more  than  one  Member  State.  Furthermore,  the  proposed  revision  of  the  EU 
pharmaceutical  legislation  should  guarantee  a  high  level  of  public  health  by  ensuring  the 
quality,  safety  and  efficacy  of  medicines  for  EU  patients.  The  proposal  is  based  on  Articles 
114(1) and 168(4)(c) of the Treaty on the Functioning of the European Union (TFEU). 

(b)  To what extent do Member States have the ability or possibility to enact appropriate 

measures? 

The  proposed  revision of  the  pharmaceutical  legislation  respects  Member  States’  exclusive 
competence in the provision of health services, including pricing and reimbursement policies 
and decisions. 

(c)  How does the problem and its causes (e.g. negative externalities, spill-over effects) vary 

across the national, regional and local levels of the EU? 

The problem and its causes are similar in all Member States as most of the provisions in the 
pharmaceutical  field  are  harmonised  since  long  time.  However,  concerning  access  to 
medicines  across  the  EU  the  situation  varies  between  the  Member  States.  The  number  of 
authorised  medicines  in  the  EU  has  increased  over  time:  1 160  centrally  authorised 
medicines (CAPs) were authorised in the period 2005-2020 and more than 17 000 medicines, 
primarily generic medicines, were authorised through mutual recognition and decentralised 
procedures  in  the  same  period.  However,  patient  access  to  medicines  varies  considerably 
across  the  EU.  The  number  of  EU  countries  in  which  CAPs  are  launched  has  been  steadily 
decreasing. Evidence shows that, whilst in Germany 133 out of 152 (i.e. 88%) new medicines 
authorised  between  2016 and  2019  at  EU  level were  accessible to  patients,  small  Member 
States such as the Baltic Member States or Member States with comparatively low prices or 
with low GDP, like Romania, had fewer than 50 of these available. The time to patient access 
is also significantly longer for most of these latter countries, e.g. approximately two years or 
more after marketing authorisation in Romania compared to four months in Germany. 

(d)  Is the problem widespread across the EU or limited to a few Member States? 

The problem is affecting all Member States 

(e)  Are Member States overstretched in achieving the objectives of the planned measure? 

Some specific expertise, for example on innovative products or novel technologies, might not 
be  easily available in all Member States,  therefore the  necessity to bring  simplification and 
efficiency  in  the  current  legislative.  The  same  is  true  concerning  digital  interoperability; 
expertise  and  infrastructure  which  are  not  sufficiently  available  across  the  Member  States 
and the EU regulatory network. 

(f)  How do the views/preferred courses of action of national, regional and local authorities 

differ across the EU? 

2 https://europa.eu/european-union/about-eu/eu-in-brief_en  

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Pharmaceutical legislation is implemented at national level in the Member States. There is an 
overall consensus among competent authorities – as confirmed in the context of the various 
above-mentioned  consultation  activities  -  on  the  necessity  to  streamline  and  simplify  and 
make the current legislative framework future-proof. 

2.4 Based on the answer to the questions below, can the objectives of the proposed action be 

better achieved at Union level by reason of scale or effects of that action (EU added value)? 

Common  standards  of  quality,  safety  and  efficacy  for  the  authorisation  of  medicines 
constitute a cross-border issue for public health that affects all Member States and thus can 
effectively be regulated only at EU level. Furthermore, provisions at European scale reduce 
burden  amongst  others  for  companies  and  preserve  the  single  market.  There  will  also  be 
benefits for national authorities (streamlining of procedures and simplification will enhance 
efficiencies at all levels, for instance). 

(a)  Are there clear benefits from EU level action?  

Common  standards  of  quality,  safety  and  efficacy  for  the  authorisation  of  medicines 
constitute a cross-border issue for public health that affects all Member States and thus can 
effectively be regulated only at EU level. EU action relies also on the single market to achieve 
a stronger impact as regards access to safe, effective and affordable medicines, as well as the 
security  of  supply  across  the  EU.  For  example,  a  harmonised  approach  at  EU  level  also 
provides greater potential for incentives to support innovation and for concerted action for 
development of medicines in areas of unmet needs. 

(b)  Are there economies of scale? Can the objectives be met more efficiently at EU level (larger 

benefits per unit cost)? Will the functioning of the internal market be improved? 

Having  provisions  at  European  level  reduces  the  administrative  burden  and  preserve  the 
single market for pharmaceutical companies which often operate in more than one Member 
State  ensuring a strongly positive environment for  the  pharmaceutical  industry to continue 
to develop its cutting-edge products within the EU.  The revision will also aim at improving 
the affordability of medicinal products benefiting national health systems. A  simplified and 
better integrated regulatory system will benefit national regulators. 

(c)  What are the benefits in replacing different national policies and rules with a more 

homogenous policy approach? 

