Pharma Companies Raise Supply Concerns Post Brexit

By Patricia Van Arnum - DCAT Editorial Director

November 15, 2017

As the UK seeks to exit the European Union (EU), the pharmaceutical industry has raised concerns over the impact of Brexit.

A recent study by the European Federation of Pharmaceutical Industries and Associations (EFPIA), an industry trade association that represents pharmaceutical companies and national pharmaceutical trade associations in Europe, outlined the current level of pharmaceutical manufacturing and trade between the UK and the EU and the concerns by its members over the future of pharmaceutical trade post Brexit.

Change is coming

The implications of Brexit come at a time when the EU will be deciding on one order of business in a post-Brexit environment, namely the relocation of the European Medicines Agency, the pharmaceutical regulatory body of the EU, now headquartered in London, to another host city in the EU. EU member states will vote on November 20, 2017 on a new host city for the EMA. As of that date, the agency will have less than 17 months to conclude its move and take up its operations in the new host city by the end of March 2019.

The EFPIA Director General Nathalie Moll issued a statement earlier this week (November 13, 2017) to emphasize the need to ensure minimal disruption to patients, healthcare systems, and the availability of treatments in the relocation. “As we are now just a week from the vote, we are calling upon Member States to base their decision on supporting the continuity of the EMA’s critical functions, its ability to retain staff and access expert networks,” she said in an association statement. “With the numerous technical aspects that need to be managed to ensure continuity of care for patients in relation to Brexit, Europe must get the EMA’s relocation right.”

Pharmaceutical manufacturing and trade in Europe

In the broader scheme of the negotiations between the UK and the EU for a post-Brexit trade policy, the EFPIA is urging the importance of pharmaceuticals in such a policy given the role that the UK now plays in the pharmaceutical industry in the EU. “For life-saving and life-improving medicines, the EU and UK cannot afford to wait any longer to ensure that the necessary cooperation on medicines is in place from the day the UK leaves the EU,” said the EFPIA Director General in a November 9, 2017 statement.

The EFPIA offered statistics from a recent EFPIA member survey to illustrate the volume of pharmaceutical manufacturing and trade now in the UK. More than 2,600 final products have some stage of manufacture based in the UK.

On a trade basis, there are 2,900 pharmaceutical products exported from the UK to the EU, of which 90% are final products. In turn, the UK imports 3,200 pharmaceutical products from the EU, of which 70% are final products. Forty-five million patient packs are supplied from the UK to the other 27 member states of the EU and countries in the European Economic Area (EEA) each month. More than 37 million patient packs are supplied from the EU-27/EEA to the UK each month.

In this context, 45% of EFPIA members in the recent EFPIA survey expect trade delays if the UK and Europe fell back to World Trade Organization rules. To prevent these delays, the EFPIA is urging that “the EU and UK should agree on a comprehensive agreement that ensures maximum alignment between EU and UK pharmaceutical laws,” said the EFPIA in the November 9 statement.

The association offered further data to show the level of commercial and pipeline products in the UK and the need to come up with a pharmaceutical policy post-Brexit. It notes that in a post-Brexit situation, more than 12,000 licensed presentations of centrally authorized medicines will require a separate market authorization in the UK in order for the medicine to be prescribed to patients. Approximately 17% of centralized marketing authorization applications in the EU are held in the UK. In addition, there are more than 1,500 clinical trials being conducted in multiple EU member states that have a UK-based sponsor. More than 50% of these trials are scheduled to continue beyond March 2019, according to information from the EFPIA.

The EFPIA also provided information regarding the costs in moving batch releases between the UK and the EU. The EFPIA survey showed that 60% of its member have batch release from the UK that comprise 1,300 products for EU distribution from UK batch-release and test sites. If these products were to move to new sites, the EFPIA study estimates that 4,000 review months would be needed between EFPIA members and the EMA to carve out product lifecycle management (using a 90-day standard Type II chemistry, manufacturing and control (CMC) variation timeline). Forty-five percent of EFPIA members believe that Qualified Person/laboratory capacity is insufficient for retesting products released from the UK.

Moving policy

Given these numbers, the EFPIA emphasized the need for effective trade policy post Brexit. “Even in the context of the Brexit negotiations where all sectors are looking for clarity on the future, it is important to recognize that the medicines sector is different,” said Moll in the EFPIA November 9 statement. “The medicines we make impact directly on peoples’ health. Securing ongoing cooperation on medicines regulation between the UK and EU is the best way of ensuring that patients across Europe continue to have access to safe and effective medicines.”

Mike Thompson, chief executive of the Association of the British Pharmaceutical Industry (ABPI), an industry trade representing pharmaceutical manufacturers in the UK, commented on the EFPIA study. "This survey highlights not only the sheer scale of pharmaceutical industry integration across Europe – but also how essential this integration is to the successful and timely supply of live-saving treatments to more than 500 million patients,” he said. “To avoid significant disruption to the supply, regulation and safety monitoring of medicines for patients in the UK and the EU, agreement and legal certainty on these future arrangements is urgently required."

With respect to pharmaceutical trade between the UK and the EU, the ABPI is advocating for certain policies. Due to the complexity of import/export declarations and inspections, and the existing integrated nature of supply chains, the ABPI said that the UK should seek to negotiate the ability to trade and move goods and capital across borders with the EU for pharmaceuticals and medical supplies, through several means: (1) maintaining trading terms for life-sciences goods and services that are equivalent to those of a full member of the EU Customs Union (which consists of EU member states, Monaco, and some territories of the US that are not part of the EU) and the European Commission’s common system of value-added tax; (2) continued alignment of good manufacturing practice (GMP) and good distribution practice (GDP) standards with the EU, including reaching an agreement that allows UK-based Qualified Persons decisions and inspections to be recognized between the EU and UK; and (3) reaching an agreement with the EU to maintain the benefits of the Parent-Subsidiary Directive (which allows an exemption of withholding tax at source on dividends distributed between EU companies) and the Interest & Royalties Directive (which allows for a withholding tax exemption on royalties and interest if the shareholding is a minimum of 25% and a minimum period of 1 year).

The EFPIA established a Brexit Taskforce to coordinate the work of the pharmaceutical industry across Europe. With regard to Brexit, the EFPIA has outlined certain priorities: (1) securing ongoing alignment, cooperation, and mutual recognition between the UK and the EU regarding the authorization, testing, and surveillance of medicines; (2) providing certainty for EU and UK citizens working in the pharmaceutical industry by agreeing to an immigration system that allows pharmaceutical companies to employ talent from around the world and that facilitates skilled UK and EU nationals working across Europe; (3) maintaining scientific research collaboration between the UK and EU; (4) applying equivalent standards of intellectual property (IP) in the UK after Brexit and maintaining the existing level of IP incentives across the EU; and (5) reaching a comprehensive agreement between the UK and EU that ensures maximum alignment between EU and UK pharmaceutical laws to avoid causing any disruption to existing quality control arrangements and to the supply of medicines in Europe and the UK.