Full Transcript Of HDA Appearance Before The Health Select Committee

Health Committee – University of Nottingham, British Association of European Pharmaceutical Distributors, Healthcare Distribution Association, Royal College of Radiologists – Brexit – medicines, medical devices and substances of human origin


The Health Committee has published oral evidence from the following witness(es): Dr Andrew Grainger, Assistant Professor in Logistics and Supply Chain Management, University of Nottingham; Richard Freudenberg, Secretary-General of the British Association of European Pharmaceutical Distributors; Martin Sawer, Executive Director of the Healthcare Distribution Association; and Dr Jeanette Dickson, Vice-President of the Faculty of Clinical Oncology, Royal College of Radiologists.


Examination of witnesses

Witnesses: Dr Andrew Grainger, Richard Freudenberg, Martin Sawer and Dr Jeanette Dickson.

Q1 Chair: Good afternoon and welcome to the Health Committee for our first session on medicines, medical devices and substances of human origin. There is another Committee—the BEIS Committee—meeting as well for their pharmaceuticals inquiry into Brexit and the implications for UK business. We are not seeking to duplicate these inquiries, so our focus, as the Health Committee, is on the implications for patients. I want to make clear from the outset that that will be our key focus for this inquiry.

For those following outside this room, could the panel introduce themselves and say for whom they are speaking, starting with you, Mr Sawer?

Martin Sawer: I am Martin Sawer, executive director of the Healthcare Distribution Association. Thank you very much for inviting us because this is an issue we have wanted to get on the agenda for a while.

We represent the major distributors of medicines in the UK, distributing about 90% of medicines that the NHS use, about 225,000 deliveries a week to all hospitals, pharmacies and doctors across the UK. That is distribution from 50 warehouses, which depend very much, on a just‑in‑time basis, on deliveries twice a day on average, 11 times a week.

Dr Dickson: I am Jeanette Dickson. I am the vice‑president for clinical oncology at the Royal College of Radiologists and I am here today to represent both faculties. I happen to be a consultant clinical oncologist, so I will be able to talk about the impact of a disrupted supply chain on treatment and diagnosis of malignancy—cancer—and the impact that that would have on patients, but also for the radiology and diagnostic workforce, which is also part of the major use of medical radioisotopes.

Dr Grainger: I am Dr Andrew Grainger. I am an academic currently at the University of Nottingham, with a background in trade and customs procedures.

Richard Freudenberg: I am Richard Freudenberg from the British Association of European Pharmaceutical Distributors—a long title. We represent the parallel importers of medicines into the UK, about 25 million packs each ear, about £1 billion‑worth of sales.

Q2 Chair: Thank you. Reminding you that the focus of this inquiry is on the impact on patients, may I ask each of you as an opening question to set out what a realistic worst‑case scenario could look like after Brexit. Martin?

Martin Sawer: I suppose a worst‑case scenario from our perspective is that as businesses—we are all private sector businesses in the association—we do not have any guidelines or rules against which we can operate. If there is no common regulation with either the EU or other countries that at the moment exists because of the EU, then medicines will become less safe, I would suggest, for UK patients in the long run. We have, on average, about four or five months’ stock of most medicines in the UK, but the beauty of the EU system and the single market is that the 28 countries all operate in the same way, with the same wholesaler dealers’ authorisation that my members have, so product can be moved around, but there is also a central database against which you can check the origin of those medicines as a wholesaler. That type of patient safety issue is very important to us and guarantees that we are handling proper medicines—kosher medicines, should I say.

The other issue is tariffs. Obviously, at the moment there are no tariffs on medicines between us and the other 27 member states, but nor are there for those from India and China, where a good half of the medicines originate, whether that is on an API basis—where they come in as raw pharmaceuticals—or in finished products. Therefore, in a worst‑case scenario, if there is no trade agreement, that will produce a great challenge for trade to be organised properly and systematically following 2019. If it is not sorted out in a few months, we will have great problems importing medicines. Ninety per cent of the medicines in the UK are imported from the EU or third countries—45% from the EU—whether finished or unfinished product. We do not manufacture that much in the UK. Those would be our big concerns in supply and trying to get them safely to patients.

