HDA Statement regarding the availability of Public Health England-supplied PPE for community pharmacy

COVID-19 Update – 29 April 2020

 

HDA Statement regarding the availability of Public Health England-supplied PPE for community pharmacy

The Healthcare Distribution Association would like the community pharmacy sector to be aware that the stocks of Public Health England (PHE) PPE masks recently supplied by the Association’s member wholesalers to pharmacies, for staff use only, have now almost completely run out.  HDA member companies are awaiting a new sale event to be announced by Public Health England.

In the meantime, the Department of Health & Social Care has told HDA:

“We have extended our PPE supply route to Local Resilience Forums (LRFs) to help distribute stock to organisations outside of the NHS supply chain who have the highest need clinically and other services that would have a high priority need for PPE including Pharmacists.

Over 7 million more items of PPE have been delivered over the last week to the LRFs identified as being in the highest need of resupply. We will continue to make drops of PPE for distribution by the LRFs to meet some priority need until the new e-commerce solution is operational.

We will continue to make releases to wholesalers when stocks permit.

If providers are unable to access PPE through these routes and have an urgent need, they should contact the National Supply Disruption Response (NSDR) helpline to request emergency support. The 24/7 freephone number is 0800 915 9964.”

This statement about PHE-supplied PPE masks excludes the fact that individual HDA wholesalers may be able to obtain some supplies of appropriately certified PPE masks from their own sources.

Dear HDA Members,

On behalf of the Healthcare Distribution Association, we would like to thank all our members for your continuing dedicated efforts and hard work through these challenging and unprecedented times.  Now more than ever, your work is crucial to the health of millions of UK citizens up and down  the country, with hospitals, community pharmacies and dispensing doctors relying on wholesalers to provide vital medicines.  This critical role has been recognised across Government, and by others in the medicines supply chain.   You all have been classified as Key Workers in our joint fight against Covid-19; for this we say ‘Thank You’.

The safety of wholesaling and distribution colleagues is one of our top priorities.  With this aim, the HDA is working closely with the UK Government and our members, to ensure that distribution staff’s day-to-day work is as safe and secure as possible.  As always, our mission remains to maintain the efficiency of our supply chain and get medicines to those who need it the most at the right time.

The HDA is very proud of the work you are doing to support the country’s healthcare system at such a critical time.  We hope our members, and all respective families are keeping well.

Once again, on behalf of all at the Healthcare Distribution Association, we thank you.

Yours sincerely,

Martin Sawer, Executive Director and Jeremy Main, Chair

The Healthcare Distribution Association (HDA) has been working closely with its members and supply chain partners during the COVID-19 pandemic to help ensure patients continue to receive the right medicine, in the right place, at the right time.

The demand for medicines has increased dramatically, both from primary and secondary care, leading to a substantial uplift in the volumes of medicines flowing through the supply chain. Such increased volumes would place strains on healthcare distributors in more normal circumstances but has done so to an even greater extent in recent weeks, as some wholesaling staff have been self-isolating.

As an Association, we have been working with partners such as the Department for Health and Social Care; NHS England; NHS Improvement; the Medicines and Healthcare products Regulatory Agency; and pharmacy and pharmaceutical manufacturing trade bodies to identify and mitigate possible impediments to the safe and secure distribution of increased volumes of medicines.

Examples of such measures include:

  • Exceptional Good Distribution Practice (GDP) flexibilities from the MHRA that minimise business burden during the pandemic.
  • The recognition by Government of wholesaling staff as key workers; providing greater access to schooling and eventually COVID-19 antigen and antibody testing.
  • Formal government recognition of the crucial role being played by healthcare distributors in tackling the COVID-19 pandemic.
  • An NHS England Standard Operating Procedure for out of hours and weekend access to emergency orders from wholesalers for NHS Trusts.

The priority of the HDA remains the safe and secure distribution of medicines to primary and secondary care, which in itself is predicated on the safety of wholesaling staff. The Association will continue to work with all its supply chain partners during and after the COVID-19 pandemic to achieve these twin aims.

Dear HDA members,

Please see below letter from Steve Oldfield, Chief Commerical Officer at DHSC, thanking pharmaceutical wholesalers for the crucial role they play in the supply chain, which is more important now than ever.

25th March 2020

Pharmaceutical wholesalers critical to the COVID-19 response

Pharmaceutical wholesalers play a crucial role in our supply chain. We rely on your staff to enable hospitals and community pharmacies to continue to treat patients and supply them with the medicines and other supplies they need. This is more important than ever under the current circumstances.

You will have heard the Secretary of State for Health and Social Care yesterday saying that “key workers, for example in the NHS, social care, pharmacists, medicine supply chain, should go to work unless they are self-isolating due to symptoms.”. There should be no doubt that anyone working for a pharmaceutical wholesaler is a key worker. We need key workers including those working in your company to come into work to do the important job they do to support the NHS and patients across the country.

I would be grateful if you could share this message with your staff.

Yours sincerely,

Steve Oldfield, Chief Commercial Officer

‘No-deal Brexit’ risks supply of medicines to patients, warns Healthcare Distribution Association

  •         Supply shortages of certain medicines a possibility
  •         Curtailed supply could see medicine prices rise for NHS
  •         Call to consider NHS ‘temporary powers’

 

London: 23 October 2018: The Healthcare Distribution Association (HDA UK) has warned that a ‘no-deal Brexit’ could lead to medicine shortages and price rises.  The HDA is lobbying for a Brexit deal that ensures the reciprocal recognition of existing EU medicines regulations, in order to guarantee that patients will not suffer the consequences of not being able to access their medicines.

Speaking ahead of an appearance in front of the Health and Social Care Select Committee’s ‘No-Deal Brexit’ inquiry, the HDA’s Executive Director, Martin Sawer, noted:

We very much welcome, and are a part of, the Government’s efforts to prepare for all Brexit scenarios, but HDA and its member companies are now concerned that the uncertainty over a deal with the EU, in the very short-time frame left, is not a good position to be in.

Nearly 50% of the medicines in a typical HDA member company’s warehouse will have been through an EU country before reaching the UK. If crossing borders is not made easy for medicines, then HDA is concerned about the impact on patients requiring critical treatments.

HDA is very supportive of the government’s plans to stockpile medicines, but in a ‘no deal’ scenario, it is the management of the medicines that are already in the UK, that will become crucial.  This is where, the HDA believes that the Government and the NHS should step in. The medicines supply chain is a very successful and responsive delivery mechanism, but a ‘no deal Brexit’ would be new territory altogether.

The NHS has achieved great reliability and savings from the medicines market; a ‘no deal Brexit’ could unleash unforeseen consequences, especially in the generics sector.  This could lead to:

  1.        Patients not being able to access the right medicine, in the right place at the right time
  2.       Pharmacists wasting valuable time trying to source a patient’s medicines
  3.        The NHS having to spend more on purchasing medicines

 

Martin Sawer went onto highlight:

The potential impact of a ‘no-deal Brexit’ will not just be felt from day one of the UK leaving the European Union, but in the run-up to the UK leaving, if it becomes clearer that a ‘no-deal Brexit’ is the most likely outcome.  Equally, it is unclear how long such effects will continue after Brexit as it will take time for the supply chain to address shortages by sourcing additional stock.

Appearing in front of the Select Committee, the HDA will call for strong and regular communication from the NHS and regulators to all members of the supply chain, including patients, to keep them abreast of supply issues.  Moreover, there should be a consideration of short term ‘temporary powers’ to manage supplies of certain medicines and control unhelpful market behaviours. Such powers could include the consideration of more stringent ‘obligations to supply UK patients’ regulations.

— END –

About the Healthcare Distribution Association

The Healthcare Distribution Association (HDA UK) represents those businesses who supply medicines, medical devices and   healthcare services for patients, pharmacies, hospitals, doctors and the pharmaceutical industry. HDA UK members operate across the 4 nations of the United Kingdom enabling a safe, efficient and high-quality supply chain for the healthcare sector.  They are responsible for distributing over 92% of NHS medicines and provide wholesaling services including working capital, stock management and IT systems to their supply chain partners. The HDA and its members are at the forefront of the constantly evolving healthcare supply chain, which is seeing innovative practices and technologies make new services possible for manufacturers and to those who dispense medicines, reflecting the needs and choices of individual patients.

