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Storm clouds gather over Brexit

By Mike Scialom

Brexit: Government proposals for medicines sector are in the spotlight
Brexit: Government proposals for medicines sector are in the spotlight

Medicines sector considers ‘no-deal’ drug supplies

Technical director Antony Appleyard at Diamond Pharma Services on Cambridge Science Park: Although these steps might not be needed if a sector deal is reached, the risk of drug shortages is still very real in a no-deal scenario. Picture: Keith Heppell
Technical director Antony Appleyard at Diamond Pharma Services on Cambridge Science Park: Although these steps might not be needed if a sector deal is reached, the risk of drug shortages is still very real in a no-deal scenario. Picture: Keith Heppell

A no-deal Brexit risks the “disintegration of the complex regulated medicines market in Europe in terms of regulation, cross-border movement of goods, comparative pricing and intellectual property”, according to the BioIndustry Association.

The comments were made following last week’s publication of the first 24 of 80 government papers outlining arrangements for sectors including financial services and medicines if the UK leaves the EU with no withdrawl agreement next March.

The technical briefing on medicines says the government will ensure the UK “has an additional six weeks supply of medicines in case imports from the EU through certain routes are affected”.

“Everyone is still hoping that there is a deal as there is so much interconnectivity in medicines regulations,” said Diamond Pharma Services’ technical director Antony Appleyard. “The hope is that we can find some mutual recognition and pragmatic middle ground.

Prime Minister Theresa May during her visit to Addenbrookes Hospital earlier this year. Picture: Daniel Leal-Olivas/PA Wire
Prime Minister Theresa May during her visit to Addenbrookes Hospital earlier this year. Picture: Daniel Leal-Olivas/PA Wire

“The EMA [the European Medicines Agency, which has relocated from London to Amsterdam post-referendum] has already set out its no-deal terms. Firms will have to have all their approvals within the EU after Brexit, but this is the first time the government has responded to that no-deal scenario and in reality there’s nothing as far as I can see that is entirely a shock – it’s a logical response.

“It’s just that they’re not a reality as we don’t know what’s going to happen.”

Diamond has broken the issues raised in the papers into two parts.

“The first is the actual supply issue. All major stakeholders appear to be stating the need for some sort of stockpile and that’s what the government is alluding to.

“The second part addresses the flow of regulatory submissions which would be carried out in the event of a no deal. The shared portals which we have access to at the moment we would no longer have access to, so firms will be seeking equivalence.

“In terms of a regulatory pathway a number of approvals for major drugs are approved centrally, through the EMA, and we won’t be part of the EMA so we have to have our own registration process. We have some mechanism for that – for some drugs, but not all – so we would be converting centrally authorised products (CAP) to UK marketing authorisations. It is possible to do that as we’re working to the same standards, but it’s a lot of propcedural work.”

The prospect of increased paperwork – the exact opposite of what Brexiteers campaigned for before the 2016 referendum – also caught the eye of Cambridgeshire Euro MP Alex Mayer.

“Each industry will face their own Brexit problems,” she said. “From organic farmers who will have to wait nine months for new organic certification recognised by the EU, to having to change the health warning photos on cigarette packages because the EU owns the copyright.

“There’s mountains more red tape with instructions for businesses about extra paperwork at borders.

“These papers confirm that a no-deal Brexit is not a credible option for Britain and must be opposed.”

Gonçalo de Vasconcelos, CEO of online investment platform SyndicateRoom, focused his concern on people being caught up in the blitzkreig of new regulations.

“‘No deal’ is simply the worst deal for the UK,” he said. “The government is unilaterally trying to do damage-control, but the key question remains: is it too little, too late?

“With passporting no longer being assured by the EU, UK citizens living abroad could lose the ability to access existing services including their UK banks accounts, lending, deposits and insurance.

“Foreign investment into UK companies will no doubt fall due to the increases in costs and added complexities of doing business with non-EU countries. With start-ups and scale-ups accounting for 100 per cent of UK job creation, can the country really afford to be cut off from foreign investment?

“Access to talent remains one of the thorniest points. It’s still unclear what happens to EU citizens working in the UK and their eligibility to remain in the UK, even though there’s absolutely no reason why the government can’t fully address this issue now. Why is there still no clear guidance?

“The government needs to create a fast-track visa system so rapidly growing technology businesses and universities can continue to bring in the best talent from the EU, or prepare for the country to lose its competitive edge.”

The Department of Health has written to pharmaceutical companies detailing government contingency plans to stockpile medicines to cope with any potential delays at the border that may arise in the short term.

Commenting on the letter, BioIndustry Association (BIA) CEO Steve Bates said: “We encourage BIA members and other pharmaceutical companies that supply medicines for NHS patients from, or via, the European Union or EEA to engage actively with the Department of Health request for information as to how, or whether, they can, or cannot, ensure an additional minimum of six weeks supply in the UK, over and above their business as usual operational buffer stocks, by March 29, 2019.

