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Pharma firms call on UK government to ensure frictionless EU trade after Brexit

Out-Law News | 05 Dec 2017 | 10:23 am | 4 min. read

Major pharmaceutical companies have called on the UK government to ensure that smooth trade with EU countries can continue after Brexit.

AstraZeneca, Johnson & Johnson, Merck and Roche were among the organisations to outline their views on the potential impact of Brexit in submissions to a UK parliamentary inquiry.

The companies each stressed the importance of barrier-free trade between the UK and EU post-Brexit and further called on the government to maintain a regulatory regime that is aligned with that in place in the EU and to fill a funding gap for research that will be left by the withdrawal of EU funding.

"The message from industry is loud and clear that the relationship between the EU and UK going forwards must be one of close cooperation and alignment as far as possible," said Catherine Drew, specialist in life sciences at Pinsent Masons, the law firm behind Out-Law.com. "In the event that this is not achieved, industry has serious concerns about the future access to medicines for patients in the UK."

There are opportunities stemming from Brexit, however, for the UK to "facilitate or sponsor the next phase of the life cycle of the life sciences sector – the move towards personalised and complex biological solutions to the world’s healthcare problems", said Helen Cline of Pinsent Masons. This might include taking the lead on the regulation of, for example, gene and cell therapies, tissue engineering and regenerative medicines, she said.

“Outside the EU the UK could road-test innovative approaches to regulation and become the R&D base for the next generation of life sciences companies working on addressing these issues," Cline said.

AstraZeneca warned that its "ability to conduct and run clinical trial programmes in and from the UK" could be undermined due to the "administration, delays and reduction in frictionless trade", as well as the additional cost, it would face if UK-EU trade was governed by World Trade Organisation (WTO) rules and tariffs post-Brexit.

"Given the importance of regulation and the risk of non-tariff barriers to biopharmaceutical trade, AstraZeneca would like to see an agreement negotiated with the EU that allows the UK to remain a part of the EU regulatory framework for medicines research, development, manufacture and supply," AstraZeneca said. "This should also ensure the continued frictionless movement of goods between the UK and EU and with those countries with which the EU has FTAs (free trade agreements)."

Johnson & Johnson warned that the UK "could become a much less attractive place to conduct research" unless action is taken by the UK government to support research and development (R&D).

It said: "The UK is currently a net beneficiary of R&D funding opportunities from the EU such as the Horizon 2020 programme. J&J welcomes HM Treasury’s commitment to underwrite funding for Horizon 2020 projects while the UK remains part of the EU. However, action is needed to address the future funding gap created by a withdrawal from EU initiatives such as Horizon 2020, as well as further initiatives that encourage R&D investment post-Brexit. Clarity is sought on the government position in this respect."

"Brexit has created the potential for a long-term research funding crisis that would risk a serious loss of intellectual and research project capital from the UK, as research projects are attracted to other countries such as Germany and Poland," it said.

Merck said that Brexit offers the UK government an opportunity to "streamline the regulatory and access environment, for example for new medicines", but said "remaining part of, or close to, the EU regulatory framework is vital to ensure ongoing safe decision-making on new products and continued patient access to medicines".

Roche said that patient safety could be at risk where there is not "maximum alignment between UK and EU on trade, regulation and pharmaceutical supply chains". It identified "non-tariff barriers" that could arise were the UK to leave the Single Market and Customs Union.

"A significant risk is that all goods due to be moved between the UK and EU could be held either at border checks, in warehouses or manufacturing and/or subject to extensive retesting requirements," Roche said. "This would lead to a severe disruption of most companies’ supply chains, which would result in potential supply disruptions of life-saving medicines and in vitro diagnostics. In order to avoid this potentially disastrous and dangerous life-threatening situation for patients, ‘frictionless trade’ post-Brexit has to be a top priority for the negotiations."

In evidence they submitted jointly, the Association of the British Pharmaceutical Industry and the BioIndustry Association warned that industry could view the UK as a "second priority market" if UK medicines regulations differ from those that apply across the EU.

"A standalone UK medicines regulatory system, if separate from the EU, will lead to increased costs and considerable delay or no regulatory submission to develop new medicines in the UK," the trade bodies said. "For global companies, the UK market is not sufficiently large to justify significant additional costs, at just 3% of global pharmaceutical sales. There is a risk that this would lead to the UK becoming a second priority market for new products and innovative medicines being made available to UK patients later than those in the EU."

The Business, Energy and Industrial Strategy (BEIS) Committee is due to continue its inquiry with oral hearings this week.

Rachel Reeves, chair of the BEIS Committee, said the evidence shows that Brexit could impact on the cost of medicines and investment in the UK by pharmaceutical companies, and further warned that Brexit may threaten "access to new and innovative research and products".

"There are serious concerns raised around the future regulation of pharmaceuticals, mutual recognition of medicines, and the prospect of damaging disruption to cross-EU drug supply chains," Reeves said.

"This is very concerning, with uncertainty risking the UK becoming a less desirable place for investment and development in a growing, productive industry. We are keen to examine the detail of these concerns and to hear from the industry what it wants from the government to ensure the smoothest possible transition as we leave the EU," she said.

The UK government recently announced plans to invest more in R&D as part of its industrial strategy. Life sciences is one of the sectors that the government has said it will provide special support to as part of its plans to boost productivity under the strategy.