Despite months of furious debate over Brexit, few have talked about its potential implications for the pharmaceutical industry and medical research.
When the UK leaves the EU, the prospects for British pharmaceuticals may be dim. This is increasingly apparent as a hard Brexit seems ever more likely, with no deal between the UK and the EU at the end of the two-year divorce period. If no deal is reached, according to European pharmaceutical leaders, the UK runs the risk of having stockpiles of life saving medications held up at the borders due to differing, or unspecified regulations.
Medicines stopped at the borders?
Britain currently ranks third among European countries for both the import and export of medical goods. The UK contributes 11 percent of all pharmaceutical exports to countries outside of Europe. It is eclipsed only by Belgium, at 13 percent, and Germany, at 25 percent.
The UK also ranks third in terms of medical imports, importing 11 percent of the total imports from outside of the EU. Amongst EU nations there is also a degree of trade of medical supplies that enjoys the benefits of the free trade agreement, currently with more trade taking place within the EU than exports to outside the EU.
There are a number of current trade models the UK and EU could adopt post-Brexit. The Norway model, for example, would see the UK still paying a sum, likely similar to what it paid while a full member of the EU. For this, access to the single market would be maintained. Freedom of movement and abidance to all EU trading laws would also be upheld. If this model was adopted, the impact of leaving the EU on pharmaceutical, as well as most other industries, would be minimised.
More loosely integrated models also exist in which the UK would not pay as much into the EU, though these come with the trade-off of less favourable trading deals. The Switzerland model would see the UK remain a member of the European Free Trade Association, but not the European Economic Area. This model would still require an open borders scenario, a key talking point of the Brexit campaign. Open borders have been claimed as vital to the Swiss pharmaceutical industry, with a high level of cooperation with the EU despite not being a member state.
Other proposed models such as the Comprehensive Economic and Trade Agreement (CETA) agreement – currently in the works between Canada and the EU – could be utilised. Crucially, however, this agreement has been worked upon for nearly a decade and is still not implemented. It would see trade tariffs removed, though UK pharmaceutical companies would need to abide by EU regulations which they would have no say in setting.
To remove the UK from the EU without first establishing trade agreements in the pharmaceutical sector could have long-lasting impacts on services provided by the NHS. Should regulations for the importation of medicines not be set beforehand, it could see imports from the EU stalled at the borders of the UK for an unspecified amount of time until the situation is resolved.
This in turn could put lives at risk in the UK. Any medications not domestically produced would be in short supply, with no clear estimate of when restocks are available. The customs bottleneck could also result in many perishable medications with short shelf lives simply being scrapped. This would result in wide scale wastage would see many medications potentially unavailable in the UK for long periods.
For the EU, the effects of such a decision would be far less apparent. EU regulations remain intact both throughout and after Brexit. While they may suffer a small setback to medical supply lines by the potential lack of a pharmaceutical trade agreement with the UK, imports from the UK to the EU form a small percentage of overall medical imports to the EU. Trade agreements with large pharmaceutical partners such as Switzerland and the US remain intact and so pharmaceutical trade within the EU would remain relatively stable.
It is clear from this alone that the UK has the most to lose from the lack of a quickly established trade agreement. It is also the matter of large pharmaceutical partners that could have wider implications for the UK pharma industry.
Brexit implications for international pharmaceutical trade
After leaving the EU, if Britain alters any regulations regarding pharmaceutical products, many trade agreements will need to be redrawn. This may also require that deals with major pharmaceutical companies will potentially need to be reassessed.
Many trade agreements will be altered that may give a far less favourable deal to the UK. Leaving an economically powerful free trade bloc and potentially requiring trade tariffs to be paid on imports could dissuade international importers from creating a new deal with the UK. If a deal is struck, it is likely the cost to the NHS will be increased, putting further financial strain on the system.
Tariffs have been marked as a major hurdle which will need to be addressed. The rapid growth of the European pharmaceutical market has been linked with the establishment of free trade within European borders. 67 percent of European exports in 2016 were within European borders. To be able to move goods around the continent with no importation charges is a huge incentive to pharmaceutical trade between EU nations.
The trade body the Association of the British Pharmaceutical Industry (ABPI) has warned of a potential crisis of drastically reduced access to the European markets which could lead to hundreds of millions of pounds worth of restructuring costs.
