Pharma firms face multi-million Brexit bill, MPs warned

Pharmaceutical companies may have to swallow a bitter pill in the form of higher regulatory costs after Brexit. [funnyangel/Shutterstock]

Pharmaceutical companies face a multi-million euro bill in regulatory costs regardless of whether the UK reaches a ‘soft’ or ‘hard’ Brexit deal with the European Union, industry leaders warned on Tuesday (19 December).

“Our working assumption is for between £60-£70 million in contingency planning costs in the scenario of a ‘no deal’ over the next three to four years,” GlaxoSmithKline’s Global Affairs President Phil Thompson told MPs on the House of Commons Health select committee.

“Even if we have a smooth and orderly Brexit process there are going to be costs of that magnitude,” Thompson added.

“It will be at least that for the generic (medicines) industry,” said Warwick Smith, director general of the British Generic Manufacturers Association. “The risk is that as costs go up, companies will relinquish their licenses, and that could mean fewer manufacturers in the market,” he added.

More than 2,600 medical products in the EU are partly manufactured in the UK, according to a recent survey by the European Federation of Pharmaceutical Industries and Associations.

“We’ve got 1,700 products directly affected by Brexit,” warned Thompson.

The bulk of the costs will lie in preparing to move employees and laboratories from EU countries and in employing new regulators, the witnesses told the committee.

They also called for ministers to be ready to prepare emergency laws to protect against disruption to the supply of medicines.

All EU regulations on health and medicines will be transferred into UK law as part of the EU Withdrawal Bill currently being scrutinised by the UK parliament.

However, last month’s decision by EU health ministers to move the European Medicines Agency (EMA) from London to Amsterdam after March 2019 underscored the upheaval that could await the sector.

Amsterdam, Paris take EU agencies in lucky dip thriller

Amsterdam and Paris won the right to host the two EU agencies that must leave London on Brexit after a dramatic ministerial meeting in Brussels on Monday (20 November) that left both result decided by drawing lots after votes were tied.

The EMA and national regulators currently oversee all manufacturing, clinical trials and marketing authorisation of medicines in the EU. Responsible for assessing around 20% of the drugs the EMA evaluates each year, the UK’s Medicines and Healthcare Products Regulatory Agency (MHRA) is the national authority with the largest workload across the bloc.

Industry wants unfettered access to EU market

In July, Health Minister Jeremy Hunt and Business Minister Greg Clark called for a ‘deep and special relationship’ with the EU’s drug licensing agency. Theresa May’s final cabinet meeting of 2017 on Tuesday ended with ministers intent on leaving the EU single market and customs union and seeking a ‘bespoke’ trade agreement.

That could leave the MHRA having to duplicate much of the EMA’s work after the UK leaves the two year transition period that is likely to follow its formal exit from the EU in 2019.

Post-Brexit 'free trade' talks with UK to start in January, EU says

The EU will start negotiating in January its future relations with the UK – along the lines of free trade agreements it has signed with Canada or Japan – and agrees to have a transition period in place from when Britain formally leaves the bloc in March 2019 until the end of 2020.

One of the UK’s largest industries, pharmaceutical firms and health professionals are anxious to retain unfettered access to the EU’s single market, which accounts for around 25% of global drug sales, as well as medical research programmes such as Horizon 2020. The UK accounts for 3% of global sales.

“Is the MHRA going to stay as aligned as possible to the EMA? That would be the quickest and easiest way to ensure that patients continue to get medicines quickly,” said professor Alan Boyd, president of the Faculty of Pharmaceutical Medicine.

Witnesses also warned the committee that World Trade Organisation rules on medicines needed urgent updating, with all drugs created after 2010 currently subject to tariffs.

“The official list of products that are tariff-free was last updated in 2010,” said Sanofi’s Hugo Fry. “There would be tariffs for everything else as of 2019. That needs some working through.”

A meeting of industry representatives organised by the EMA in October agreed that ‘an early decision on the future relationship and a long transition period are needed to mitigate manufacturing supply issues and ensure uninterrupted availability of medicines’.

However, despite calling for any regulatory changes to be as minimal as possible, industry leaders remain reluctant to put their heads above the parapet and demand continued UK membership of the single market or customs union.

“The environment is dictated by the (referendum) vote and the will of the people. The European regulatory framework is very strong…and it works, but there is no reason why the UK cannot move forward,” said Thompson.

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