Contact Information

Will Browne – wbrowne@hdauk.co.uk

Hannah Milne – hmilne@hdauk.co.uk

0207 031 0590

HDA UK Welcomes Government ‘No-Deal’ Brexit Planning for the Medicines Supply Chain

London, 23 August 2018 – The Healthcare Distribution Association (HDA UK) supports the Government’s proposals to prevent disruptions to the supply of medicines to patients, in the event of a ‘no-deal’ Brexit through the stockpiling of medicines, as all possible outcomes of the ongoing negotiations should be planned for.

The HDA has been working with the Department for Health and Social Care (DHSC), and other medicines supply chain representatives, on assessing current levels of preparedness to ensure the supply of medicines to patients across the UK, including the building up of appropriate buffer stocks.

Martin Sawer, Executive Director of the HDA noted: We welcome the Governments plans to develop contingency plans to build up buffer stocks, as they recognise the importance of ensuring patients continue to receive their medicines in the right place, at the right time.  We believe this is a sensible and pragmatic approach at this stage. However, we are clear that a Brexit agreement must still be the primary objective.

Martin Sawer went on to highlight: HDA members ensure a resilient and flexible supply chain that is very well placed to support the Governments plans. However, the devil will be in the detail, with the need for any stockpiling to be carefully managed in order to avoid challenges such as medicine shortages, caused by changes in purchasing patterns. Therefore, we also welcome the strong guidance issued today from the Department of Health & Social Care when they state:

“Hospitals, GPs and community pharmacies throughout the UK do not need to take any steps to stockpile additional medicines, beyond their business as usual stock levels……local stockpiling is not necessary and any incidences involving the over ordering of medicines will be investigated and followed up with the relevant Chief or Responsible Pharmacist directly….. clinicians should advise patients that the Government has plans in place to ensure a continued supply of medicines to patients from the moment we leave the EU. Patients will not need to and should not seek to store additional medicines at home.”

HDA members are well versed in managing demand challenges, where the smoothing out of supply and demand is crucial to ensuring patients receive the right medicines, in the right place at the right time. Association members are in constant contact with their supply chain partners, from manufacturing to dispensing in order to understand likely demand and potential supply pinch-points.

It is also prudent that the Government is planning to unilaterally recognise EU medicines regulation in the event of a no deal scenario, as this could assist the continued cross-border supply of medicines. In addition, the proposal to unilaterally align to the EU/EEA exhaustion regime from Exit day to provide continuity and ensure that parallel imports of goods, such as pharmaceuticals, can continue from the EU, will be a helpful source of supply if shortages are threatened.

The HDA has called for future alignment of UK/EU medicines regulation to ensure the hugely beneficial pan-European supply chain is able to continue to the advantage of patients in the UK who enjoy greater access to lifesaving treatments in the right place, at the right time, as a result.

-END-

About the Healthcare Distribution Association

The Healthcare Distribution Association (HDA UK) represents those businesses who supply medicines, medical devices and   healthcare services for patients, pharmacies, hospitals, doctors and the pharmaceutical industry. HDA UK members operate across the 4 nations of the United Kingdom enabling a safe, efficient and high-quality supply chain for the healthcare sector.  They are responsible for distributing over 92% of NHS medicines and provide wholesaling services including working capital, stock management and IT systems to their supply chain partners. The HDA and its members are at the forefront of the constantly evolving healthcare supply chain, which is seeing innovative practices and technologies make new services possible for manufacturers and to those who dispense medicines, reflecting the needs and choices of individual patients.

02 February 2018

FMD Safety Features – Newsletter 09

 

Implementation Advisory Board – 23rd January 2018

 

MHRA welcomed stakeholders from across public sector bodies and industry associations for the latest Implementation Advisory Board. The Board provides advice and guidance to support the UK’s implementation of the safety features aspects of FMD.

 

MHRA and DHSC updated the group on implementation work and news since the last meeting in September 2017 including:

  • Publication of guidance in different sectors.  FAQs for secondary care published in November and Community Pharmacy (see below);
  • A reaffirmed commitment to issue the public consultation as soon as possible.  The consultation will focus solely on flexibilities, sanctions and enforcement where the UK has legal scope to make changes.  It will not include other issues which must be implemented according the Regulation;
  • Working collaboratively with SecurMed UK to address challenges in its delivery of the UK national verification organisation; and
  • Our work at a European level harmonising implementation.

 

There was also a wide ranging discussion on implementation throughout the supply chain which covered some of the important work being done and the issues facing different sectors.  We do not underestimate the challenge of delivering implementation on time and to the right standard.  We also remain committed to continuing to work constructively to deliver the benefits of the safety features aspects of FMD.

 

 

Article 23 Flexibility

 

The Board also heard reports from three of the groups potentially impacted by the Article 23 Flexibility.  Under Article 23 the UK can require wholesalers to decommission for others supplying to the public as long as they are not operating in a healthcare institution or pharmacy.  Our positions on the flexibilities are subject to change during the public consultation.

 

Provisional discussions have included:

  • Health and Justice & Hospices: A mixed model with bulk stock decommissioned at wholesaler level under the Article 23 flexibility, and named patient medicines decommissioned by community or hospital pharmacies.
  • Homecare: As registered pharmacies they will be expected to meet the obligations of suppling medicines to the public rather than coming under the Article 23 flexibility.

 

If there are issues you would like to raise either to do with these groups or others covered under Article 23, please email our mailbox – FMD.safetyfeatures@mhra.gov.uk with the subject field ‘Article 23’.

 

 

New guidance in community pharmacy

New guidance for community pharmacy owners has been issued by the UK FMD Working Group for Community Pharmacy (for further details on the group please see their website). The guidance is intended to build understanding of the options open to pharmacy contractors as the 12-month milestone for implementation approaches.

 

The Way Forward for FMD in community pharmacy covers key assumptions about FMD, high level processes for incorporating authentication in to existing dispensing workflows, handling stock transition, what IT systems will need to deliver and implications for patient safety.

 

The guidance has been published on FMD Source (www.fmdsource.co.uk) and will be updated by the Working Group as new information becomes available.

 

 

SecurMed UK Information

 

We understand that during Q1 2018 SecurMed UK will publish the UK Funding Model, setting out the fee structure and contracting model for Marketing Authorisation Holders. SecurMed UK request all manufacturers and parallel distributors pre-register with SecurMed UK. Please refer to the SecurMed UK website at www.securmed.org.uk for more details on pre-registration information required, the FMD implementation and how to register for the IT System Solution Provider toolkit.

 

For questions to SecurMed please email info@securmed.org.uk Questions relating to FMD process or compliance should be addressed to FMD.safetyfeatures@mhra.gov.uk

 

 

Mailbox

 

MHRA will continue to answer your questions about FMD through our dedicated mailbox, FMD.safetyfeatures@mhra.gov.uk Please send queries to this mailbox rather than other MHRA email addresses.

 

Best regards,

MHRA Safety Features team

 

Medicines and Healthcare products Regulatory Agency
151 Buckingham Palace Road, London SW1W 9SZ, UK

gov.uk/mhra

Business, Energy and Industrial Strategy Committee – ABPI, Propriety Association of Great Britain, British Generic Manufacturers Association – Brexit and the implications for UK business: Pharmaceuticals inquiry

Analysis

The Business, Energy and Industrial Strategy Committee has published oral evidence from the following witness(es): Mike Thompson, Chief Executive, Association of the British Pharmaceutical Industry; John Smith, Chief Executive, Propriety Association of Great Britain; Paul Fleming, Technical Director, British Generic Manufacturers Association.

Content

Examination of witnesses

Witnesses: Mike Thompson, John Smith and Paul Fleming.

