Tendering Systems in Europe: How Public Procurement Drives Generic Drug Purchases

When European governments buy generic medicines, they don’t just pick the cheapest option. They use a complex, highly regulated system called tendering-a process designed to get the best value for public money while keeping the market fair and open. This isn’t about cutting corners. It’s about building a system where hundreds of generic drug manufacturers across 27 countries can compete on equal terms, and where hospitals, pharmacies, and health systems get reliable, affordable medicines at scale.

How Europe’s Tendering System Works

At its core, the European tendering system is built on four pillars: transparency, competition, proportionality, and value. It’s not just about price. It’s about quality, reliability, delivery speed, and even sustainability. The rules come from EU Directive 2014/24/EU and Directive 2014/25/EU, which apply to all public buyers-including national health services, regional hospitals, and municipal pharmacies.

When a public health authority wants to buy generic drugs, they must publish a contract notice in the Tenders Electronic Daily (TED), the EU’s central procurement portal. This notice includes the exact medicine name (using standardized ATC codes), required quantity, delivery schedule, and evaluation criteria. Any company based in the EU can respond-even if they’re based in Latvia or Portugal, not Germany or France.

There are five main procedures used for generic drug procurement:

• Open procedure: Any supplier can submit a bid. Used for simple, high-volume purchases like paracetamol or metformin. Accounts for about 45% of all EU tenders.
• Restricted procedure: Suppliers must first apply to be pre-qualified. Only those who pass are invited to bid. This reduces administrative load for large buyers like national health agencies.
• Competitive Dialogue: Used for complex or innovative purchases-like new formulations or delivery systems. Buyers talk to suppliers before finalizing specs. Common in digital health or specialty generics.
• Framework Agreements: A single contract is signed with multiple suppliers for a set period (usually 1-4 years). When a hospital needs drugs, it runs a mini-competition among the pre-approved suppliers.
• Dynamic Purchasing Systems: An electronic system where suppliers can join at any time. Ideal for rapidly changing markets like antibiotics or vaccines.

Each procedure must follow the proportionality principle: you can’t require a small generic manufacturer to have €10 million in annual revenue just to bid on a €500,000 contract. That’s illegal under EU law. The rules are designed to let SMEs compete.

Why MEAT Evaluation Beats Lowest Price

For years, many countries bought generics based on the lowest price. But that led to problems: suppliers cutting corners, stock shortages, and quality issues. Today, the EU mandates the Most Economically Advantageous Tender (MEAT) method for all contracts above €1 million.

MEAT doesn’t ignore price. But it weights it against other factors:

• Product quality (e.g., bioequivalence data, GMP certification)
• Supply reliability (delivery track record, inventory levels)
• Price stability (long-term pricing commitments)
• Sustainability (packaging waste, carbon footprint of logistics)
• Local production (supports EU-based manufacturing)

A 2023 study by the European Public Procurement Observatory found that health authorities using MEAT achieved 15.7% higher innovation in their generic drug purchases-like improved tablet coatings for better patient adherence or blister packs with child-safety features.

Dr. Anna De Lillo from Bocconi University found that MEAT-based tenders delivered 12-18% better value outcomes than lowest-price-only bids in infrastructure and pharmaceutical contracts. In practice, this means fewer shortages, fewer recalls, and more consistent access to medicines.

Real-World Impact: How It Plays Out

Take Germany’s national tender for metformin. In 2022, the Federal Joint Committee (G-BA) launched a multi-supplier framework agreement. Over 30 manufacturers applied. After evaluation using MEAT, five were selected. Each got a share of the market based on price, quality scores, and delivery performance.

Result? Prices dropped 18% compared to the previous year. Stockouts fell by 63%. And for the first time, a Polish generic producer won a contract-something that would’ve been nearly impossible under a purely national bidding system.

On the flip side, France’s 2021 tender for insulin generics used a poorly written technical specification. The document didn’t clarify whether excipients had to be EU-approved. Three suppliers submitted bids with non-compliant ingredients. The contract was canceled after six months, costing €2.1 million in legal fees and delays.

That’s why clear technical specs matter. According to Dr. Sarah Compson, 68% of cross-border supplier complaints stem from vague or inconsistent requirements. A single ambiguous phrase can derail an entire procurement.

Barriers and Challenges

Despite the system’s strengths, real-world friction remains.

Small businesses often struggle. A 2023 Eurochambres survey found that SMEs spend an average of 117 hours preparing a single bid-compared to 78 hours for large firms. One Dutch generic manufacturer spent eight months gathering documents just to qualify for a framework agreement with a Belgian regional hospital.

Another issue: supplier lock-in. Some framework agreements become de facto monopolies. A 2022 audit in Spain found that 40% of multi-supplier frameworks had only one active supplier after two years. The others didn’t win any mini-tenders because the buyer kept favoring the same vendor.

Then there’s the digital divide. Nordic countries like Finland and Denmark have 92% of tenders conducted electronically. In Romania and Bulgaria, it’s below 50%. That means smaller suppliers in southern Europe face higher costs and slower access to opportunities.

And while the EU promotes cross-border bidding, only 7.3% of generic drug procurement value crosses national borders. Northern countries buy more from each other. Southern and Eastern countries still rely heavily on domestic suppliers.

What’s Changing in 2025?

Europe is pushing hard to fix these gaps.

The European Single Procurement Document (ESPD), launched in 2023, lets suppliers submit one digital form for all EU tenders. No more uploading 20 different certificates. It’s already cut administrative time by 40% in pilot countries.

By 2025, all tenders over €1 million must allocate at least 50% of evaluation points to non-price factors under the updated Directive 2014/25. That means quality, reliability, and sustainability can’t be footnotes-they’re central.

AI tools are being tested in France and Finland to automatically score bids. Early results show 30% faster evaluations with 99.2% accuracy. This could level the playing field for smaller firms that can’t afford large procurement teams.

Sustainability is no longer optional. By 2025, 85% of high-value generic drug tenders will include environmental criteria-like plastic-free packaging, low-carbon logistics, or recycled materials. The European Commission is also pushing for more local production to reduce supply chain risks.

What This Means for Generic Drug Access

The European tendering system isn’t perfect. But it’s working. It’s the reason why a patient in Lisbon can get the same generic statin as a patient in Helsinki-at the same low price, with the same quality controls.

It’s why Europe spends less on generics than the U.S. while maintaining higher standards. It’s why shortages are rarer here than in many other regions.

For manufacturers, it’s a challenge-but also an opportunity. If you can meet the specs, play by the rules, and prove your reliability, you can sell across the entire EU. No need for 27 separate sales teams.

For patients, it means consistent access. For taxpayers, it means smarter spending. And for the EU, it’s proof that a single market isn’t just about free movement of goods-it’s about free, fair, and transparent competition that puts public health first.