On Tuesday, the Legal Affairs Committee approved a bill, agreed with EU governments, requiring firms to mitigate their negative impact on human rights and environment.

MEPs on the Legal Affairs Committee adopted with 20 votes for, 4 against and no abstentions new, so-called “due diligence” rules, obliging firms to alleviate the adverse impact their activities have on human rights and the environment, including slavery, child labour, labour exploitation, biodiversity loss, pollution and destruction of natural heritage. The requirement to prevent, end or mitigate their negative effects also concerns companies’ upstream partners working in design, manufacture, transport and supply, and downstream partners, including those dealing with distribution, transport and storage.

Scope and transition plan

The rules will apply to EU¹ and non-EU companies and parent companies with over 1000 employees and with a turnover of more than 450 million euro and to franchises with a turnover of more than 80 million euro if at least 22.5 million was generated by royalties.

Companies will also have to integrate due diligence into their policies and risk management systems, and adopt and put into effect a transition plan making their business model compatible with the global warming limit of 1.5°C under the Paris Agreement. The transition plan should include the company’s time-bound climate change targets, key actions on how to reach them and an explanation, including figures, of what investments are necessary to implement the plan.

Civil liability and fines

Firms will be liable if they do not comply with their due diligence obligations and will have to fully compensate their victims. They will also have to adopt complaints mechanisms and engage with individuals and communities adversely affected by their actions.

Member states will designate a supervisory authority in charge of monitoring, investigating and imposing penalties on companies that do not comply. These can include fines of up to 5% of companies’ net worldwide turnover. Foreign companies will be required to designate their authorised representative based in the member state in which they operate, who will communicate with supervisory authorities about due diligence compliance on their behalf. The Commission will establish the European Network of Supervisory Authorities to support cooperation among supervisory bodies.

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Following the committee vote, lead MEP Lara Wolters (S&D, NL) said:“I’m delighted that a clear majority of Legal Affairs Committee members backed the Due Diligence Directive today. It is high time that this legislation is adopted, to stop corporate abuse and to give companies clarity in what is expected of them. I’m looking forward to the plenary vote and confident that it will be adopted swiftly.”

Next steps

Once formally approved by the European Parliament and the member states, the directive will enter into force on the twentieth day following its publication in the EU Official Journal.

Background

The Commission proposal introduced on 23 February 2022 is consistent with the European Parliament’s 2021 call for mandatory due diligence legislation. It complements other existing and upcoming legislative acts in the area, such as the deforestation regulation, conflict minerals regulation and the draft regulation prohibiting products made with forced labour.

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The winning film of the 2024 LUX Award will be announced in the Brussels Hemicycle, with representatives from the five nominated films and MEPs present.

The upcoming ceremony in the European Parliament will bring together MEPs, filmmakers, and citizens to celebrate the winning film selected by both MEPs and the audience.

If you wish to attend the ceremony, please register here before 8 April.

Around 1200 visitors registered for the 2023 award ceremony in the Brussels Hemicycle.

Watch and rate

The winner of the award is selected jointly by MEPs and the public through ratings, each accounting for 50% of the final result. European citizens are invited to rate the films out of five stars until 14 April 2024. To rate the films, visit the LUX Award website.

Background

The five films nominated for the 2024 award are “20 000 Species of Bees” by Spanish director Estibaliz Urresola Solaguren, “Fallen Leaves” by Finnish director Aki Kaurismäki, “On the Adamant” by French director Nicolas Philibert, “Smoke Sauna Sisterhood” by Estonian director Anna Hints, “The Teachers’ Lounge”, directed by Ilker Çatak and produced in Germany. Free photos and videos from the film screenings in Brussels are available here.

The LUX European Audience Film Award has been awarded by the European Parliament and the European Film Academy, in partnership with the European Commission and the Europa Cinemas network, since 2020. The award helps to promote and distribute European films with high artistic quality that reflect cultural diversity and touch upon topics of common concern, such as democracy, human dignity, equality, non-discrimination, inclusion, tolerance, justice and solidarity.

MEPs adopted their proposals to revamp EU pharmaceutical legislation, to foster innovation and enhance the security of supply, accessibility and affordability of medicines.

