Regulatory divergence biggest Brexit concern for pharmaceuticals, says report

Out-Law News | 17 May 2018 | 4:31 pm | 2 min. read

The biggest Brexit-related concern for pharmaceuticals companies is that the UK will deviate from EU regulation of the market, according to a new report by a committee of MPs.

The Business, Energy and Industrial Strategy (BEIS) Committee warned that the cost of new drugs could increase in the UK if the UK's regulatory framework diverges from the EU's post-Brexit.

"What little benefits there may be of regulatory divergence would be greatly overshadowed by the costs and loss of markets and influence the UK would face," the BEIS Committee said in a new report. "It makes commercial sense for the UK to remain aligned with standards in the EU market, given the significant amount of trade it provides for both the UK and EU and the access it gives both to medicines. The government should pursue this approach."

The BEIS Committee also urged the government to seek clarity from the European Commission on its position regarding the UK's membership of the European Medicines Agency. It said the government should "prioritise a form of membership … that maintains cooperation" between the EMA and UK's Medicines and Healthcare products Regulatory Agency and that "does not require replication of manufacturing sites, testing or roles".

The committee's report was published at the end of an inquiry it held on Brexit and the implications for UK pharmaceuticals. Major pharmaceutical companies AstraZeneca, Johnson & Johnson, Merck and Roche were among the organisations to outline their views on the potential impact of Brexit in submissions to the committee's inquiry.

In the report, the committee cautioned of the potential impact a 'no deal' outcome from Brexit negotiations could have on the UK pharmaceuticals sector, and further urged the government, through the ongoing negotiations, to "ensure that UK pharmaceutical companies can conduct effective clinical trials through continued cooperation with European institutions and with mutual recognition of results".

Catherine Drew, a specialist in life sciences at Pinsent Masons, the law firm behind Out-Law.com, said: "The report aligns with the views that we are hearing from clients. The difference in size and so priority of the UK market compared with the EU market as a whole means that, for the UK to remain competitive as a marketplace, alignment on the regulatory front is an important goal."

According to the UK government, the topic of Brexit and "the challenges and opportunities it presents along with priorities for the [life sciences] sector" was discussed at the inaugural Life Sciences Council meeting on Wednesday. The Council is a partnership between government and industry and has been established to shape work on the implementation of the life sciences strategy and 'sector deal'.

"Industry leaders were clear on the government’s commitment to achieving a good outcome for the sector, both for medicines and the wider sector," a Downing Street spokesperson said.

The life sciences sector deal, announced by the government late last year as part of its broader industrial strategy plans, envisaged increased investment in UK life sciences by both the government and industry. In support of those plans, the government announced in January that it would commit £70 million towards the establishment of new centres for manufacturing medicines in the UK. Japan-headquartered pharmaceutical company Eisai announced on Thursday that it plans to extend its existing investment in dementia research in the UK.

The sector deal also highlighted plans for greater collaboration between life sciences companies and the NHS, including in exploring how data can be used to deliver better treatments.

According to the Downing Street spokesperson, at the first Life Sciences Council meeting "the importance of data to both industry and patients was a key topic of discussion".

The fourth annual Life Science Competitiveness Indicators report (37-page / 867KB PDF), published earlier this week, revealed record annual turnover across the UK's life sciences sector of over £70 billion and that the sector attracted more than £660 million of private equity investment via 67 projects in 2016.