Brexit, EMA

What does Brexit mean for Pharmaceutical Companies?

The whole world is holding its breath to see whether Britain’s withdrawal from the European Union, nicknamed “Brexit,” will have a “hard” landing – meaning a strict break with the European common market and open emigration – or a “soft” one, meaning that some parts of the treaty may be maintained. Theresa May, Prime Minister, favors a harder landing, but the parliamentary elections on June 8, 2017 showed a decrease of support for her party.

The biggest impact of a hard Brexit would be on trade and employment: the UK does a large portion of its imports and exports with other nations in the European Economic Area (which includes a few countries such as Norway that are not part of the more formal European Union). Open emigration is at least as big an issue: on a recent trip to London, I’d seen a newspaper article that said that 30% of restaurant workers in London are citizens of other EU nations, with similar figures in other service industries – losing those workers could cripple many businesses.

Taking a closer look at the pharmaceutical and other life sciences industry – after all, if you’re reading this blog you’re likely a member of that group – the impact could be enormous. According to the World Atlas, as of 2014 (the most recent year for which I can find statistics) the UK had the 8th largest pharmaceutical market in the world (Between Italy and Canada), at around $24B. Realize, though, that the US market is over $330B, Japan at #2 is $94B – the UK is actually only 3% of the world pharmaceutical market. More significantly, though, it’s about 13% of the total EU market.

The same year, per Wikipedia, the UK was also the world’s 8th largest source of pharmaceutical exports. That’s nothing to sneeze at: PMLive reports that it’s the third most important economic sector for Britain, with more than a £2.8B trade surplus and employing 73,000 people (other accounts list about 140,000 employees, and nearly a half-million counting related industries including transportation, retail, etc.).

MIT reports that for 2015, more than 40% of those exports went to other countries in the EU – duty free, per the EU treaty. It’s unlikely that those exports would disappear, but tariffs could be applied, raising the costs of products produced in the UK, and making EU-based competitors more favorable. On the other hand, with the decline in the value of the pound, imports from the UK to other countries could be more attractive (Pharma Times July 2016)

It’s extremely unlikely that the UK’s health authority, the Medicines and Healthcare products Regulatory Agency (MHRA), would stop recognizing medications already approved by Mutual Recognition Procedure (MRP), Decentralised Procedure (DCP) or the Centralised Procedure (CP). The MRP and DCP processes use the review in one country (the Reference Member State) as the primary justification for market approval – with adjustments by the other Concerned Member States. In those cases, there is at least a UK-specific approval on the books. The Centralised Procedure uses only two national agencies as the Rapporteur and Co-Rapporteur, which may mean MHRA will scramble to make local equivalents of those approvals (thankfully, the CP is a small fraction of marketing applications).

However, patients in the UK may have to wait longer for future drug approvals, since only the MHRA’s review process will be available, versus depending on EMA or another reference state to do the brunt of the review work for those drugs whose reviews are not initiated in the UK. In an article on PharmaPhorum, David Jefferys, senior vice president at Eisai, was quoted as saying, “UK patients may be getting medicines 12, 18 or 24 months later than they would if we had remained in the European System”

And that’s if they get them at all: The Independent quotes Anthony Hatswell of BresMed Health Solutions and University College London saying that the alternative would be to rubber stamp EMA – or even FDA – approvals, “without having any input into them.” Otherwise, a separate approval process might raise the costs to manufacturers such that they may not deem it worth entering the UK market.

Similarly, products where the UK is the Reference Member State will need some changes to registrations to create a new Reference State within the EU. In the Heads of Medicines Agencies annual statistics presentation, the UK is the third-most-frequent location for Reference Member States for the MRP and DCP.

MDP and DCP by Reference Member State in 2014

RAPS Regulatory Focus reports several other regulatory impacts, based on a FAQ from EMA. Essentially, companies headquartered in the UK will need to establish a presence in an EEA country. This includes the Qualified Person for Pharmacovigilance (QPPV), the location of the Pharmacovigilance Master File Location (MFL), Orphan Drug designation, and Small/Medium Company license benefits.

Another major impact to the industry is to EMA itself, currently located in London’s Canary Wharf district. The agency has already announced that they will relocate, with its 900 staff, and 36,000 visiting experts per year contributing to the host country’s economy. The decision as to where they will move will occur in November of 2017 – a rapid decision, but it’s important, in order to be able to recruit staff who would face uncertainty as to jobs in London. That’s affecting initiatives throughout EMA: most projects are scheduled to either end before the move, or not begin until after the move has been completed. IDMP (Identification of Medicinal Products) is the only project known to span the relocation, but even they are expecting a six-month ‘hold’ in their launch countdown because of the move.

Reuters reports that as of early June, cities from 21 of the other 27 EU countries have declared their interest in hosting EMA. The winning country is likely to be one that has a significant life sciences economy, as well as being able to handle the transportation and hotel/conferencing. Formal offers from the member states must be submitted by July 31. I’m hoping for Barcelona, strictly for tourism opportunities flanking meetings. I expect that the size of the pharmaceutical economy and the presence of experts will likely be major influencers – in which case, I’d put my money on Amsterdam or Copenhagen, based just on the number of MRP/DCP reviews in the chart above.

Please contact ACUTA to learn more about how we can help your company weather these changes, including updated submissions on either side of the English Channel.

Author: Joel Finkle

Joel became embroiled in electronic submissions when regulatory came downstairs and asked "Can we convert all our clinical study reports to WordPerfect format for the FDA reviewer?" and he didn't say, "No." Since then, he's been involved with custom CANDAs, PDF publishing, eCTD, document template automation, Regulatory Information Management, HL7's RPS, and the ISO IDMP standard. He joined ACUTA in April of 2017. He'd share some of his famous tomatillo salsa with you, but he can't carry it on airplanes.

2 Comments on “What does Brexit mean for Pharmaceutical Companies?

  1. Thanks to Tom Macfarlane of Accenture for additional details on the Centralised Procedure, and to Sandra Vignes of ArisGlobal for a few details I got wrong.

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