On Tuesday, the Environment, Public Health and Food Safety Committee adopted its position on the new directive (66 votes in favour, two against and nine abstentions) and regulation (67 votes in favour, six against and seven abstentions) covering medicinal products for human use.

Regulatory data and market protection: incentives for innovation

To reward innovation, MEPs want to introduce a minimum regulatory data protection period (during which other companies cannot access product data) of seven and a half years, in addition to two years of market protection (during which generic, hybrid or biosimilar products cannot be sold), following a marketing authorisation.

Pharmaceutical companies would be eligible for additional periods of data protection if the particular product addresses an unmet medical need (+12 months), if comparative clinical trials are conducted for the product (+6 months), and if a significant share of the product’s research and development takes place in the EU and at least partly in collaboration with EU research entities (+6 months). MEPs also want a cap on the combined data protection period of eight and half years.

A one-time extension (+12 months) of the two-year market protection period could be granted if the company obtains a marketing authorisation for an additional therapeutic indication which provides significant clinical benefits in comparison with existing therapies.

Orphan drugs (medicines developed to treat rare diseases) would benefit from up to 11 years of market exclusivity if they address a “high unmet medical need”.

Step up the fight against antimicrobial resistance (AMR)

MEPs underline the need to boost the research and development of novel antimicrobials, notably through market entry rewards and milestone reward payment schemes (e.g. early-stage financial support upon achieving certain R&D objectives prior to market approval). These would be complemented by a subscription model-based voluntary joint procurement scheme, to encourage investment in antimicrobials.

They agree with the introduction of a “transferable data exclusivity voucher” for priority antimicrobials, providing for a maximum 12 additional months of data protection for an authorised product. The voucher could not be used for a product which has already benefited from maximum regulatory data protection and would be transferable only once to another marketing authorisation holder.

Among the new measures to promote the prudent use of antimicrobials, MEPs want stricter requirements, such as restricting the prescriptions and dispensation to the amount required for the treatment and limiting the duration for which they are prescribed.

Strengthened requirements for environmental risk assessment

These new rules would require companies to submit an environmental risk assessment (ERA) when requesting a marketing authorisation. To ensure adequate evaluation of ERAs, MEPs want the creation, within the European Medicines Agency, of a new ad-hoc environmental risk assessment working party. MEPs insist that the risk mitigation measures (taken to avoid and limit emissions to air, water and soil) should address the entire life cycle of medicines.

Increased independence for EU health emergency body

To effectively address public health challenges and boost European research, MEPs want the European Health Emergency Preparedness and Response Authority (HERA, currently a Commission department) to become a separate structure under the European Centre for Disease Prevention and Control (ECDC). HERA should primarily focus on the fight against the most urgent health threats, including antimicrobial resistance and medicine shortages.

More details on MEPs’ specific proposals are available in this background document.

Quotes

Rapporteur for the directive Pernille Weiss (EPP, DK) said: “The EU pharmaceutical legislation revision is vital for patients, industry and society. Today’s vote is a step towards delivering the tools to tackle present and future healthcare challenges, particularly for our market attractiveness and medicine access across EU countries. We hope Council takes note of our ambition and commitment to create a robust legislative framework, setting the scene for prompt negotiations.”

Rapporteur for the regulation Tiemo Wölken (S&D, DE) said: “This revision paves the way to addressing critical challenges such as medicines shortages and antimicrobial resistance. We are strengthening our healthcare infrastructure and reinforcing our collective resilience ahead of future health crises – a significant milestone in our pursuit of fairer, more accessible healthcare for all Europeans. Measures improving access to medicines, whilst incentivising areas of unmet medical needs, are crucial parts of this reform.”

Next steps

MEPs are scheduled to debate and vote on the Parliament’s position during the 10-11 April 2024 plenary session. The file will be followed up by the new Parliament after the European elections on 6-9 June.

Background

On 26 April 2023, the Commission put forward a “pharmaceutical package” to revise the EU’s pharmaceutical legislation. It includes proposals for a new directive and a new regulation, which aim to make medicines more available, accessible and affordable, while supporting the competitiveness and attractiveness of the EU pharmaceutical industry, with higher environmental standards.