Doubts over ‘No Deal’ rise: How Pharma is preparing for Brexit

Following the majority rejection of a proposed withdrawal agreement, the pharmaceutical industry is left to prepare for a 'no deal' scenario




The UK is scheduled to leave the European Union on the 29th March 2019. However, the UK Government is no closer to securing an adequate withdrawal agreement, creating continued uncertainty.

On the 15th January, Prime Minister Theresa May’s proposed Brexit deal to set the terms of the UK’s exit was rejected by 230 votes in a historic defeat. If no agreement can be made between the UK and the EU prior to the 29th March, it may not be possible to secure the 21 month transition period necessary to address the issue of cross-border trade.

An anonymous poll of the members of the Ethical Medicines Industry Group, which represents branded drug manufacturers in the UK, found that 73% of their members have little or no confidence that the UK government will be able to obtain a good deal.

73% of drug manufacturers lack confidence in the UK government's ability to secure a good deal pre deadline

The UK Government has warned that without a sufficient exit agreement, access at UK ports could be significantly reduced for up to six months. The E.U echoed these comments, warning that transport between the UK and EU would be “severely impacted” from the extra check points needed. This would have a drastic impact on the pharmaceutical industry.

The chief executive of the Association of the British Pharmaceutical Industry, Mike Thompson, said that “the focus of pharmaceutical companies is on making sure that medicines and vaccines get to patients whatever the Brexit outcome”. To ensure this remains the case, the UK’s Department for Health and Social Care recommended pharmaceutical companies have a minimum of six weeks’ additional supply above their standard reserves. To put this in perspective, Novo Nordisk shared that while they normally reserve 7-8 weeks of their insulin supplies, they currently have 17 weeks of stock ready to go and an air freight firm on standby to cover additional supply.

RELATED: Read our initial analysis of the 'no deal' stockpiling recommendation

The European Federation of Pharmaceutical Industries and Associations said that the prospect of a ‘no deal’ exit scenarios presents “very real, tangible and immediate threats to patient safety and public health in both the UK and across Europe”. They have called for the continued participation of the UK in crucial data sharing platforms and have pushed for the sector and the relevant authorities to come together to formulate contingency plans. They recommend a focus on creating fast track lanes and priority routes for drugs through ports or airports.

Mike Thompson, chief executive for the Association of the British Pharmaceutical Industry, claimed that addressing a ‘no deal’ scenario will be the “biggest logistics challenge” the industry has ever faced. Speaking in an interview to LBC, he noted that there are over 12,000 medicines licensed to be used in the UK. He recognized that while the industry is used to dealing with shortages, the scale of the challenge will prove difficult to handle. He commented that while they “are as prepared as we can be… undoubtedly things will go wrong”.

A 'no deal' exit could be the "biggest logistics challenge" the industry has ever faced

The UK’s Transport Secretary has been working to increase freight capacity and has claimed that medicinal products will be prioritized on alternative shipping routes.

The Medicines and Healthcare Regulatory Agency (MHRA) have also attempted to reassure the industry, with their proposed arrangements for a no-deal scenario. They’ve recommended automatically converting Centrally Authorized Products to UK Marketing Authorizations.  They’ve offered free scientific advices for UK based small to medium enterprises and have proposed giving companies until the end of 2021 to amend packaging and leaflets for products already on the market. They’ve also proposed the expansion of the MHRA’s registration system to all classes of medical device, allowing those with a CE mark from a notified body in the UK or EU to be recognized by UK for a time limited period.

Many pharma companies are still caught in the preparation phase due to the continued uncertainty over the fundamentals of the future UK/EU relationship

However, as the managing director of VIC, Utz Tillmann, commented “a disorderly Brexit would create such a complex situation that it is impossible for companies to prepare for all eventualities”.

With many pharmaceutical companies and associations required to sign non-disclosure agreements with the government following consultations, it has been difficult to get clarity on how the industry has faced this challenge. This increased level of uncertainty, the lack of a clear deal and continued calls for a second referendum mean that the industry is left to prepare for the worst case and hope for the best.

 

Did you enjoy this article? Read about why UK pharma companies are still actively pursuing M&A deals despite Brexit uncertainty