“Companies should receive an email from the Department with an ask to engage next week, and respond formally by September 10. We have stressed and recognise that endeavouring to deliver on this in less than 200 days will be a massive challenge for industry and the MHRA alike. Given that over 150 BIA members are actively involved in clinical development in the UK, we will pay particular attention to the implications of this work with regard to ongoing clinical trials.

“A ‘no-deal’ Brexit would mean the biggest disintegration of the complex regulated medicines market in Europe in terms of regulation, cross-border movement of goods, comparative pricing and intellectual property. On behalf of patients we encourage all participants to be as prepared as possible for a scenario industry really does not want, but we should be under no illusions that this will be easy or smooth.”

On the first tranche of 24 technical notices Mr Bates said: “A Brexit deal involving continued close co-operation on medicine regulation is in the best interests of patients. The technical notices gives greater clarity on how UK medicines regulation will work in the scenario of ‘no deal’, something we do not want to see.

“It’s helpful that the technical guidance on medicines regulation is pragmatic, essentially proposing unilateral recognition of existing process, is in line with industry expectation, and echoes the position of ministers expressed last year. We look forward to further discussion of the detail to build greater clarity around how the complex regulation and supply of medicines would work in the event of ‘no deal’.

“We will now engage our membership on the MHRA technical consultation promised for early autumn.

“As we have repeatedly articulated since 2016, it is now clear that a ‘no deal’ Brexit would mean a significant increase in replicative bureaucratic red tape for developers of innovative medicines. Introducing additional regulatory process for a market worth less than three per cent of the world’s value adds additional time and expense for companies who have a choice as to where they launch new therapies. It would not add to the UK’s attractiveness for life science businesses.

“It would likely mean that NHS patients would get access to new therapies later than other countries in Europe.”

What is most irritating for business is so much of the economic landscape in seven months’ time is still lacking in clarity.

Mats Persson, EY’s UK Brexit strategy leader and former adviser to 10 Downing Street, said: “The steps announced today will help reduce some friction in the event of a ‘no-deal’ scenario, mostly for companies that import to the UK.

“In particular, the pharmaceutical sector will be relieved to see a unilateral recognition of EU testing and authorisation, reducing the need for costly duplications in the short-term, which could have cost some companies millions of pounds.

“Allowing for VAT to be dealt with in VAT returns rather than to be paid at the border will reduce cash flow impacts, particularly for smaller firms; and a selective approach to customs checks will help reduce the risk of delays and costs at the border.

“While welcome, these notes can only cover some of the impact businesses face in a ‘no-deal’ scenario and of course only cover the UK side. UK customs waving through a shipment will have limited effect if that shipment is stopped on the EU side and there are delays on that side. The government is right to challenge the EU to reciprocate some of these arrangements to avoid the most damaging friction, not least for EU-based firms, should a deal not happen.

“Fundamentally, no amount of ‘no-deal’ planning can fully mitigate the effects of falling back on WTO rules in March next year.”

“In the event of a ‘no-deal’ scenario, the EU state aid rules will be transposed into UK domestic legislation under the European Union (Withdrawal) Act 2018,” says Stephen Cole, a senior associate at Hewitsons.

“This will apply to all sectors and will mirror current EU block exemptions, including the Agricultural Block Exemption Regulation, and the Fisheries Block Exemption Regulation.”

Darren Bear, from Grant Thornton’s Cambridge office, said: “There is increasing talk of ‘no deal’ as a likely outcome.

“This scenario would have the biggest impact and provide businesses with the least time to prepare. There would be no transition period and the UK would start trading on World Trade Organisation terms straight away.

“The uncertainty and complexity of Brexit can make it difficult for businesses to plan ahead but they must narrow uncertainty and prepare for the future, whatever that holds.”

Here’s what happens if no deal is reach:

- The Competition and Markets Authority (CMA) will take over state aid regulation within the UK

- UK public authorities will need to notify state aid to any undertaking, through either the block exemption or through a full notification to the CMA instead of the European Commission

- Existing approvals of state aid, including block exemption approvals, will remain valid and will be carried over into UK law under the Withdrawal Act

- Any full notifications not yet approved by the Commission should be submitted to the CMA

- Complaints about unlawful aid or the misuse of aid should be made to the CMA

- Secondary legislation under the Withdrawal Act is intended for autumn 2018, which will replicate the existing state aid framework, with only technical modifications to correct deficiencies with the transposed EU law to ensure the regime operates effectively in a domestic context. After legislation has passed, the CMA will publish its own guidance explaining in more detail how it will operate its state aid regulatory function.

Opinion: Medicines stockpiling plan is a begging letter dressed up as a legal obligation.


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