Brexit or EU?

19th September 2019

Brexit: What it means for the Pharmaceutical Industry

Will the UK pharmaceutical industry be ready for Brexit, Deal or No Deal?

The UK is set to leave the European Union on October 31st, 2019, after extending the original deadline from the 29th March. Currently, there are ongoing discussions on whether we’ll have a deal in place or if a no withdrawal deal is agreed. Will the UK pharmaceutical industry be ready for Brexit, Deal or No Deal?

The answer currently stands at… we don’t know! Nothing is certain at this point, but we can speculate, which is always fun.

 

The UK and Pharma

Claims that the UK pharmaceutical industry will not be ready, stems from multiple sources, one being; the scenario laid out in a confidential Cabinet note leaked to the Financial Times. The note states that the government would need six to eight months of negotiations with the pharmaceutical industry “to guarantee suitable preparations are in place to build stockpiles of medicines by October 31” if not, we could be in serious trouble. It also states that it may take a minimum of five months “to ensure traders are ready for the new border checks that would be required in a no-deal scenario, including the provision of financial incentives to encourage exporters and importers to register for new trading schemes.” Steve Bates, CEO of the UK Bioindustry Association states that; “a no deal outcome would be hugely damaging to the sector”.

Companies won some breathing space when the departure date was put back to 31 October, but it was not clear what they should be doing in this additional period. The Department of Health and Social Care emailed pharma firms, such as Eisai, MSD and Astra Zeneca to tell them that medicines stockpiling, and other contingency plans should “remain in place but on hold until further guidance is available.” (Pink Sheet, 15 Apr 2019) Bates said that medicines supply chains were complex and “not cheap or easy to modify at speed”.

David Jefferys, Senior VP of Eisai, who conducted the regulation brief at the Association of the British Pharmaceutical Industry (APBI) , said companies could not eliminate the possibility of patients facing drug shortages in the event of no-deal. “We aren’t controlling the whole supply chain,” he said. “We can do our bit, but we don’t control the ports, we don’t control the airports.” Eisai has stockpiled around four months’ worth of medicines, considerably more than the six weeks that the UK health department has instructed companies to keep. But the industry is also facing a more bureaucratic but equally serious problem: how to ensure medicines licensed in another European country can continue to be sold in the UK.

 

The ABPI

The ABPI has also stated that the UK clinical trials industry may see a decline in the number of trials conducted, “The UK is the EU’s most popular location for phase I trials. It also ranks second, after Germany, for phase II trials and third, behind Germany and Spain, for phase III studies” – Pwc 2017. As of 2018, the new EU Clinical Trails Regulation will apply, aiming to facilitate pan-European clinical trials. If the UK would no longer be part of the EU regulatory system, UK involvement in these trials will become more difficult and costly. Pharmaceutical companies may need to set up separate trials for the UK, leading to higher costs and more time-consuming processes. And companies may favour running the trials in EU member states, as it will allow them to have access to a larger market and candidate pool. However, to counteract this, experts are saying that little or no change may happen to the number of clinical trials that are conducted as UK Clinical Trials regulations are one of the most efficient globally.

 

The WTO impact

Lastly, the World Trade Organisation (WTO) trading arrangements would present significant barriers. In the event of ‘no deal’, the EU and the UK would fall back to WTO terms and tariffs. This may affect EU-UK medicines trade due to duty requirements at several stages of the supply chain. The WTO Pharmaceuticals Agreement includes a ‘zero-for-zero’ arrangement on most pharmaceutical goods and products in supply chains. However, the list of pharmaceutical products included in this ‘zero-for-zero’ agreement has not been updated since 2010, and therefore many components of existing medicines and pharmaceutical products are not included in the agreement. EFPIA recommends that the current discussion update the WTO Pharmaceuticals Agreement be concluded. In the event of ‘no deal’, the UK should ensure it is a signatory of the ‘zero-for-zero’ annex.

Given major uncertainties in the road ahead, there are multiple different outcomes possible; these will have different implications on the challenges mentioned above. Nonetheless, given the range of major risks and impacts that these entail, not only on the industry but also on patient access to medicines, the EU and the UK should immediately start working on an ambitious agreement to frame relations between the two parties.

In the scenario where a final agreement cannot be reached before 31st October 2019, an interim agreement should apply in order to limit to the highest possible extent the impact of Brexit on trade between the two parties and ultimately on patients access to medicines.

 

By Warda Issa

 

References  

https://www.pwc.nl/en/brexit/documents/pwc-brexit-monitor-pharma-life-sciences.pdf

https://www.efpia.eu/media/288641/uk-exiting-from-eu_life-science-industry-coalition_position-paper.pdf

https://efpia.eu/publications/downloads/efpia/2018-the-pharmaceutical-industry-in-figures/

https://www.theguardian.com/politics/2019/feb/19/what-are-brexit-contingency-plans-for-pharmaceutical-industry

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