BRUSSELS (Reuters) – The European Commission said on Thursday it wanted to set up a permanent reserve of essential drugs and medical equipment to address shortages that have dogged the EU for years and worsened throughout the COVID-19 pandemic.

The stockpile would be funded from a new health budget worth 9.4 billion euros ($10.3 billion) which the EU executive commission proposed on Wednesday.

The reserve would complement a 380-million-euro emergency stockpile created at the onset of the COVID-19 pandemic after many countries in the 27-nation bloc faced acute shortages of face masks, testing kits, ventilators, intensive care drugs and other vital items.

The EU is seeking to stockpile disinfectants, testing and diagnostic reagents, protective gear and essential medicines, according an EU document.

The extra funding, which needs to be approved by EU governments and lawmakers, would also be used to acquire vaccines, which are often in short supply in the EU and are mostly manufactured outside the bloc.

The Commission said it wanted to offer incentives to pharmaceutical companies to develop and produce vaccines in Europe, and relocate manufacturing capacity of medicines and their chemical ingredients which are now mostly imported from India and China.

EU lawmakers urged subsidies to encourage relocation, but health commissioner Stella Kyriakides declined to comment on the matter on Thursday.

She said incentives would be addressed in proposals for an EU pharmaceutical strategy due at the end of the year – a timetable that raised some eyebrows in the industry in view of the risks of a second wave of the epidemic in autumn.

In a draft report, the Parliament also urged the creation of one or more “European nonprofit pharmaceutical undertakings” to manufacture priority medicines.

The United States has also been looking to build up the ability to produce drugs and their raw materials at home after the pandemic exposed the industry’s dependence on China and India.

(Reporting by Francesco Guarascio; Editing by Kirsten Donovan)