Q1 Chair: Thank you very much for coming to give evidence to our Select Committee today about the impact of Brexit on the pharmaceutical sector. We appreciate you coming in to see us. It might be helpful if you start by introducing yourself and who you represent, and then we will crack on with the questions.

John Smith: I am John Smith, the Chief Executive of the Proprietary Association of Great Britain. We represent branded manufacturers of consumer healthcare products in the UK—products that you would buy in a supermarket or a pharmacy.

Mike Thompson: Mike Thompson, CEO of the Association of the British Pharmaceutical Industry. We represent the research-based pharmaceutical companies and supply the NHS with about 80% of the branded medicines. We have a similar percentage of all of the medicines that are in development around the world. We also have the responsibility for the industry’s code of practice and the responsibility to negotiate with Government over arrangements.

Paul Fleming: Good morning. My name is Paul Fleming, and I am the technical director for the BGMA, which is the British Generic Manufacturers Association. We manufacture unbranded generic medicines, which become available after the patents for the original versions of the drugs are over. In the NHS, that constitutes the great majority of the volume of medicines that are used: we constitute about 75% of the medicines that are actually used day to day by the NHS.

Q2 Vernon Coaker: Good morning, everyone. As a general start, what would you say the reaction of the different sectors of your industry has been so far to Brexit? What has the general reaction been to it?

Mike Thompson: On the day of Brexit, we made an announcement to say that we accepted the voice of the British people and we would work to find the best solutions for them. We have been doing that. We agreed with the Government to set up joint working parties with George Freeman, who was then the Life Sciences Minister. We set up a working party and we involved everybody that we could, including people like MHRA. We had six work streams; we did something like 60 hours of workshops. We had 200 global experts—some of the areas are incredibly specialist, so we were able to reach into our organisations. We came out with a meeting with the Government in September, with four key areas that we felt were vital: regulation, trade, people and investment in the science base. Those four areas have remained the key areas of focus. They have been amplified by the Government and they have essentially set how we have worked now to find a way forward to get the best result for patients and public health as an outcome of these negotiations.

Q3 Vernon Coaker: Other members of the Committee are looking in more detail at some of the things that you have mentioned there, but can I just get a general comment, please?

John Smith: I am absolutely aligned with Mike and what he is saying. We are also looking at ways that we can make sure that this happens in the best way possible. Making sure that we have a continuous supply of consumer healthcare products on the marketplace is key for us. We are working very closely with our trade associations—Mike and others—and are also working with our European trade association and the MHRA.

Paul Fleming: It is very much the same for us. We have worked very closely together, both here in the UK—not just within pharmaceuticals but across the life science sector—and in parallel with our colleagues at European level. A lot of that has been around mapping out the scale of potential risks and the timescale. One of the important points for us is to have very well managed change, so that we have visibility on what is likely to happen and are able to ensure that there is no disruption to the supply of medicines to patients in the UK.

Mike Thompson: I should just add that our written evidence was produced jointly with the UK BioIndustry Association, who are not represented today. It would be important for me to mention that, because, as everyone has said, we have worked very closely together on this.

Q4 Vernon Coaker: There is a lot of working together, looking at what is happening, and everybody is trying to assess the impact, et cetera. Let us try to look at that a little bit. Paul, you were talking about the register of risk, unless I misheard you. Anybody would say that there is a degree of uncertainty at the moment about what exactly is going to happen. Have you noted any changes in investment decisions or changes in the way any of the people you represent are acting at the moment? What are they factoring in in terms of the future, and when do they need decisions made by?

Paul Fleming: I will try and answer some of that.

Vernon Coaker: Essentially, have you noticed any changes in behaviour as a consequence of Brexit. Can you give any examples, as that is always helpful?

Paul Fleming: Yes, I will be very happy to do that. I will probably ask Mike to add a little bit more on the piece about investment after I have finished answering. Regarding the specific risk factors, one particular one is around quality control testing of medicines. Before any batch of medicines is released for sale in the market, it has to go through quality control testing, which is a wide range of laboratory testing and specification controls. At the moment that is done once and once only, for the whole of Europe, so if there is any risk of duplication on that—if the UK had to repeat that testing, for example—that would have a very significant impact. People are changing their behaviour in planning for that possibility: either they are thinking about building new facilities, which would be the ultimate approach and the most costly in the long term, or they are moving to alternative facilities, which they either already have access to or are making new commercial arrangements for.

Q5 Vernon Coaker: Have you seen anybody do that?

Paul Fleming: Some companies are starting to do that already, because of the time that takes.

Q6 Vernon Coaker: This may sound pedantic but what does “already done it” mean? Have they have already moved to another country, have they already built a bigger facility, or what?

Paul Fleming: They are starting the process of doing that, because it is a very lengthy activity. It takes at least 12 months, typically 18 and up to 24 months, so that is one of the physical activities that does take a long time to perform. Due to the timescale that we are on running up to March 2019, to do something that takes 18 months, you have to have started now or be starting very soon.

Q7 Vernon Coaker: So you need certainty quite quickly.

Paul Fleming: That is right.

Mike Thompson: I am seeing different players making different decisions. If we start with individuals, AstraZeneca, in their evidence to a Lords Committee, said that they were having difficulty attracting some people to take up jobs in the UK. It is understandable that if you are coming from the continent, at this moment in time it does not seem like a good idea to move your family when there is a period of uncertainty. They are having difficulty filling some of the jobs that they have open at the moment.

Q8 Vernon Coaker: Already?

Mike Thompson: Already.

Q9 Vernon Coaker: Do you know the numbers for that? Do you have any figures?

Mike Thompson: No, we do not have any numbers for that. You then see some different decisions, which may be confusing to people from the outside. There are some people who have decisions to make now in their cycle who have either made a decision to delay making that decision, or, as some smaller companies are reputed to have done, made choices about going to Switzerland as opposed to going here. On the other side, you will have seen that there have been some major announcements of companies that have planned to invest in the UK.

Pulling these things apart, there are different reasons for those decisions, and therefore there is not a simple answer that you can take across the whole piece.

Q10 Vernon Coaker: Is there evidence that there is a difference between some of the decisions being made by smaller companies as opposed to bigger companies?

Mike Thompson: I would not say that. I do not think it is as simple as to say that. Tomorrow we are expecting to see Sir John Bell announce the next phase of the life sciences sector deal, and I think we are going to see a significant number of investments from companies of all sizes. You have to look at each individual company and you have to look at the reasons behind their decisions.

John Smith: Very similar to Paul, we are seeing our companies considering about where batches are released; if the UK has a hard exit, we would have to have a release in both countries. They are thinking about putting positions into Europe.

If you also look at medical devices, which we also look after, you have notified bodies. Notified bodies have to be part of the EU, so they are looking at having offices in the UK but probably also having offices in Europe so that they can cover both sides.

The last thing for us is we are seeing some of our members thinking about how they deal with the MHRA, because if they are a reference member state and they have a process that is going to go past the EU exit date, they are looking at going to other reference member states rather than the MHRA.

Q11 Vernon Coaker: So people are starting to hedge, in a sense, against what may happen.

John Smith: Yes, because the whole process is not going to be quick. Once we know what is happening it is still going to take quite a while to do that, so they are going to have to start hedging now. The most important thing for us is certainty going forward, so that the companies can start planning. If we have no certainty they have to start hedging now to be in a position at the date.

Vernon Coaker: As Paul was saying, if you are going to change something, there are a couple of years, with the transition period and how long that is, et cetera. We will come on to that.

Mike Thompson: I would say “hedging” is an umbrella word, and I do not think it is quite accurate enough for the decisions that are being taken. As John said, GSK has publicly announced that it is going to build some batch release sites on the continent because there is a requirement under EU law for batch release to be done in an EU state for those medicines that are going to be distributed to the EU. Therefore, although there is a possibility that the outcome of the negotiations is mutual recognition, so that decision would not be needed, essentially GSK would not be able to supply its medicines manufactured in this country to other EU states if it did not have that facility built. They are going to spend tens of millions of pounds to set up that capability.

Q12 Vernon Coaker: GSK is going to spend tens of millions of pounds setting up a facility in another European country.