The  sector  is  already  completely  harmonised  since  many  years.  The  first  legislation  in  the 
area of medicines was adopted in 1965.  

(d)  Do the benefits of EU-level action outweigh the loss of competence of the Member States 
and the local and regional authorities (beyond the costs and benefits of acting at national, 
regional and local levels)? 

The proposal will not impact the existing national competencies with regard to Member 
States’ exclusive competencies in the provision of health services, including pricing and 
reimbursement policies and decisions. 

(e)  Will there be improved legal clarity for those having to implement the legislation? 

Yes,  the  proposed,  revised  legal  framework  will  clarify  definitions,  introduce  classification 
mechanisms  as  well  as  further  streamlining  and  simplification.  This  will  reduce  administrative 

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burden for companies and authorities and hence improve efficiency and attractiveness of the EU 
system.  

3.  Proportionality: How the EU should act 

3.1  Does the explanatory memorandum (and any impact assessment) accompanying the 

Commission’s proposal contain an adequate justification regarding the proportionality of the 
proposal and a statement allowing appraisal of the compliance of the proposal with the 
principle of proportionality? 

The initiative does not go beyond what is necessary to achieve the objectives of the revision. It does 
so in a way that is conducive to national action, which would otherwise not be sufficient to achieve 
those objectives in a satisfactory way. 

The principle of proportionality has been reflected in the comparison of different options evaluated 
in the impact assessment. For example, trade-offs are inherent between the objective of innovation 
(promoting  the  development  of  new  medicines)  and  the  objective  of  affordability  (which  is  often 
achieved by generic/biosimilar competition). The revision maintains the incentives as a key element 
for innovation, but they are adapted to better encourage and reward product development in areas 
of  unmet  medical  needs  and  to  better  address  timely  patient  access  to  medicines  in  all  Member 
States. The explanatory memorandum reflects the above considerations.   

3.2 Based on the answers to the questions below and information available from any impact 
assessment, the explanatory memorandum or other sources, is the proposed action an 
appropriate way to achieve the intended objectives? 

The initiative does not go beyond what is necessary to achieve the objectives of the revision and is 
appropriate to achieve them. The choice of the legal instrument is justified and as simple as possible 
and coherent. The proposal does not modify the current repartition of competences.  

(a)  Is the initiative limited to those aspects that Member States cannot achieve satisfactorily on 

their own, and where the Union can do better? 

The proposed Regulation introduces a large number of amendments to Regulation (EC) No 
726/2004. It also incorporates part of the current provisions and amendments to Regulation 
(EC) 1901/2006 on medicines for children, as well as current provisions and amendments to 
Regulation 141/2000/EC on medicines for rare disease.  A new Regulation (rather than an 
amending Regulation) is therefore considered the appropriate legal instrument as it will bring 
more legal clarity. 

(b)  Does the Union action leave as much scope for national decision as possible while achieving 
satisfactorily the objectives set? (e.g. is it possible to limit the European action to minimum 
standards or use a less stringent policy instrument or approach?) 

The proposal does  not modify the repartition of competencies between the Union and the 
Member States compared to today. 

(c)  Does the initiative create financial or administrative cost for the Union, national 

governments, regional or local authorities, economic operators or citizens? Are these costs 
commensurate with the objective to be achieved? 

For health systems, public health budgets would also benefit from the modulated incentive scheme 

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since more EU citizens will have access to treatments, which results in savings due to more effective 
treatment and reduced hospitalisations. They will also benefit from stronger competition and 
transparency measures around public funding for clinical trials. There would be additional societal 
benefits for families and carers too, in terms of both quality of life / independence and earning 
potential. Overall, the new incentives will come with costs for healthcare budgets but the public 
health benefits should outweigh those.  

For regulators, the effects of the proposed changes would be overall positive especially due to 
various horizontal measures, which will allow to better coordinate, simplify and accelerate regulatory 
processes to the benefit of industry and launch new digitalisation programmes to improve the 
integration and efficiency of the regulatory system overall (as well as its interfaces with other 
regulatory systems). 
Budgetary implications for the Union budget are mainly related to additional tasks to be carried out 
by the European Medicines Agency in terms of providing scientific, administrative and IT support in 
the following main areas: 

- Enhanced pre-authorisation scientific and regulatory support 
- Decision-making on orphan designations and management of Union Register on 
designations of orphan medicines 
- Active substance master file assessment and certification 
- Inspection capacities in third countries and support to Member States 
- Environmental Risk Assessment 
- Shortage management and security of supply 

(d)  While respecting the Union law, have special circumstances applying in individual Member 

States been taken into account? 

Special circumstances linked to certain Member States have been taken into account in the 
proposal for a Directive, linked to this proposal.  

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