European Medicines Agency (EMA) fleeing elsewhere
Another landmark setback to the UK following Brexit is the proposed relocation of the EMA. The EMA is one of the largest pharmaceutical regulatory bodies in the EU, as well as being the main regulatory body, it also happens to currently be based in the UK. As expected after Brexit many EU bodies based in the UK are moving to the continent. As a result, many British based jobs will be moving alongside the institutions.
Currently 890 staff are employed by the agency, based in London’s Canary Wharf. These jobs will either relocate, or be replaced entirely as the EMA relocates. Where the agency will relocate is a matter of hot debate. The EMA is now highly sought after, with 19 European cities placing applications to host the agency.
The loss of the EMA is not only an impact to British jobs in the pharma sector. It can also be viewed as symbolic of the UK’s influence in the pharmaceutical sector waning, with European nations quick to take the reins. The UK’s loss of influence within European pharmaceutical development could see the decade long, rapid increase of the EU pharma sector stall significantly.
Research stalling? British universities could potentially lose funding
Medical research within a university setting may also suffer a setback following the departure of the UK from the EU. MPs have recently been informed at a Commons committee hearing that the number of EU applicants to UK universities have fallen by 7 percent since the vote to leave the EU.
Before this drop in applications there had been a year-on-year increase in applicants for nearly a decade. The assumption is that the vote to leave has dissuaded Europeans from applying.
The UK has a number of the world’s leading institutions for scientific and medical research. These institutions work closely with their European counterparts. The nature of scientific research — particularly in novel fields — means collaboration is not just necessary but vital to successful research. The current attitude that the UK is distancing itself from Europe is detrimental to this practice.
Collaborations between laboratories in the UK and Europe have allowed for great advancements across many scientific and medical fields. In my own experience during my Master’s degree — working on novel approaches to the treatment of Alzheimer’s disease — the laboratories had a large presence of European students. My own laboratory was mostly inhabited by Italian students and postdoctoral researchers, many with funding from European grant bodies.
The cutback in the number of EU students brings with it a reduction in funding from the EU. This could result in medical and scientific research in the UK slowing in pace. As UK universities work closely with pharmaceutical bodies in the formulation of new approaches to medicine, this may in turn slow the development of new medications and therapies, damaging medical progress globally.
Though the UK could opt back into some EU programmes if more closely tied trade models are adapted, it risks losing funding from large scale EU investment projects. Examples include the Horizon 2020 project, under which €80 billion is to be invested over the period of 2014-24 to fuel innovation and research. Much of this funding will be used to promote pharmaceutical research.
Hope on the horizon?
It is undeniable that media reporting of Brexit is dominated by negative stories. However, there may be hope on the horizon for the pharmaceutical sector. In a letter sent to Michel Barnier, chief EU negotiator, EU pharmaceutical industry leaders sought “to underline the importance of securing ongoing cooperation between the UK and the EU on medicines”.
Following this, the UK Brexit plans have been outlined in a paper that has called for goods already on the market to remain on sale without any additional restrictions. This would avoid the potential restrictions at the border previously mentioned and has been welcomed by trade bodies representing the pharmaceutical industry in Britain.
Dr Virginia Acha, executive director of the Association of the British Pharmaceutical Industry (ABPI), and Steve Bates, chief executive, BioIndustry Association (BIA), said “ABPI and BIA welcome the publication by UK Government of its position paper on ‘Continuity in the availability of goods for the EU and UK’ in support of its negotiations with the EU.”
The EU however has refused to talk on the matter, maintaining that negotiations must stick to the agreed schedule. UK progress on negotiations were set back after Prime Minister Theresa May called a snap general election but failed to secure a majority government and have seemingly progressed very little. Access to the single market continues to be a hotly debated issue.
While the results of the negotiations will remain unclear for some time, what is at stake is all too clear. An EU pharmaceutical industry now worth €225 billion and employing 725,000 people is at risk of a severe set back. For the British pharmaceutical industry the stakes are higher, with the potential to lose a large amount of money and influence worldwide. The pharmaceutical industry contributes 10 percent of the UK’s GDP, employing 73000 people and generates a trade surplus of €3.3 billion. For an industry this important, providing medicines globally, prioritisation during Brexit negotiations is vital.