Mike Thompson: Correct, because the EU regulations, as they stand, say that you need to have batch release from an EU member state. At the moment, the guidance from the EMA is that the UK will be a third country. The issue of whether there will be some mutual recognition is something which is not going to get clearly resolved for a long time, and therefore companies have got to make sensible contingency decisions. Our overriding concern is to make sure that we can continue to supply medicines to patients across Europe.

Vernon Coaker: That is interesting. GSK, AstraZeneca—and a small business moving to Switzerland.

Mike Thompson: I am not saying that GSK and AstraZeneca are moving to Switzerland.

Vernon Coaker: No, I am saying GSK and AstraZeneca are doing something, and then you mentioned a smaller business moving to Switzerland.

Mike Thompson: Yes.

Q13 Chair: I want to put the other side, because, as you have said, Mike Thompson, tomorrow the Government will be announcing parts of the industrial strategy and the sector deal with the pharmaceutical sector. We had the announcement, on the day that the industrial strategy was launched, of new investment coming into this country. We also had the letter from the Secretary of State for Health, along with the Secretary of State for Business, Energy and Industrial Strategy, to the Financial Times in July setting out the Government’s objectives with regard to the sector and to have that close co-operation.

Some of that seems to be working; investment is still coming into this country despite the worries that you have spoken about, so what explains that? Some companies are saying, “We need to do more in the European Union,” and others are saying, “We still want to come to the UK.” Are they different companies reading things in different ways, or are they doing different things?

Mike Thompson: I recognise that it can look confusing from the outside. It is a good question. If we look at the MSD announcement, it is an announcement into early phase discovery, and I think the UK is recognised as being the third best centre globally for early stage research. After the east and west coasts of America, the UK is predominant. Everybody in this room can feel very proud about the ecosystem that we have developed, with the strength of our universities and medical charities, having built a life sciences business here. In the UK we are fantastic at creating and discovering things; it is something in our psyche and therefore I think it makes a lot of sense. I am absolutely delighted to see MSD’s investment in here.

The message to Europe is that Europe benefits from its close association with the UK. There is not another centre on continental Europe that matches the UK and the golden triangle. We are operating in a global business and people make global decisions. I have to tell you that if people are not going to invest here, they are unlikely to be investing in Paris or Berlin; they are much more likely to be investing in the east and west coasts of America, so Europe as a whole benefits enormously from the strengths that we have here. Therefore, we were delighted with the letter that Secretaries of State Hunt and Clark wrote, which said, “Actually, the UK’s aim out of this is close co‑operation with Europe, which we believe is in the best interests of the UK but also in the best interests of Europe.”

What we have been able to do is ensure that that across our industry and across the whole of Europe, we are completely aligned. We have a single set of messaging that everybody in the industry is using when we talk to Governments across the whole of Europe, and it is the same thing: that we are better together in Europe, and that Europe benefits as much as the UK from us working together in this space.

Q14 Chair: To follow up again with you, Mike Thompson, something like 40% of the jobs in the pharmaceutical sector in this country are in research; many of the others will be in manufacture. Are you saying that in the future it might be easier to attract the R&D jobs—or that will not change because we have such strength there—but it is the manufacture and testing of the drugs that might move overseas because of Brexit? Is one type of job sort of okay, and the other more at risk?

Mike Thompson: We have seen that a large amount of the manufacturing has actually already moved overseas. The work that we have been doing through the Medicines Manufacturing Innovation Partnership is essentially to say, “Can we now jump a generation of medicines, and can the UK be effective as a manufacturing base for the next generation that is coming along?” We have, in a way, lost the battle in some of the previous generations. You will have seen in the Budget quite a bit of money being put into manufacturing. That is because the nature of manufacturing for new medicines is changing, and some of the very large-scale manufacturing plants that were required for the previous generations of manufacturing medicines will not look the same in the future. They are much more likely to be back-ended into research bases and therefore they can be much smaller—you can use a much smaller plant to produce the same volume of medicines.

Q15 Chair: My question is about whether Brexit affects those sorts of jobs more? The answer to Mr Coaker’s question was that AstraZeneca, GSK and others are going overseas, and yet at the same time you are acknowledging that there are jobs coming to this country.

Mike Thompson: I think there is the potential, but clearly if there were trade barriers, then those trade barriers would then make people think twice about those investments. That takes us into the area of trade, and clearly we are saying that one of the critical things—and I think one of the most important things for people to understand—is that frictionless trade is really critical in this area. This is an important conversation for us to have.

Q16 Chair: We will come to that in a minute. In terms of the Government’s aims, as stated in the letter from the two Secretaries of State to the Financial Times and then also in the industrial strategy, is there anything in the aims of the Government on pharmaceuticals that you disagree with? If, as I expect, you agree with the objectives of the Government, how realistic are they for that close co‑operation in the future?

Mike Thompson: First of all, you are absolutely right: we are delighted with the UK Government’s response on all four areas. We have seen a series of announcements on all four key issues that have been really aligned with the work that we have been doing together. I think it is no surprise that when you work together, you come to solutions that everybody can buy into. It has been a very effective process.

As a result of that letter, our European organisation wrote a joint letter to both Barnier and Davis saying, “This is what we are looking for.” As you know, the issue for us has been that the negotiations with the EU have been stuck in phase 1, and the message back from Barnier’s team was, first of all, “This is a really interesting letter that has been published in the Financial Times. We really note its significance and it is very welcome, but, by the way, we cannot talk about it, because our brief from our member states is only to talk about three things until we get to the end of phase 1.”

One of the challenges for us is that, if I may say, it is not unusual for politicians to think that you do not need to do a deal until the absolute last minute, but businesspeople need to be able to plan ahead. The fact that we have not had the time to plan ahead has meant that companies are having to make these contingency decisions, which is costing them an enormous amount of money. We have been pushing hard. If there is any disagreement, it is to say, “Can you please get into phase 2 as quickly as possible, because we need to have some decisions so that we can plan to ensure the continued supply of medicines to patients across Europe?”

Chair: That is very helpful. If either of you want to come in then please do, but we are going to cover some of these issues in more detail.

John Smith: I think we are completely aligned.

Q17 Mark Pawsey: I would like to pursue the issue of trade that you spoke about. Can you help us by giving us some numbers in terms of the value of the trade, both imports and exports? Could you also give us some guidance as to what proportion of the trade that is happening in pharmaceuticals is between the UK and the EU, and between the UK and the rest of the world? How important is the EU in the industry generally?

Mike Thompson: We export about £30 billion a year and we import about £30 billion a year. To make that a bit more tangible, there are 45 million packs of medicines that leave the UK every month and go to Europe, and there are 37 million packs of medicines that leave the continent and come to the UK. The reason for that is that, in a sense, this industry has taken the most from being in a single market and we have a very integrated supply chain across the whole of the continent. That obviously gives us some more problems at the moment. I think about 44% of our exports go to the EU. Those are the numbers.

In trade there are two issues, as you will know. There is a tariffs issue and then there is a process and paperwork delay issue. Candidly, both of those issues are important, but for us the most critical issue at this moment in time is the delay issue, particularly for the sorts of newer medicines that are being produced. The production process has a number of steps; typically it can be up to eight different steps before you get to a final medicine. The way we have developed our supply chain is that often those are done in different manufacturing plants, because it is not sensible to build the same process in each country; you tend to have one for a region. As you make a medicine these things get moved around, and they can go across borders multiple times. That is just in the production of them.

The other issue is that quite a lot of them are temperature-controlled. If you do not manage to do it within a certain time period, you are out of spec and you have to throw it away. There is a very real issue for us here. We do absolutely everything we can to get medicines to patients; I have seen us charter planes and people work thorough weekends. We do whatever we need to do to get a medicine to a patient. If we legally cannot get through borders or we are delayed in getting through, there is nothing we can do about it. We have been imploring people to understand that medicines are different.

