More than a year and a half after the Brexit deal came into effect, the UK’s pharmaceutical industry is still trying to determine the likely impacts. In principle, the deal could create new opportunities for British pharma companies – not least the chance to work under a more supportive regulatory framework.

However, in practice we are seeing a climate of real uncertainty. Among the negative effects that have been reported are supply chain disruptions, skills shortages, issues around market authorisation, and added costs for pharma CMOs. According to a 2021 GlobalData survey, Brexit is expected to have a worse impact on the UK’s healthcare sector than the Covid-19 pandemic.

Each month, an estimated 37 million packs of medicines are shipped between the EU and the UK, with 45 million traded in the opposite direction. This trade has been able to continue for the most part, as the UK’s regulator (the MHRA) remains aligned in many areas with the EU’s regulator (the EMA). But it is not clear how any changes to this alignment would impact future trade flows.

Following the introduction of customs controls in January 2021, medicine imports from the EU fell to their lowest levels in years. And while the gloomiest predictions around medicine shortages do not appear to have come to pass, shortfalls in drugs like HRT products have been partially attributed to Brexit.

Changes to batch testing requirements

One looming issue for the pharma industry is the upcoming December 2022 deadline around batch testing. Since the end of the Brexit transition period, the UK has continued to accept batch testing results from the European Economic Area. This will apply until December 31st. As of that date, however, the UK government may tell the industry it has changed its position.

Should that be the case, companies would have two years to set up new batch testing operations. Because the products would already have been tested within the exporting country, the testing would be duplicative and (to many people’s minds) unnecessary.

The UK government itself has stated that: “this option would be costly for industry to implement… [would add] complexity to supply chains… could cause short to medium term disruption to the availability of medicines, and would be challenging to address within the 2-year implementation period.”

Industry figures have spoken out against this prospect. Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry (ABPI), said: “For many companies, setting up new batch testing operations in two years would be challenging at the best of times”.

Mark Samuels, chief executive of the British Generic Manufacturers Association (BGMA) remarked that these duplicative processes would add time and cost. “We must ensure that UK patients are not disadvantaged in any way in terms of future supply,” he added.

Why might the new facilities be needed?

Simply put, batch testing is the process of confirming each batch of medicine has the right composition. It is part of the good manufacturing practice (GMP) quality assurance system, and is undertaken by laboratories, usually at contract research organisations (CROs).

Batch testing is always necessary in the case of imported medicines, no matter what kind of quality protocols have already taken place. The exception would be if the countries share a Mutual Recognition Agreement (MRA), meaning they recognise each other’s GMP inspections. The UK has MRAs in place with Australia, Canada, Israel, Japan, New Zealand, Switzerland and the USA.

Following the UK’s divorce from the EU, there was some hope that the two parties could establish this kind of agreement, but the EU was not in favour. Since the start of 2021, the EU has implemented batch testing for all UK exports, which could be a foreshadowing of what is to come for the UK.

Currently, the UK is operating under a unilateral ‘listing’ system that recognises the EU’s GMP standards as functionally equivalent to its own. This system was introduced with a view to maintaining supply during the pandemic, and was only ever intended as a short-term measure.

As part of a review into the long-term policy, the government is grappling with four options. ‘No import testing’ is being considered, but so is ‘full quality control batch testing’. A consultation took place between May and July 2022, and the Department for Health and Social Care will announce any changes no later than the December deadline.

Does the UK have capacity?

Should the government opt for ‘full quality control batch testing’, UK importers will have a challenge on their hands. Even following the Brexit vote, the EU remains the UK’s largest trading partner, and a high proportion of UK drugs originate from European countries.

Historically, EU imports have made up around two-thirds of NHS supply, with 80-90% of generic drugs sourced from outside the UK. In 2016, the UK imported £24.8bn of pharma products, of which 73% (£18.2bn) came from the EU.

As things stand, there are doubts as to whether the UK would be able to conduct additional batch testing at these scales (including method transfer validations). According to GlobalData’s Contract Service Providers database, there are currently 81 UK facilities that offer analytical testing. This is the second highest figure in Europe, but may not be enough to cover a dramatic rise in testing requirements. Just 26 offer Qualified Person release, a key part of the batch certification process.

According to the government’s own impact assessment, it would cost between £330m and £615m for importers to set up new batch testing/batch release operations. That’s not to mention the running costs (£127m-£171m) and licensing costs (£6.2m) – or the possibility that these additional costs could lead to products being discontinued.

The impact assessment does state that there might be benefits to this approach – namely protecting patients against faulty or ineffective batches, and ‘potential for increased long-term investment in the UK pharmaceutical market’. But given the potential hit to medicines supply, it remains to be seen whether the government will take the risk.

Speaking to companies, Butterworth Laboratories has found that few of them are making any significant investments into additional batch testing. Laboratories are being asked about the capacity to take on Finished Product Testing but are not pursuing a discussion on the time and cost of method transfer required for a smooth transition. Many appear to be gambling on the probability that the government will select a different, less costly, option, and that the current system can continue in some capacity. Here, as with so many aspects of pharmaceutical trade, the industry will be hoping for the minimum in Brexit-related bureaucracy. However, it’s worth reinforcing that at this stage, nothing can be ruled out.