18 WAYS A BREXIT WOULD AFFECT PHARMA

18WAYSABREXITWOULD
AFFECTPHARMA
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15May2015
FrancescaBruce,IanSchofield& EleanorMalone

INWARD INVESTEMENT
After the Conservative party won the UK General
Election with a clear majority on 7 May, it looks like
it is full speed ahead to an "inout" referendum on
membership of the European Union. Prime
Minister David Cameron has pledged to hold the
referendum by the end of 2017, but it is looking
increasingly likely that this could happen as soon
as 2016.
1

EU LEGISLATION
The life sciences sector in the UK and the rest of
Europe is subject to a huge body of EU legislation,
rules and guidance in the form of Directives,
Regulations and scientific and procedural
guidelines. These laws and regulations affect all
aspects of the sector, from drug assessment and
authorization, clinical trial approval, trial reporting,
pharmacovigilance, and animal testing, to cross
border healthcare, joint procurement of emergency
measures (including pandemic vaccines) and
tackling the trade in falsified medicines. What
would happen if these laws and guidelines were no
longer applicable in the UK?
2

REGULATORY INCENTIVES
Companies developing new drugs in the UK can
take advantage of a number of services and
incentives, such as scientific advice from the EMA,
market exclusivity for orphan drugs, and the
chance to take part in the adaptive pathways
experiment. Originator companies also gain the
EU's added IP protections such as supplementary
protection certificates, data and market exclusivity,
etc.
3

ROLE OF THE MHRA
In the event of a Brexit, the role of the UK
regulator, the MHRA, would change, as would the
way that new medicines are approved in the UK.
The MHRA authorizes some products for
marketing, but most new drugs go centrally via the
European Medicines Agency. Centralized
approvals would no longer be valid in the UK, and
the MHRA would probably have to reauthorize
them as national drugs.
4

LAUNCH PRIORITIES
Firms think carefully about their launch sequences
and an EU exit could see the UK slip way down the
priority list if companies have to jump through extra
hoops to win approval there (see above). The UK's
fragmented market access systems and reluctance
to pay high prices could compound the situation,
making the UK a less attractive launch market.
This might also affect the UK's attractiveness as a
place to do clinical trials.
5

THE EUROPEAN MEDICINES
AGENCY
How would the EMA be affected by a UK
withdrawal? Its headquarters are in London, and it
has just completed its move into brand new offices
in Canary Wharf. Where would it go if the UK were
to leave the EU, and would happen to its
permanent staff in London? What about the
services that it offers to UK companies on new
drug development, such as scientific advice?
6

INTERNATIONAL TIES
The EMA has close ties with other major world
regulators such as the US FDA, Health Canada
and the Japanese PMDA. Agreements with the
FDA include parallel processes for giving scientific
advice to companies and assessing quality by
design, as well as a common application form for
orphan drug designation. The MHRA might need to
rethink its relations and agreements with these and
other regulators.
7

CLINICAL TRIALS
The new Clinical Trials Regulation, due to take
effect sometime in mid2016, will introduce a single
portal for submitting applications to begin trials in
the EU, together with an EUwide trials database
and new requirements for trial data disclosure.
Would an exEU UK have access to the portal and
database?
8

R&D FUNDING
The EU is very active in funding research and
development programs. Companies (particularly
SMEs) and researchers benefit from EU research
programs like FP7 and Horizon 2020. The latter is
a sevenyear research and innovation program
with almost €80bn of funding that is intended to
remove barriers to innovation and help public and
private sectors to work together. UKbased firms
would lose access to these opportunities.
Meanwhile, the UK is the EU's second biggest
contributor to the EU budget; in 2013 its net budget
contribution was around €11bn.The EU would
likely have to rethink its spending in light of a
Brexit. It's unclear where the axe would fall, but
some R&D programs may be at risk of losing some
or all of their budget.
9

PUBLIC/PRIVATE PARTNERSHIPS
The EU is very active in funding research and
development programs. Companies (particularly
SMEs) and researchers benefit from EU research
programs like FP7 and Horizon 2020. The latter is a
sevenyear research and innovation program with
almost €80bn of funding that is intended to remove
barriers to innovation and help public and private
sectors to work together. UKbased firms would lose
access to these opportunities.
Meanwhile, the UK is the EU's second biggest
contributor to the EU budget; in 2013 its net budget
contribution was around €11bn.The EU would likely
have to rethink its spending in light of a Brexit. It's
unclear where the axe would fall, but some R&D
programs may be at risk of losing some or all of their
budget.
10

INCENTIVES
Different member states offer a range of incentives
for keeping business in the EU, for example tax
back for using services from a company based in
another member state. Some UK companies could
seem less attractive in the event of an exit.
11

PATENTS
Different member states offer a range of incentives
for keeping business in the EU, for example tax
back for using services from a company based in
another member state. Some UK companies could
seem less attractive in the event of an exit.
12

ACCESS TO MEDICINES
The UK plays a key role in initiatives like early
access programs, adaptive pathways, international
collaboration on health technology assessments
and the like. A Brexit could jeopardize UK
participation in panEuropean projects intended to
speed up patient access to innovation.
13

TRADE ASSOCIATION LINKS
UK pharma and biotech industry bodies have
strong relationships with their European
counterparts: ABPI/BIA/EFPIA, BGMA/EGA,
PAGB/AESGP, to name but a few. What would
become of these ties, and would the UK industry
see a decline in its lobbying power abroad?
14

TRADE TREATIES
The UK is involved in the negotiation of
international trade treaties as part of the EU
discussions led by the European Commission. Left
outside the EU, it would need to configure its own
trade relations with the likes of the US, Canada
and nations of Southeast Asia.
15

TAX INCENTIVES
Pulling out of the EU could give the UK greater
freedom in its tax regime (its "Patent Box"
incentive scheme was reined in after Germany
cited EU rules for fair play.)
16

FREEDOM OF MOVEMENT
Pulling out of the EU would put an end to the free
movement of goods and services between the UK
and the other 27 member states. This could have
implications for the movement of scientists, life
science company staff and researchers across
Europe, as well as on trade.
17

ECONOMIC STABILITY AND
VIABILITY OF THE EU
On a wider scale, the departure of one of the EU's
biggest and more stable economies could have a
destabilizing effect on the rest of the Union. Aside
from the economic impact, it could prompt other
members to rethink their position in the EU.
There are also further implications for industry in
general in areas such as merger and competition
rules, taxation, employment law, data protection,
healthcare systems, hospital tendering, and so on.
18

18 WAYS A BREXIT WOULD AFFECT PHARMA

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18 WAYS A BREXIT WOULD AFFECT PHARMA