Quite frankly, if a car is held up at Dover it is obviously unfortunate but it is not life-threatening. If medicines cannot get through, it is life‑threatening. What is important is that people need to understand that this is not an issue about UK patients versus EU patients. This is about patients across the whole of Europe, so everybody is going to lose out here. At one level we say, “Surely everybody is going to understand that and we will not end up in that position”, but sometimes you can see that the scale of challenge that is facing those who are negotiating arrangements is such that somehow these things could get missed, the officials cannot cope with it, and we could end up in a situation where we cannot supply.

Q18 Mark Pawsey: Can that process delay not be dealt with by simply holding more stock?

Mike Thompson: It is not possible for us. First of all, some medicines will only have a shelf life of 12 to 18 months. At this stage we would not be able to ramp up all of what is required to produce the sort of stock holding that is required to be able to manage this effectively.

Q19 Mark Pawsey: So you are suggesting that the process issues are rather more important than the tariff issues. What impact would it have if we do a hard Brexit, tariffs are imposed and we go to WTO rules? Would that be marginal?

Mike Thompson: I think it will depend. First of all, if you are making future manufacturing decisions, you will then clearly look at tax and tariffs, and you will make some decisions looking at the total fiscal weight that you have. It will make a difference in the long run. From our perspective, the delay factor at this moment in time is the more important factor. The others will start to play out in time, but that is for us.

It obviously depends on the margin you have available in a product. I will perhaps ask John and Paul to talk, because it will have different impacts for different people.

Q20 Mark Pawsey: Perhaps the others might like to contribute. If there are tariffs or process delays, why can we not simply manufacture more of what we need ourselves? Why do we need to rely so much on products that are manufactured overseas? Why can it not come back?

Mike Thompson: We do not have the process capability in the UK to manufacture all medicines in the UK. We do not have the plants. These plants cost tens, sometimes hundreds, of millions of pounds to invest in. Nobody is going to build it in the UK; at current values, with the devaluation of the pound, the UK is 2.3% of the global market. People are not going to build manufacturing plants to supply all of the medicines for the UK.

Q21 Mark Pawsey: Not all of them, but maybe at the margin. Would it not make more sense to manufacture in the UK more of the medicines that are needed in the UK?

Mike Thompson: I think that will not make economic sense.

Q22 Mark Pawsey: So the cost of medicines would go up, essentially. We would end up with the cost of the process and the cost of the tariffs.

Mike Thompson: First, I do not think it is practical, but it would also mean that the costs would have to go up dramatically.

Q23 Mark Pawsey: In terms of trade, if we are going to do less business with the EU—you said that 40% of our exports were to the EU—why can we not be more aggressive in other markets outside the EU and pick up more business? Why can we not grow that 60% in emerging economies? Why are we so dependent on our 40% of exports into EU countries?

Mike Thompson: Remember that this is a global business. At the moment, those other economies receive the same medicines out of regional supply chains in their areas, whether it is the US or the Far East. There are already manufacturing capabilities to do that, so I do not think it is the fact that they have not got these medicines and we can therefore sell them. There are supply routes that are already regionally based.

Q24 Mark Pawsey: What about the relationships that we have? We have trade envoys and we are starting to talk to countries as a UK producer rather than part of the EU team. Are you discounting that?

Mike Thompson: No, I am saying the same medicine is already being produced in a different regional supply chain. We tend to have regional supply chains, so it is not that it is only produced in the UK for the whole of the world. It will be produced in the UK for Europe, but then there will be a plant in the US producing for the US and there will be a plant in Singapore producing for the Far East. Those supply chains are already established, in the main.

Q25 Albert Owen: Can I just follow up on the WTO rules? Mr Thompson, you said pharmaceuticals should be zero tariff. You also pointed out that there are 1,000 finished products and an additional 700 component products awaiting introduction to the list. In your opening remarks, you also talked about your relationship with the Government. Have the Government indicated that they are acting on this? Is there going to be a standardisation in the timeframe?

Mike Thompson: Regarding WTO rules, as you rightly say the last round was in 2010. In the main, we expect a sort of “zero for zero” will play out. However, there are a large number of ingredients that are not on the list. At the moment, as you will know better than I do, there appear to be geopolitical reasons why a renegotiation of the WTO rules is unlikely to happen. It should have been updated every three years but there seem to be some reasons why other major countries are not interested in updating the WTO rules. It is not in the gift of the UK to say, “We want to update them so let us just update them.” There are very significant other issues that would need to be addressed to do that.

There are challenges there. As I said, the result of those challenges is that those elements will probably have a 6.5% tariff laid on them. If you have stuff that is going across borders three or four times before you actually get to it, that mounts up to quite a lot of money. Those things will then start to play on people in terms of making the decisions as to where they will manufacture in future. Of course it is a very big issue, but I am just saying that for us the other issue about delay is a much bigger issue at this moment in time.

Q26 Albert Owen: Regarding the delay, in a previous answer you talked about the sensitive nature of the products and the temperature sensitivity if there were delays in ports. You have just indicated that two or three stops may add problems. How much of your trade, as an industry, is with the Republic of Ireland, and how much of a land bridge is the UK to the rest of Europe? In my constituency, much of the trade coming through the Port of Holyhead goes to central Europe and to the rest of the EU.

Mike Thompson: I do not have specific figures for that. As you know, the Republic of Ireland has built a tax regime that has resulted in a very strong manufacturing base. There will be quite a lot of intermediates which come from the UK to the Republic of Ireland, and therefore a resolution of that will be of as much interest to the Republic of Ireland as it is to the UK.

Q27 Albert Owen: Absolutely, and we heard what happened yesterday, but my point is, as somebody who worked in trade with Ireland, you could have R&D in the UK, manufacturing in Ireland, and then transportation from the Republic of Ireland via the United Kingdom back into a European market, and that is complex.

Mike Thompson: That would be a very typical supply chain today.

Albert Owen: I will leave it at that.

Q28 Antoinette Sandbach: I wanted to talk to you about the regulatory aspects and, in particular, regulatory alignment. How important is regulatory alignment for your industry?

Mike Thompson: We think it is critical. I wonder if I should describe the solution that we have proposed, which we think is acceptable to both parties. In the regulatory process, as you know, the first stage of the process and the most important stage is what is called scientific review. The MHRA, which is the UK regulator, has played a very big part in being a leader of that scientific review, which is called a rapporteur. Essentially, they then make a recommendation; there is a committee that signs it off, and it moves to a second stage, which is that that recommendation from the scientific review goes to Brussels for a decision.

Q29 Antoinette Sandbach: Can I just check, because you said MHRA. What role does the EMA have in this process?

Mike Thompson: The EMA runs the process but, essentially, it subcontracts the work to the national regulatory authorities. By the way, we should be very proud of the MHRA. They are an absolutely outstanding agency: they have really good recognition around the world and their influence across Europe is huge. This has been a very successful agency from our perspective. I have to say that, for the rest of Europe, not having the MHRA involved will be a really significant loss to the totality of the effectiveness of Europe.

The point, however, is that, if, at the point of decision, the decision train is split in two, and one half goes to Brussels and one half goes to London, the advantage would be that London would be able to say that we have total control over what we license as medicines for UK citizens, and Europe would be able to say, “We control what we license.” The benefit for the UK is that that decision would not be beholden to the ECJ but the result would be that the medicines that are used across Europe would be identical. Since the EMA was set up, there are only one or two cases where there has been any challenge to that decision, and I have to say that that has normally been for political reasons and, in the end, it has got worked out.

That was a very neat solution that we know is acceptable to the UK Government, and we believe that that will be acceptable to the Europeans as well. We have a solution on regulation that I think is a very neat solution. That regulatory co-operation would also fit the Irish question as well, because that would meet some of the requirements that people are looking for there, so this is a very good outcome.

Q30 Antoinette Sandbach: I think my colleague Rachel Maclean will pursue that regulation issue further, but I am going to pick up on the MHRA. You said it is a huge benefit to us, and that that expertise is a huge benefit to Europe and that Europe will lose out, in effect, if there is separation in terms of the EMA now moving, as we know it is. Do you think the UK will lose its influence over those regulatory standards because the EMA is no longer in the UK, or do you think that they will still take into account MHRA decisions?

