UK Pharmaceutical Sector Bracing for Regulatory Shake-Up Following Brexit Possibility

From Elza Homstedt Pell of EurActiv, pharmaceutical companies are closely watching the “Brexit” referendum for the UK to leave or stay in the European Union (EU) and how it could shake up the pharma regulators.

Pell argues that the UK would lose its regulatory influence in pharma over the European Medicines Agency (EMA) if the Brits do decide to Brexit. Sweden and Denmark would fight for the new home of the EMA. The UK and US could, in theory, align themselves when it comes to pharmaceutical regulations.

The European Commission has remained mum on the EMA in the case of the UK exiting the EU. It could remain with the EMA, but would lose its current influence.

The consulting leader at PwC in the UK, Jo Pisani, noted that the pharmaceutical industry “benefits from very harmonized regulation in Europe.” Pisani laments that the UK could remain in the EMA, but would have little to no power as a result. The UK would possibly consider joining forces with the Food and Drug Administration (FDA) to form a global regulatory “superpower”. This, of course, would have an effect on US pharmaceutical manufacturers that don’t sell abroad.  The EMA and FDA differ, and it would be more likely that the UK would be a willing participant in the EMA. Either way, the UK seeks to strengthen its own agency, the UK Medicines and Healthcare Products Regulatory Agency (MHRA).

The FDA declined to comment on the possible team-up with the MHRA, but mentioned that there is already a strong bond between the two agencies and would work with whatever agency it needs to. The FDA currently works well with Swissmedic of Switzerland, a country that remains neutral and not a member of the EU, so it wouldn’t be unprecedented to work with a country-specific agency.

The UK would lose the Unified Patent Court (UPC), an EU member state patent court, and the main division would be in Paris. Divisions would be located in Munich or London, but that could change with the potential Brexit. Since the UK would lose their seat, they’d lose the ability to host a division. The Netherlands or Italy could pick up the available vacancy.

Many pharmaceutical industry leaders have voiced their opposition to a Brexit. 93 pharma and life science CEOs, led by Glaxo Smith Kline (GSK), signed a letter calling the UK to stay with the EU. If the UK left the EU, British researchers would lose access to shared funding amongst the member-states.

There is concern that domestic research investment would decline if the UK cannot remain part of the Innovation Medicines Initiative (IMI), which brings together companies and researchers from around Europe. Another focal point is whether the UK would continue to have unrestricted access to the EU market, which it would not.

However, one argument made by the pharmaceutical industry in favor of a Brexit would be that the UK could offer tax incentives to companies. Currently, the EU regulates these tax incentives and the UK would be free to do whatever it wants. It’s possible that the UK could strike deals with other EU countries, but past attempts have resulted in blocks because it would result in unfair market competition.

The European Medicines Agency In-Depth

The EMA was started in 1995 and has been based in London ever since. The EMA is funded by the EU, pharmaceutical companies, and subsidies from member-states. The purpose of the EMA was meant to create a harmony, or centralized standard, for existing national regulatory agencies.

The European Union is the source of roughly one-third of the new drugs available in global markets annually. If a Brexit occurs, the EMA would relocate to another EU country. The Brexit vote comes less than a week before the EU summit in Brussels, and all the world’s eyes are glued to the UK.

Many in the international politics community believe that if the UK leaves, other countries will vote to exit as well. It’s possible that the UK leaving could spark the EU to lose more members, and thus diluting its overall authority in the region. Time will tell, and national leaders might have some decisions to make in the coming days. Nonetheless, it’s a thrilling addition to the EU’s storied history.

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