Pharmaceuticals and Brexit: Keeping the industry healthy
It is estimated that each month 37 million packs of medicines are supplied from European countries to the UK with 45 million heading in the other direction. Depending on what is agreed between the UK and the EU, Brexit threatens to disrupt this important trade flow. A recently leaked government study suggested that in a worst case scenario some patients may face medicine shortages within a matter of two weeks.
This would be symptomatic of the highly regulated and highly integrated nature of the European pharmaceutical industry. Both the manufacturing and marketing of pharmaceuticals are underpinned by a common European regulatory framework, featuring around 50 national regulatory authorities from 31 countries (when including the EEA) as well as the European Commission and the European Medicines Agency (“EMA”).
Here, we examine the degree to which both aspects of the industry are interwoven with two aspects of this regulatory system before considering what steps can be taken to minimise Brexit’s effect.
The European pharmaceutical market is characterised by deeply integrated supply chains that span multiple member states and utilise ingredients from third-countries. To illustrate the point, more than 2,600 medical products in the EU are partly manufactured in the UK and 80% of pharmaceutical ingredients come from outside of Europe, predominantly India and China. All EEA medicine manufacturers and importers from non-EEA countries require a national authorisation which, in the case of the UK, is issued by the Medicines and Healthcare Products Regulatory Agency (“MHRA”). Authorisation is subject to a number of conditions, and the manufacturer or importer must have an expert at its disposal to conduct batch testing (the laboratory testing to ensure that pharmaceutical products conform with the terms of their marketing authorisations, for quality and safety purposes). Significantly, only one batch test is needed within the EEA.
After Brexit, with the UK as a third-country, UK pharmaceuticals would be treated in the EEA as third-country imports, requiring duplicate batch testing in the EEA by an entity with an import authorisation from an EEA national authority. The costs of establishing additional laboratories and extending existing authorisations in other European countries to perform tests currently carried out in the UK is already proving significant for groups like GSK and AstraZeneca. It can take 12 to 24 months, or in some cases even longer, to have sites up and running. This may prompt manufacturers to reconsider EU-UK supply chains as well as the sustainability of marketing certain products. Depending on timescales, it might also result in the temporary withdrawal of products from the UK or EU markets, thereby affecting the availability of some medicines to patients.
Brexit also poses issues in relation to marketing authorisations (so called because they are required in order to place a pharmaceutical on the market). Within Europe, these can be obtained via one of four routes, the centralised, national, decentralised and mutual recognition procedures. The centralised procedure, which is mandatory for certain products such as new active substances for treating cancers, allows pharmaceutical companies to apply for a single EU-wide marketing authorisation. This is granted by the European Commission on advice of the EMA. One difficulty in respect of Brexit is that the authorisation must be held by an EEA entity, which means that thousands of existing authorisations are being transferred from UK entities, potentially a significant administrative burden for industry and regulator alike. On the UK side, under the terms of the European Union (Withdrawal) Bill as it currently stands (and subject to the statutory instruments to be made under it), all EU authorisations would continue to be valid under UK law wherever the holder is incorporated – however, the MHRA as an operational and administrative matter would need to adjust to its greatly increased remit.
The more worrying potential issue arising from having two distinct marketing authorisation procedures is that it may take longer for medicines to reach the UK. The standard submission sequence for medicine approval is the Food and Drug Administration (USA), the EMA, the Pharmaceutical and Medical Devices Agency (Japan) and then smaller countries – the order being dependent on market size. Relatively smaller countries that have their own drug approval processes, such as Canada and Australia, must often wait longer for pharmaceutical companies to apply for approval for medicines. Given its size, it is likely that the UK would be a lesser priority than the US or the remainder of the EU, although presumably higher priority than Canada or Australia. The result is newer medicines would perhaps be launched later in the UK and take longer to reach patients.
To minimise disruption, future EU-UK arrangements could maintain close alignment of pharmaceutical manufacturing and marketing regulation. Fortunately, there are two relatively straightforward ways in which this could be achieved.
Firstly, the FTA should provide for the mutual recognition of good manufacturing practices. The EU already has such agreements in place with Japan, Switzerland, Canada and the USA. Given that UK and EU practices will be identical in this respect at Brexit, this should not be too ambitious a goal. Importers of UK pharmaceuticals would still require authorisation but, importantly, the importer would not need to perform duplicate batch-testing. Secondly, the UK could adopt the industry suggestion of “one recommendation, two authorisations”, whereby the MHRA could adopt a UK authorisation on the basis of an EMA recommendation for a marketing authorisation. This could go hand in hand with MHRA collaboration with the EMA, building on the existing strong links between the two institutions. This would allow pharmaceutical companies to receive two market authorisations without having to duplicate procedures.
Considering the volume of trade at issue and its human importance, sorting out the pharmaceutical sector sooner rather than later should be a priority for both parties.
Written by Samuel Coldicutt and Luigi Pedreschi, PhD candidate at the European University Institute in Florence.