Mike Thompson: If the outcome is that the MHRA is still involved in the EMA, which is the proposal that the industry is making across Europe, then I believe that the quality of its capability and its expertise will still have a huge influence, regardless of the final decision about whether they have a vote or not. Votes tend to be taken by consensus. This is a scientific debate and it is more about being at the table than being able to influence the decision that is important. I think everyone would benefit by the expertise of the MHRA participating.

Q31 Antoinette Sandbach: Effectively, if the MHRA is not part of the EMA going forward, in whatever status it has, that would potentially be a big problem and the UK would—

Mike Thompson: They have been fairly open to say that they would look to try to build alliances with other stringent regulatory authorities elsewhere in the world. In our industry, 75% of the value of the medicines is in the US and within Europe. If you are not participating in those two parts, then you are inevitably diminished in terms of your influence.

John Smith: Can I just come in on the regulatory process? For consumer healthcare, the big issue is what is already registered. There will be a process for batch release, and a batch release will take place in Europe for the UK as well. If we do not stay aligned with that, it would mean that we would have to have a batch release in Europe and a batch release in the UK. That adds significant complication and costs to our industry and you have got to be in two places, and that just does not make any sense. When you look at a cost perspective, it is going to add millions of pounds to the whole process. Delay is important for us, but I think the whole regulatory process of making sure there is not divergence and making sure that we are together and that we can have one batch release for everything that is produced is important for us going forward.

Q32 Antoinette Sandbach: Your evidence suggested that companies are moving away from the MHRA as being their EU-wide reference agency. Is that a trend across the industry, do you think, and what does that mean for the UK?

John Smith: Like Mike said, you should be very proud of the MHRA. I think they are very pragmatic and forward-thinking in getting access to medicines to people who can get access without going via a prescription. Members companies are now saying—and the advice coming out of Europe is—that if you have a process that is going to go beyond the date, you need to think very seriously about whether you use the MHRA or not.

Q33 Antoinette Sandbach: Beyond the date of March 2019?

Mike Thompson: Yes, the exit date. They are saying that, if the process goes beyond that, by then the MHRA will not be part of Europe and, therefore, you should not be using the MHRA. A lot of companies, although they do not want to, are starting to think about using other regulatory agencies for their processes.

Q34 Antoinette Sandbach: How soon would it need to be clear, in terms of transition and following processes and so on, to stop that? What is your lead time?

John Smith: It is now. If you look at how long things take to change the process, you have to start making decisions very soon. Companies are trying to hang on to try to understand whether there is going to be some sort of guidance: either there is going to be a transition period or we are going to have some sort of statement from the Government saying that there will not be a divergence. However, they need to start making those decisions now and at least by the first quarter; otherwise, companies will have to make those decisions.

Paul Fleming: For generic medicines, we collect a lot of data on how long things take to do. Registering a new generic medicine within the current system takes an average of 15 months, so we are right on that decision point now. MHRA, as colleagues have said, have been very good in terms of their performance in adhering to those timelines, so they have managed to run a very predictable process—very consistent and with very good standards of scientific assessment, rigour and visibility on that.

That 15 months, start to finish, has been something that the industry has been able to plan for with great reliability over the last decade, so anything that puts a risk factor over that does bring into play whether people are going to change their choices, particularly for generic medicines, because of the large number of products that are involved. Some of our bigger companies will have more than 500 products in their portfolio, so the scale and the engagement with the regulatory process is huge and continuous. The link between the regulatory process and what that means for when medicines become available and how companies have to sequence their planning is a very big part of the thinking and scenarios that companies are working through at the moment.

Q35 Antoinette Sandbach: Can I ask very briefly about IP, which is very important in your industry? What is your view in terms of the possible divergence from the EU on IP rights? Is it something that you would welcome and think creates an opportunity in terms of Brexit or, again, is this an area where regulatory alignment is really important for you?

Paul Fleming: Certainly, we want to maintain regulatory alignment. Our view is that this is not the time and place to be talking about those different elements around IP.

John Smith: I would be aligned with a lot of what Paul was saying.

Q36 Antoinette Sandbach: You must have cheered yesterday when the Government were talking about regulatory alignment, only to groan when the signature was not on the dotted line.

Mike Thompson: I think we are encouraged.

Antoinette Sandbach: You are encouraged. I am glad to hear that. Thank you very much.

Q37 Rachel Maclean: We have touched on the EMA and we have probed into that, but I just wanted to come back on one point. You mentioned the judgments. Are you referring to the ECJ judgments with respect to that, which you mentioned previously?

Mike Thompson: Yes. The regulatory process in Europe is ultimately governed, through dispute, by the ECJ.

Q38 Rachel Maclean: You said some of the judgments were made for political reasons. I think those were your words.

Mike Thompson: I am just saying that 99.9% of all recommendations from scientific review have been accepted. The only time when there have been questions is when they have been controversial—for example the first time Viagra came forward. If you like, it was not that the scientific pronouncement or recommendation was being challenged; it was because there were other factors. I am saying that we can feel very confident that, if the solution that is being proposed and is acceptable to the UK Government is adopted, we will end up with, essentially, the same medicine being prescribed across the whole of Europe and the UK, which I think is beneficial and would be the outcome we would be looking for. Medicine is becoming increasingly globalised. Having doctors who are liable to be talking to each other at conferences about medical issues having medicines that are the same helps that dialogue, so there are all sorts of reasons why I think there are benefits.

Q39 Rachel Maclean: In terms of those judgments, were there any times when those judgments were against the interests of the UK that you have seen, in your experience?

Mike Thompson: I do not believe so. I have to say that I do not know the detail. We are talking about over 10 years. It is such a rare exception. I only mentioned it to explain that it almost does not come into account.

Q40 Rachel Maclean: How many cases would that be, roughly?

Mike Thompson: I think there were two in the whole period.

Q41 Rachel Maclean: You touched on the Hunt and Clark letter, and you have talked about how important what was set out in that is. Does that mean, in effect, anything other than being part of the EMA, in practice? You said that you were encouraged by the aspirations that were set out in that letter and the assurances that were given to the industry, so does that mean, in practice, anything other than remaining part of the EMA, or can that be achieved outside the EMA?

Mike Thompson: No. It is clear that the preference is to remain part of the EMA.

Q42 Rachel Maclean: That is the preference but, if that was not possible, would there be an alternative way to achieve those aspirations outside the EMA?

Mike Thompson: The MHRA is understandably working on fall-back scenarios in terms of what that would look like. Even within the EMA, the MHRA is already a rapporteur for a disproportionate amount of medicines that are reviewed. Essentially, however, it is a distributed model, so everybody clubs together to do it; the MHRA does not need to build the capability and the number of people to review all of the medicines that need to be reviewed, and that is a very cost-effective way of doing it. The challenge is that, if the UK, which is 2.3% of the value of the global market, has a regulator on its own, it is just going to find it very difficult to build the resources. 80% of the fees of the MHRA are paid by the industry in terms of fees for review of medicines. It is very clear that we would not be able to sustain the levels of fees required for them to build up an authority that could review all medicines.

We have discussed options about taking decisions from other stringent regulators, which could still be the EMA or the FDA, and getting the MHRA to, essentially, do a very small process to look at them and then adopt them, because we need to find a way to get these medicines to British patients. There are fall-back options that we would have to work on with Government to work through.

Q43 Rachel Maclean: Clearly, however, that will involve some degree of cost, as you have identified in your evidence, as a common theme.

Mike Thompson: It absolutely will do.

John Smith: Just to add, we absolutely support that. We believe that regulatory convergence should be the priority. If there is not, there needs to be a decent transition period that allows member companies to find a way through the new system. Lastly, if we do diverge, any costs will outweigh any benefits. Although there will be some benefits, we believe strongly that the costs associated with not being part of the EU will absolutely outweigh any benefits, so our strong viewpoint is that we need to make sure that we stay part of that system going forward.

