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December 19, 2017

Brexit’s Implications for the UK Pharmaceutical Sector

AstraZeneca, Janssen Pharmaceutical, Merck and Co., and Roche were among the pharmaceutical firms that voiced their post-Brexit concerns via written evidence submissions published ahead of a UK parliamentary inquiry on December 5.

By GlobalData Healthcare

AstraZeneca, Janssen Pharmaceutical, Merck and Co., and Roche were among the pharmaceutical firms that voiced their post-Brexit concerns via written evidence submissions published ahead of a UK parliamentary inquiry on December 5. During the ensuing inquiry session with the Business, Energy and Industrial Strategy Committee (BEIS) at the UK Parliament, uncertainty surrounding the UK’s transition period was noticeable as alarm bells sounded over market access woes, the potential for dreaded non-tariff barriers, regulatory hurdles, and compromised EU-dependent R&D activities.

The companies each highlighted the significance of securing frictionless post-Brexit trade between the UK and the EU, allowing for the flow of pharmaceutical products developed outside the UK and skilled personnel without additional impediments. Trade between the UK and the EU will potentially be governed by World Trade Organization (WTO) rules, schedules, and tariffs. The foreseeable downside of such an arrangement would be that the UK would have to work with less advantageous terms, as it will have diminished bargaining powers during trade negotiations. Additionally, outdated WTO rules on the movement of medicines may result in administrative hurdles and delayed access to life-saving treatments for patients.

Leaving the single market exposes the UK to numerous thwarting non-tariff barriers. Among the most significant potential non-tariff barriers are gridlocked supply chains, where pharmaceutical products are subjected to lengthy re-inspections and held up at boarder checks or manufacturing sites. Moreover, major regulatory directives, such as the European Medical Device Regulations (MDR) and In Vitro Drug Regulations (IVDR), which are set by the European Medicines Agency (EMA), should be fully adopted by the UK to ensure that the pharmaceutical supply chains that are integrated across Europe are not disastrously disrupted. The UK is subject to these directives until it leaves the EU in March 2019. Without monitoring, the UK could become increasingly divergent from these regulatory regimes, risking the seamless supply of medical technologies, as well as the continuity and quality of UK patient care.

In an appeal to the British government, each company equivocally stressed the importance of aligning and harmonizing of the UK healthcare regulatory system with a larger one, such as the EMA. Non-EU countries and countries outside of the largest global pharmaceutical markets frequently experience delays in accessing pharmaceutical technologies due to regulatory barriers. In Switzerland, drugs get approved an average of 157 days after EMA approval as a result of launching strategies of pharmaceutical firms that prioritize submission to the FDA and the EMA, and only then filing an application to Swissmedic, the Swiss regulatory authority.

The withdrawal of EU funding and the decline of investment in the UK pharmaceutical sector could concoct a rather ominous research landscape. One plausible scenario is that the UK will have to do without the €8.8B ($11.76B) in direct EU funding for research, development, and innovation activities that it received between 2007 and 2013, which placed it second only to Germany in absolute terms of direct EU funding. If the UK is regarded as an unattractive country for launching clinical trials and forging European partnerships, clinical trial collaborations between the UK and EU member states could potentially be undermined. The UK could be left out of pan-European trials for rare diseases that are impractical to be funded by a single state. Also, for disease areas in which current treatment options are suboptimal, UK patients may be deprived of access to life-saving drugs in clinical trials conducted in other European countries.

Mitigating these risks will be a huge challenge for the UK, and its position as a leader in pharmaceutical research and innovation is under threat. Initially, a comprehensive transitional arrangement should be pursued for as long as necessary to minimize the disruption of patient access to treatments. Furthermore, the UK should seek to maintain or establish new collaborations, funding, and resources with EU countries. Despite the uncertainty surrounding the UK’s pharmaceutical sector, one fact crystallized following the UK parliamentary inquiry; access to new medicines and healthcare research should be a priority in the UK’s negotiations with Brussels.

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