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article imageBrexit uncertainty for pharmaceutical companies

By Tim Sandle     Feb 18, 2018 in Business
Of the different sectors of the British economy affected by the U.K.’s impending exit from the European Union, the pharmaceutical sector is one of the most significant. This relates to the value of the market and the regulatory impact.
Companies who market pharmaceuticals in the European Union and in the U.K. will need to plan and make decisions in advance of the U.K.’s departure from the European Union in March 2019. Here companies need to decide whether they shift operation to Europe; or maintain a U.K. and European base; or exit the U.K. entirely. These decisions are not helped by the cloud of uncertainty.
Uncertainty
The position that the U.K. will take in relation to Brexit is steeped in uncertainty, with the terms ‘hard Brexit’ and ‘soft Brexit’ being bandied about, despite the phrases having little meaning. One of the big stumbling blocks is the free movement of labor; another is the status of the border between Northern Ireland (part of the U.K.) and the Republic of Ireland.
What matters in terms of negotiation outcome is whether the U.K. remains in the European customs union or plays a part in the single market, for this affects the trading relationships and rules under which trade can take place. How this will play out is uncertain even at the highest levels of the British government.
The problem is there is no model, since no country has left the European Union before. Moreover the scenarios for leaving are not complete packages. Take the single market, only in a minority if sectors are UK-based companies likely to retain full, uninhibited access to the European economy.
Impact on the pharmaceutical sector
All of this impacts on the pharmaceutical sector and this is significant for the U.K. economy. The pharmaceutical industry delivers a significant contribution to the U.K. economy and the population as a whole. This contribution is seen in a widening trade surplus (more exports and money coming into the country than imports), reaching a little over £3 billion. In addition, 45 million packs of medicines go from Britain to the EU every month and 37 million come the other way, according to the Association of the British Pharmaceutical Industry.
Another area affected is research and the level of research grants received from the European Union, which could adversely impact research and development. The effect on research is not just monetary; scientists rely on access to research committees and the collaborative framework that the European Union provides.
Barriers to market access are also a factor. To released a medicinal product within Europe a Qualified Person (QP) is required to sign-off each individual batch. Currently a British based QP can release a batch into the U.K. and into Europe. Going forwards, Brexit could create a scenario where an additional sign-off from a European QP could be required, adding additional time-delays and business costs. A similar situation arises with release testing. The U.K.'s independent release testing laboratory is the National Institute for Biological Standards and Control (NIBSC), which is accepted by other European Union members. Another Brexit scenario is where releases would be required under NIBSC and under an equivalent laboratory from within the European Union.
Regulatory impact
In terms of regulations, much of how the pharmaceutical sector operates is bound up in regulations from the European Commission, such as Good Manufacturing Practice (GMP). There are other rules as well, such as safeguards for distribution and mechanisms for assessing the impact of medicines on the market (which falls under the practice of pharmacovigilance).
With GMP, this is overseen by the European Medicines Agency in conjunction with national agencies. In the U.K., the agency is the Medicines and Healthcare products Regulatory Agency (MHRA).
To provide some guidance for pharmaceutical firms the MHRA has issued a statement. This is in response to pharmaceutical firms asking for detail about U.K. legislative requirements in relation to the different outcome scenarios. MHRA is preparing both ‘day one’ and longer-term proposals, although no detail can yet been provided.
What the agency can states is that the U.K. aims to put forward a “time-limited implementation period with the European Union, and both parties have recognized its importance.” However, if negotiations breakdown and there is no implementation period the U.K. government aims to produce a European Union (Withdrawal) Bill which will convert all existing European Union legislative frameworks into U.K. law, which avoids any sudden changes to the U.K. regulatory framework.
After this the U.K. parliament will discuss and debate which former European Union laws remain unaffected and which will be subject to change. Where this impacts on pharmaceutical companies, the MHRA states that “adequate notice” will be given to allow pharmaceutical companies time to implement any changed requirements.
All these means is that, in some shape or form, pharmaceutical business leaders in the U.K. will need to unpick decades of integration. The outcome has implications for patients in both the U.K. and in the rest of Europe.
More about Pharmaceuticals, Brexit, Europe, Industry, Regulation