Q44 Rachel Maclean: In terms of the British Generic Manufacturers Association, do you see any advantages in terms of cost reductions for your type of business from being outside this regime at all?

Paul Fleming: It is very hard to identify cost benefits. The risks, as we have talked about this morning, are significant, particularly if we end up in a regime where there is duplication. If we look at global regulatory trends over the last few years, there has been an increasing move to more mutual reliance, working more closely with authorities and agencies, working to the same standards and building confidence in each other’s decision-making. There is a possibility that that could be strengthened if the UK looks more broadly in terms of building its relationships and information-sharing.

Examples of where that has worked very successfully so far include areas around drug safety or pharmacovigilance, where there is a lot of data that is shared globally. That is a very good example for us to think about because, if we were disconnected from the European system—something called EudraVigilance—where there is very rapid sharing of safety signals, and if we did not have access to that and were relying on a more fragmented approach, that would cast a potential risk over the safety monitoring of medicines for patients immediately.

John Smith: I just have one other small point from a consumer viewpoint. We also represent medical devices, and there is the new European Medical Device Regulation going forward. That is a gold standard that we strongly believe needs to be implemented, and the UK has been part of all the negotiations to get that. We strongly believe that that should be part of this maintaining as part of Europe.

Q45 Rachel Maclean: Are the reassurances that you have received that it would be covered? Have you received those assurances?

John Smith: We have not had assurances that it would be covered. While we are part of Europe, it remains part of it, but it is in the process and, in 2020, there is another part of it that needs to be implemented. We strongly advise that that continues, because of the UK being part of the discussion going forward. It is a gold standard and it is the right way forward for us.

Q46 Chair: I just want to pick up on this briefly, because I think the evidence that the Committee has received in this area was perhaps the most worrying. AstraZeneca has said that, although the costs of duties are not attractive, more important is the extra administration and delays. It went on to say that “it could undermine our ability to conduct and run clinical-trial programmes in and from the UK”, and it has suggested that a three-year transition would be needed, if additional testing needed to take place to bring drugs to market. The BMA has said it could take two more years to get new drugs if our regulatory system diverges, and the American Pharmaceutical Group says that a no-deal scenario would have a detrimental impact on the UK economy and threaten access to medicines.

If there is a divergence and if the EMA will not recognise testing in this country, those are the risks. Do you think that any of that is overdone in that evidence, Mike Thompson, or do you think that, if there was a divergence in regulations, that could delay access to drugs in this country for British patients?

Mike Thompson: I do not think it is overdone. Can I use clinical trials as an example? I think that has been a very big source of debate. The reason that there has been debate is because members have rightly picked up that, historically, there was a lot of criticism about the European Clinical Trials Directive. It was seen to be over-bureaucratic and not really fitting with industry’s needs, and I think that was correct. What has happened is that the UK Government, UK industry and the MHRA have done a really good job of amending that, and the updated Clinical Trials Directive, which I would expect is going to come in in 2020, which will be after we have withdrawn, is now pretty good.

The issue for us is that, if we are doing clinical trials, particularly towards the later stages of drug development, you end up needing so many patients that you do them in multiple centres. If you are a company that needs to do 8,000 patients in a trial and, therefore, are going to need 40 centres to recruit those patients, if you have to go through two systems of approval, it is quite possible that you are going to say, “I cannot be bothered to do that. I can do it through one. Why would I take the extra costs? Why would I take the extra complexity?”

If there is not complete alignment, it could be the that the EU would say, “We are not going to accept the results from the UK centres because they are not being governed by exactly the same legislation and, therefore, we will not take those patients into account in a licensing decision in Europe,” and companies would not take that risk. Therefore, it is quite likely that the UK would miss out. NHS hospitals gain enormously from the money they make from clinical trials. Patients benefit from the free drug. Our doctors benefit from using the latest medicines. All of these things are a virtuous circle that improve the ecosystem we have in the UK.

It really would not make any sense for us to have something where we had a divergent regulation. What is true, just to give you a balanced perspective on this, is that, possibly in phase one, where you have very small numbers of patients, you could do things a bit more quickly. We believe, however, that the trade-off between potentially being able to do things a bit more quickly is outweighed by the fact that, in the majority of trials, the results potentially would not be applicable and would cause the other problems that I think. Those are the reasons why we think that participating in one system is in the best interests of everybody.

Q47 Vernon Coaker: Can I just ask on this whole area of testing of drugs and medicine? It is really for information for the Committee and to have a greater understanding of this. What does that mean in terms of the use of animals in that testing process? How is that regulated? Will that change and where is that going?

Mike Thompson: I have to say that that is not my area of expertise but, essentially, use of animals would be very early in drug development. The testing we were talking about, which is batch release, is, essentially, when you have got your finished product and you are making sure that that finished product that has come through the manufacturing process is consistent with the standards and the licence that you have been given.

Q48 Vernon Coaker: Some of the companies that you represent will be involved in trials that are testing out various drugs and medicines. To be honest, I am not sure how that is regulated at the moment.

Mike Thompson: There are very stringent regulations. The UK can be enormously proud of having some of the highest standards, if not the highest standards, in the world. The fact that we have got such high standards means, I have to say, that it is highly likely that other countries would accept those. There is just always a problem that, if we have a divergence in regulation, and even though the standards are great, the EU may decide, because it is a different set of regulations and if we do not have some sort of mutual recognition, not to allow tests that have been done in the UK to count towards the process of licensing of medicines. That is the nightmare scenario. I have to say you almost cannot believe that we would end up in that position but you have to accept that there is a scenario where, if that happens, that is a very difficult position for us.

Q49 Vernon Coaker: There is also the movement of the animals as well.

Mike Thompson: All of those things are governed by regulations.

Q50 Vernon Coaker: It is just an interesting aside. I wonder, Chair, whether there could be a note from anybody. You say it is not exactly your field but is there somebody within your—

Mike Thompson: We have an expert in ABPI. I would be happy to supply a note on that, if that would be helpful.

Vernon Coaker: Yes, that would be really helpful, thank you.

Q51 Peter Kyle: Mike, my job is now to test your argument with your colleagues. If I could ask John and Paul, when it comes to the possibility, if Brexit goes ahead, of a divergent regulatory environment for IP, are there any circumstances in which this provides a positive opportunity for your sectors?

John Smith: If you look at divergence, there are always going to be opportunities, but our strong view is that, if we go down that route, the benefits will be outweighed by the costs involved. I go back to having two different systems. We would have to have two different batch releases; we would have to have two different regulatory processes, which would add significant costs to our overall business in terms of millions of pounds. Any opportunities are completely outweighed by the costs involved.

Q52 Peter Kyle: Is that simply because the British market is not big enough?

John Smith: Absolutely. Look at the European market and however many million people you have got there compared to the UK market. It is just that you have to have two systems. If they were the same system, then great. If they both agree that they accept each other, that is absolutely possible. At the moment, however, the way it is going—hard exit—could mean we would have to have two systems. Everything batch-released is checking back to what has been registered and we would have to have that done once for the EU and once for the UK market.

Paul Fleming: All I would add on that is that we have done a little bit of work looking at what this costs. For each batch of generic medicine that is released into the market, we think that costs about £1,500 a time, so that would be a straight additional cost if that had to be duplicated on top of the infrastructure costs of setting up a new lab or—

Q53 Peter Kyle: How many batches, sorry?

Paul Fleming: In terms of the number of batches, it would be lining up with the figures that Mike gave at the beginning. This is just an incremental cost per batch of about £1,500 for each one.

John Smith: I would just add that we have looked at one-off costs being over £7 million. We have just taken a sample from our members and extrapolated out for the total market. Ongoing costs would be in the region of £12 million, so that would add £20 million.

Q54 Peter Kyle: That is quite significant. What we are doing is turning over some rocks and finding some pretty big numbers underneath them, with all the different sectors that we are meeting. In your written evidence, you have suggested that there is the potential for increased self‑regulation in areas of your business. What would that look like?

