In late-May 2020, the European Commission presented its proposal for the European Union’s next seven-year budget cycle – including new proposals for European funding for external relations (read: development spending) and health research (as a response to the Covid-19 pandemic). Here below is a brief expert analysis from DSW’s Brussels office on what the EU’s proposal means for low- and middle-income countries, as well as the work that is at the core of DSW’s mission.
The European Commission’s (EC) proposal of a new Multiannual Financial Framework (MFF), the 7-year budget of the Union,was eagerly anticipated. The Commission has put 1.8 trillion euros on the table: 1.1 trillion for the new MFF (2021-2027) plus 750 billion euros through an emergency European Recovery Instrument called Next Generation EU (NGEU). The NGEU will in principle run until 2024 and will allocate 500 billion euros through grants and 250 billion euros through loans. This is an innovative proposal, unprecedented in scale – much needed in these extraordinary times. After more than two years of nuanced and complex negotiations, with this new proposal the Commission takes a stand : “This is Europe’s moment. Our willingness to act must live up to the challenges we are all facing”, said the EC President, Ursula von der Leyen. And this includes a much-needed and stronger focus on health.
Novelties for the EU – new health programmes
This new plan includes two important novelties compared to the initial MFF proposal. First, a new Health Programme, EU4Health, of 9.4 billion euros (1.7 from the MFF and 7.7 from NGEU) to strengthen health security and prepare for future health crises. The EC has done an about-face with this new programme after proposing to discontinue it in 2018. Second, a rebuffed research and innovation (R&I) programme, Horizon Europe, with a budget proposal that rekindles the ambition of the first MFF proposal: 94.4 billion euros (80.9 from the MFF and 13.5 from the NGEU) although it falls short from the Parliament’s ambition of 120 billion. The Commission recognises that it is essential to increase the EU’s knowledge of diseases, treatments and vaccines, and strengthen our autonomy and leadership in value chains. Accordingly, it proposes “to reinforce Horizon Europe to support research and innovation (R&I) in the health field, extend clinical trials, improve access to research infrastructure and help anchor sound science at the heart of the policy process”.
Questions, as ever, remain…
While this sounds good, there are still a number of important questions that need to be answered. According to the Commissioner on Budget, the MFF proposal is based in 2018 prices. Moreover, the proposal does not detail the amount of additional funding that will be allocated to health research, and how much will be in the form of loans and how much in grants. Some crucial research areas, especially in the infectious disease space do not present enough market incentives to be able to work with loans and will require grant funding to develop the life-saving tools we need to address the burden of infectious diseases in all people, including those with limited resources.
Under the current draft agreement for Horizon Europe, 7.7 billion euros in grant money, or 8.2% of the total budget, will go to the health cluster. This would represent an absolute increase of 300 million euros compared to Horizon 2020 but a relative decrease of 1.5% of the proportion allocated to health research in the overall R&I framework programme’s budget, as Horizon 2020 spends 9.7% on the health-related societal challenge. Additionally, the procedure to use the 13.5 billion euros from the NGEU remains unclear.
Will this money be transferred to Horizon Europe or allocated separately? How much funding will go to health research, under what criteria and who will decide this? The European Parliament, that must approve the final MFF agreement before it enters into force, cautiously welcomed the proposal but expressed reservations about the potential imbalance between short-term and long-term objectives, and recalled that they will fight to protect their role as co-legislators and watchdogs of the EU’s budget implementation.
Cautiously optimistic, but defining weeks still to come
Clearly this proposal is welcome news compared to the latest MFF proposal by the Council president Charles Michel. It puts global health and health R&I in the frontline for the next 7 years and acknowledges the critical role of international collaboration. Yet much more granularity is required to make sure this proposal actually mobilises extra grant money (not only loans) for global health R&I, does it through global partnerships and guarantees the availability and affordability of the resulting products and innovations. These next weeks are absolutely essential to make sure that the ambitious spirit of this proposal becomes a reality, a truly transformative MFF that puts health and wellbeing for all at the core of the EU.