As Brexit draws closer, sectors are coming to terms with the implications of what separation may mean. The pharmaceutical industry was not one that attracted vast attention at the start of the negotiating process, with banking and farming taking up more column inches. However, as time has progressed the press, politicians and the sector itself are now trying to get to grips with what Brexit means for pharma.

The leaked government impact assessments, which found their way to BuzzFeed in late January,  highlighted that “almost every sector of the economy included in the analysis would be negatively impacted […] with chemicals, clothing, manufacturing, food and drink, and cars and retail the hardest hit”.

Pharma has already seen one change with the European Medicines Agency (EMA) set to move to Amsterdam. While at first glance the location of a supranational agency might not seem significant, it gives national industry a clear link to an important regulatory body, and is a big prize for the country. This explains Milan’s desire to wrestle the EMA from Amsterdam and highlights the cost to the UK. The headquarters of a major regulatory agency attracts business and status for a city, and pharma will help that along.

For UK pharma, this could be the tip to a big iceberg in choppy waters. The EMA authorises medicines in the EU and, if there is no deal in place, all medicines made in the UK and going to the EU will need to be reassessed once exported, and vice versa. This will be time consuming for both sides of the Channel but, due to market size, will have a bigger relative impact on industry in the UK. The EU has even warned its pharma industry to rethink its supply chain and consider what contingency plans it needs to make. With UK-based companies holding the marketing authorisations and licences for about 2,400 medicines across the EU according to the European Federation of Pharmaceutical Industries and Associations, there is a looming impact for companies and patients. The UK has a small patient population and, as a standalone market, is not comparatively as commercially important for companies.

Awareness of these complications has been growing in Westminster and Whitehall and has led the Business, Energy and Industrial Strategy Committee chair, Rachel Reeves MP, to warn that Brexit may affect the cost of medicines to the NHS and hit UK pharmaceutical investment. Like in many other sectors, decades of cross-continental integration and harmonisation will need to be unpicked. However, the nature of the pharma industry makes this an even more complex and time-consuming process.

The Brexit Health Alliance, a coalition of industry, patient and public health organisations, warned in a paper at the end of January that anything other than the “copy and paste job” with European regulations will spell trouble for UK pharma and patients. Copy and paste is achievable, as David Jefferys the Senior Vice-President for the Japanese pharma firm Eisai said; “obviously, if there’s a mutual recognition agreement for and on behalf of EU27, or an extended transition, [this] problem goes away”.

To believe this, a pharma company requires a fair amount of faith in the negotiation process and the deal (or interim transitional deal) which is stuck. However, there is substantial work still to be done by both sides. With the UK and EU unable to agree the broader custom arrangements, doubt is cast on detailed sector specific agreements. A further concern for the sector is how the ‘copy and paste’ scenario doesn’t appear to be appealing to the government, or more importantly, Eurosceptic Tories who are pivotal for the government’s votes. Even Jeremy Hunt, the born again Brexiteer, will be less willing to portray that nothing has changed after Brexit.

While it might be the industry’s hope that the government strikes a deal soon – Emma Walmsley (GSK’s Chief Executive) wants a transition deal by April – current trends in the Brexit negotiation are less than positive. While industry bodies are warning pharma businesses to contingency plan for a Hard Brexit or potentially no deal, there is a cost associated with this work. This is why the industry is keen for news sooner rather than later, so planning can begin and resources are not wasted. An added dimension which makes this more problematic for the industry is the UK and EU’s position that “nothing is agreed until everything is agreed” which adds lingering uncertainty until the final deal is struck.

Going forward the pharma industry may have to make tough or new decisions in the market place. This might explain the rise in pharma acquisition and consolidation at the start of this year, or the EU proposals to create common Health Technology Assessment tools, methodologies and procedures.

Medicine will always be big business. The question that hangs over the sector with Brexit is whether politicians are willing and able to create the right regulatory environment for the UK market to not just survive but thrive. With the Brexit debate rumbling on there might not be much clarity on this issue for a while and the industry might have to get used to this uneasy period.

Alternatively, the pharma industry’s lobbying work, which has raised the profile of the sector to one that must be considered in the Brexit process, positions the sector as an important voice in the debate. What matters now is whether the industry can effectively use the platform.

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