Paul Fleming: I will make a start on that. Within the regulatory regime, we have talked about some of the bits already about the early-stage work, clinical trials and getting the products to market. Once the products are on the market for the rest of their lifecycle, there are routine regulatory activities that have to be fulfilled. A lot of those are largely administrative. They are very important and they need to be collated, particularly, as I touched on earlier, safety data and making regular reports on that.

There is some room to streamline these and we have already had some discussions with the MHRA, who are looking at their IT infrastructure, making that more flexible and adaptable, and perhaps including some more self-certification elements of that, which would then still have the same level of regulatory scrutiny through things like periodic audits and self-assessment reporting.

John Smith: We do self-regulate the industry. All the advertising that you see out there on the TV and in the newspapers for our members has already been approved by us. We follow strict codes and we work very closely with the MHRA in making sure that we self-regulate the industry. There are opportunities, I am sure, as we look forward, to do more self‑regulation. Could it be on packaging or could we take some work away from the MHRA and make it more streamlined? Again, I am going to say that the benefits are completely outweighed by the costs involved from the regulatory and trade, where we have got to do all this additional testing with the additional costs involved.

Q55 Peter Kyle: Thanks. You have made that very clear. Finally from me, we have had written evidence from StopAids that says that a weaker IP regulatory environment here in the UK could lead to a lowering of pricing for AIDS/HIV drugs. Do you want to respond to this piece of evidence that we have had?

Mike Thompson: What they are talking about is, essentially, opening up the IP protection for the whole of the market. In this country, this industry is based on effective IP. What I would say to you is that, if you look at the deal that we did with the Government on prices of medicines, for the 80% of the medicines that we supply through the PPRS, the average price over the last five years has declined in real terms by half a percent. I know that those facts are not normally understood well, but the control of medicines overall in the UK is really well controlled. I think a better way than that approach is to look at the overall costs of medicines, rather than trying to undermine something like IP, which would fundamentally undermine the model.

You need to remember that the pharmaceutical industry is, essentially, based on a model where you discover something and then you have an average of 10 years to get your money back. It then goes off-patent. We are delighted then that Paul’s members are able to make money, but it is a huge risk business. It has, however, been enormously beneficial. We have all worked together. You know that, since 1960, the average life expectancy in this country alone has increased by over a decade; that it is one of the most productive figures of any industry that has been created. This is a very effective model and we should never take a risk by undermining IP, because IP is the only thing that holds this together.

Q56 Stephen Kerr: You mentioned people as one of your four areas, as well as skills. We have received written evidence to suggest that there are skills gaps, particularly in some areas such as translational medicines and pharmacology. What are your members doing to recruit and train more British workers?

Mike Thompson: We are doing that. We were delighted with some of the measures in the Budget, in terms of things like investment in maths and that sort of thing. There are absolutely things that we can do and we work with universities to think about what types of courses could be developed to develop people with the skills. That is on an ongoing basis.

I would take it a level up and say that this is a global business. As I said, the UK is the third best centre for science and research anywhere in the world. How do we achieve that? We achieve that by attracting to the UK global experts to come and work here. This is not just in industry; you will hear this if you talk with the Crick or if you talk with some of our leading medical charities. Pretty much, if you look at the Crick or those charities, about 40% of the talent that they have has come from outside the UK. In our industry, in the research base, something like 17% to 40% of the people we have come from outside. If we cannot attract the global leading experts, then we will not remain as a global centre. It is all about people, as always, and it is all about the intellectual capital that is created. We are brilliant at it but, if we are not able to bring those experts in, then that would undermine our position.

Q57 Stephen Kerr: Which points to having a suitable and appropriate immigration system.

Mike Thompson: It does, and I have to say that the UK Government have been very good at making it clear that these are the sorts of skilled jobs they want to continue to attract here. There are opportunities. The current process for bringing people in is quite bureaucratic. Most companies have to employ specialists to work their way through the system, so certainly our hope is that, when a new proposal comes forward, it will be less bureaucratic and we will be a step forward from where we are today.

Q58 Stephen Kerr: The UK industry is an attractive industry to want to come to live and work in.

Mike Thompson: The UK is an enormously attractive place to come and live. If you come with your families, families have a wonderful time here. The culture is great. Whether it is men or women, people feel comfortable and safe in our society. There are all sorts of reasons that attract people to come to the UK and we need to leverage that.

Q59 Stephen Kerr: In connection with that, it has been suggested that, as the EMA relocates, up to a quarter of their staff will not want to leave the UK. Is there an opportunity for businesses to attract those people into their ranks?

Mike Thompson: I think there will be some opportunity at the margin. What I would say, though—and it is an important fact—is that, at the moment, we all know that there is a negotiation going on and there is some hardball being played. We now need to get to being very pragmatic. The EMA moved not so long ago, in 2011, and it took four years to move from Nine Elms to Canary Wharf. That took four years—and, by the way, it was pretty difficult.

We are now trying to move 950 people from Canary Wharf to Amsterdam. Already, 200 have said they will not go, so that is already a 20% problem. The property market in Amsterdam grew by 15% last year; it is one of the hottest property markets. There are 600 kids in the EMA who will need to be found international schools. I have to tell you that there will be very serious issues in effecting that sort of transfer. We all know that, where there is one parent working in an organisation who is offered a job overseas, if you cannot get your kids into school, people make some choices based on family needs, not on professional needs.

At the moment, no one is really being honest about the challenges of this transfer. I hope that, as we get into phase 2, there can be some real pragmatism here. There is a long lease on Canary Wharf. There will be a number of people who will not choose to move. We need to have a pragmatic agreement. We need to be generous. However, we need to have a number of people who continue to work from the EMA out of Canary Wharf; otherwise, quite frankly, the EMA will not be able to fulfil all of its duties. As soon as we are out of the heavy negotiation, we need to get into something that is much more pragmatic.

Chair: That is very interesting and is something that I have heard before: the possibility of some EMA staff staying in London for those very practical reasons. If that could be achieved, I think that would be a very good outcome for the sector and for the industry across Europe. Thank you.

Q60 Mark Pawsey: Probably to conclude, you have given us a pretty challenging picture around Brexit with issues on the regulatory process, trade and, just now, about attracting talent. Are there any niche areas where Brexit offers an opportunity to specific companies? You all represent a very large number of companies in your sectors; are there any that see our leaving the EU as an opportunity, whether it is going for new markets or developing products on our own terms?

Mike Thompson: We have found it very difficult. As I said, we had a lot of people working, and one of the questions we asked is, “What is the upside?” I have to tell you that we really did not come up with very much. There are times when Europe is slow and bureaucratic because, if you need to get 29 people to sign up to something, the processes are slower. If, at the outcome of this, we were in a different scenario, we would have to look at speed and agility as something to try to take advantage of, and that is where I think we would focus.

Q61 Mark Pawsey: Do you think we could set something up that would enable us to do that?

Mike Thompson: We would have to set something up but, as I have explained, there are some very significant challenges that we would have to overcome here.

Q62 Mark Pawsey: Do either of your colleagues want to add anything?

Paul Fleming: The one point I would add is one I touched on a little bit earlier, which is working more closely with global regulators who work to the same standards as us and in Europe. There are a lot of platforms where people are sharing scientific and regulatory expertise. There are opportunities to make those more formalised and stronger going forward. Collectively, we think that that is probably the clearest opportunity. It is something that is already there that could be reinforced in working more closely with other global standards.

Q63 Mark Pawsey: Mr Smith, are there any upsides for any of your members?

John Smith: Like Mike, we have struggled to find real upsides, and the downsides far outweigh them. Certainly, speed and agility of what the MHRA could deliver in terms of the registration of products could be something we could be looking at, but it is the downside of all the additional costs of the regulatory process and having to do things twice. My concern is some of the smaller companies. The big companies will be able to cope with whatever happens. The smaller guys have not got all these big systems and understanding of what is happening, and my worry is that they are as well prepared as they could be. If we do end up with a really rock-end date, it could be very severe for some of the smaller guys.

Chair: Thank you very much, all three of you, for coming to give evidence to the Committee today. It is very useful.

From Factory to Pharmacy

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