Preparing for the impact of ESG policies on market access in Europe

With growing regulatory pressure in Europe, including the EU's commitment to carbon neutrality by 2050, environmental sustainability is becoming an important consideration for pharmaceutical companies seeking long-term market success. This, coupled with a rising focus on social responsibility and ethical governance has placed environmental, social and governance (ESG) factors at the forefront of the pharma industry.

ESG is rapidly becoming a core consideration for investors, regulators and consumers alike. Within this landscape, companies face pressure to demonstrate their commitment to ESG across all aspects of their operations. ESG considerations are increasingly gaining attention in European market access, especially in regions leading sustainability initiatives, and are likely to play a growing role in how companies bring their products to patients in the future. ESG is emerging as a crucial element in shaping both public perception and policy decisions.

This new paradigm demands that companies embed sustainability frameworks into their core strategies to mitigate environmental impact, enhance their reputation and potentially position themselves for future market access benefits as ESG criteria become more formalised in decision-making processes.

In this article, Gerdi Strydom, MD, Valid Insight, part of Bioscript Group examines the emerging influence of ESG on market access in Europe, exploring how pharma companies can navigate this evolving landscape and leverage ESG to drive both business success and societal good.

ESG criteria in public drug tenders

In the European pharma market, public drug tenders play a crucial role in determining which medicines are accessible to patients and healthcare systems. Traditionally, these tenders have focused primarily on price. However, this approach is evolving as ESG considerations gain prominence. One notable shift is the move towards the Most Economically Advantageous Tender (MEAT) criteria. MEAT goes beyond simple price comparisons and allows for a more holistic evaluation of bids, incorporating factors such as quality, safety and environmental sustainability.

Some European countries, most notably the Nordics, are integrating environmental criteria into their tendering processes. These criteria can include a company's carbon footprint, packaging practices, waste reduction efforts and overall commitment to environmental sustainability. For example, some tenders may favour companies that:

Use renewable energy sources in their manufacturing processes.
Have implemented measures to reduce their greenhouse gas emissions.
Provide medicines in recyclable packaging.
Demonstrate a commitment to environmental management systems, such as ISO 14001 certification.

This trend is evident in the growing number of tenders that include specific environmental requirements. For instance, Amgros, the Danish Medicines Agency, has been incorporating environmental criteria in selected tendering procedures since 2021. A recent Amgros tender included new criteria such as energy efficiency in sterile water production and a return scheme for devices. These criteria were developed based on an analysis of the climate footprint of medicines and a dialogue with suppliers to ensure their feasibility and industry alignment. This example demonstrates the commitment to incorporating environmental considerations into public procurement decisions and the collaborative efforts to drive sustainability in the healthcare sector.

ESG considerations in reimbursement decisions

While public tenders focus on the procurement of medicines, reimbursement decisions ultimately determine which treatments are funded and made available to patients. Health Technology Assessments (HTAs) offer another opportunity for policymakers and decision-makers to consider incorporating environmental sustainability into funding decisions. While the integration of ESG into HTA frameworks is still in its early stages, some HTA bodies have started to explore how to integrate environmental considerations into their evaluations.

However, integrating ESG metrics into HTA frameworks presents challenges, such as the lack of reliable and standardised data on the environmental impact of different therapies and the need to balance environmental sustainability with clinical effectiveness and cost-effectiveness.

Despite these challenges, organisations like the National Institute for Health and Care Excellence (NICE) in the UK are taking action. In its 2021-2026 strategy, NICE pledged to "consider how environmental impact and wider societal values should be reflected" in its advice. To meet this ambition, NICE is exploring ways to include environmental impact data in its guidance to reduce the carbon footprint of health and care. Similarly, the Canadian Agency for Drugs and Technologies in Health (CADTH) has included environmental impact assessments in its strategic plan.

The integration of environmental sustainability into HTAs is still in its early stages, but it represents a significant step towards a more sustainable healthcare system. As the field of HTA evolves, it is likely that ESG considerations will play an influential role in shaping reimbursement decisions.

Carbon neutrality targets and market access

Several leading pharmaceutical companies are taking significant steps toward carbon neutrality and environmental sustainability, driven by both regulatory pressures and a growing recognition of their environmental impact. These commitments extend beyond corporate social responsibility and are vital for demonstrating leadership in a rapidly evolving landscape.

In Europe, several pharma companies have set ambitious carbon neutrality targets. For example, AstraZeneca has committed to reducing emissions by 98% across its global operations (Scope 1 and 2) by 2026, a target validated by the SBTi. Similarly, GSK aims to achieve an 80% reduction in emissions for its operations (Scope 1 and 2) by 2030.

By demonstrating their commitment to carbon neutrality, companies can enhance their reputation, gain a competitive advantage, attract investment and align with policy goals. As the focus on environmental sustainability intensifies, carbon neutrality targets will likely play an essential role in market access decisions.

Social initiatives and market access

Beyond environmental concerns, the 'S' in ESG encompasses social factors like diversity and inclusion, labour standards, patient engagement and health equity. These initiatives are integral to market access, as companies recognise that their societal impact can significantly influence their ability to bring new therapies to patients.

As healthcare systems move towards sustainability, it's important to ensure that new environmental measures don't widen existing inequalities. Tools like Health Equity Impact Assessments (HEIA) can help policymakers evaluate how new programs or technologies might affect different population groups, ensuring equitable access to care even as sustainable practices are implemented. This is particularly important for vulnerable populations who may be at greater risk of being left behind as wealthier regions adopt low-carbon health technologies. Decarbonisation efforts must be combined with promoting health equity and building climate resilience, ensuring that all populations can benefit from low-carbon healthcare systems.

By actively engaging in social initiatives, companies can demonstrate their commitment to societal well-being and build stronger relationships with stakeholders. However, implementing and measuring the impact of these initiatives can be complex. Specialised consultancies can play a crucial role in helping companies navigate these complexities and ensure their social initiatives are aligned with ESG goals and market access requirements.

Navigating the future of ESG and market access

As the landscape evolves, the integration of ESG into market access and reimbursement decisions will likely involve greater standardisation of reporting frameworks and methodologies. While environmental considerations have taken the initial spotlight in many ESG discussions, social factors like health equity, patient engagement, and diversity and inclusion have always been essential aspects of responsible business practices within the pharma industry. These social factors are now receiving even greater emphasis as part of a holistic approach to ESG.

To effectively navigate the evolving ESG landscape, companies need expert guidance to take a proactive and strategic approach. Partnering with specialised consultancies can help businesses incorporate ESG principles into their strategies, ensuring alignment with payer and regulatory expectations. From identifying key ESG opportunities to embedding sustainability in market access strategies and plans, these partnerships enable companies to effectively respond to evolving demands while maintaining a competitive edge.

The journey towards an environmentally sustainable healthcare industry requires a collective effort. By working together, manufacturers, payers and academics can ensure that ESG considerations are integrated into market access decisions in a way that balances environmental goals with the imperative of ensuring patient access to innovative treatments.

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About the author

Gerdi Strydom is managing director for Valid Insight, part of Bioscript Group

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