Q3 Chair: So it is supply and getting them there safely.

Martin Sawer: Yes; so we would argue for a transition period, clearly.

Q4 Chair: Thank you. We are going to explore some of those issues in more detail. Jeanette?

Dr Dickson: If we start off with the medical radioisotopes, the worst‑case Brexit scenario covers a number of issues. First off is diagnostics. We import about 80% of the medical radioisotopes used in diagnostics. There are about a million procedures, both diagnostic and therapeutic, a year, and we import about 700,000 of those.

The facility to manufacture them in the UK does not exist at the present time. For the other 20% you can do some substitution, but the capacity there to increase the amount of radioisotope is limited, and the cost of those radioisotopes is much more than the ones we import. You are talking of a significant proportion of patients with cancer, heart disease, bone disease or thyroid disorders, for example, not having rapid access to diagnostic imaging, not having an assured diagnostic pathway and not being able to know, for example, whether they have had an improvement in their cancer or whether it has spread.

Can we use other tests? Yes, we can, but the workforce that provides the medical radioisotope tests and the workforce that provides the other tests are not the same. They are not cross‑trained, so there is a lack of nimbleness there to transfer across.

If we talk then about the treatment of cancer, which is done by what we call unsealed sources—medical radioisotopes that you either ingest, that is, take in by mouth, or we inject into you—these cure patients with predominantly thyroid cancers. If we do not have an assured supply of those, again there would be a reduction in the rate of cure and more people are going to die of their thyroid cancers. We probably treat about 2,000 people a year in the UK for thyroid cancer.

If we talk about the unsealed sources that are used for specific types of radiation therapy called brachytherapy, which is not treating cancer from the outside but into the specific organ, the major use of that is iridium, which is used in cervical cancer. There are about 3,600 ladies diagnosed with cervical cancer in the UK per annum, and brachytherapy is an essential part of their treatment. Despite advances in technology, we still rely on that for a cure rate in about 500 cases per year. We have to deliver the treatment as a combination of external beam and afterloading of brachytherapy. The external beam takes 42 days. If we do not deliver the whole treatment within 56 days, there is a reduction in cure. If you do not have sustained assured pathways, you cannot be sure that those patients will receive the best form of therapy that they could.

In terms of medical devices, that is not so much an area of expertise, although our interventional radiology colleagues use them a lot to prevent surgery; so, again, there are capacity issues. If you are going to take away a medical device and as a result surgery is required, you need to expand your surgical capacity. That also holds true, for example, for treatment of benign thyroid disease, such as an overactive thyroid. If you cannot use radioactive iodine, which is used very commonly, you may have to increase your surgical capacity, and it is very difficult to be nimble to shift that in the short term.

For research, we are also very worried about a lack of supply, partly because we are a net beneficiary from research investment in the UK and about 15% of the academic workforce comes from the UK. The worst‑case scenario is that patients in the UK no longer have access to innovative trials as easily. If in the UK we diverge in a regulatory fashion from European trial protocols, then we may suffer a significant disadvantage in our patients being accepted for clinical trials.

Q5 Chair: Thank you. Andrew?

Dr Grainger: Probably one of the worst‑case scenarios imaginable is that we are not ready and there will be significant disruptions to supply chains, and—pardon the pun—people might not be clear on how to clear goods, with the result that ports might be clogged up. So, even legitimate trade might be behind in the queue compared with other people; systems might not be ready, with all the implications for how companies could be compliant, with follow‑on impacts on logistics operations, which might be delay, but it might also relate to non‑regulatory issues with questions such as where to find staff and warehousing or trucking and the like, where we rely on EU member state labour.

Richard Freudenberg: Many of my members’ concerns are common with Martin’s and indeed with Andrew’s, but, uniquely, what our members do is subject to the rules of the single market. We depend on free movement of goods within the European market in order to import into the UK. That is brought about, as you will have read from our written submission, by the exhaustion of rights principle that applies within the single market. Without that, we cannot continue to provide the competitive effects on pricing in medicines in the UK that we currently do. Indeed, our members can be much more reactive than originator manufacturers in bringing medicines to the market when there are shortages in the UK.

Q6 Chair: So, for you, it is not only supply, but it is about the increasing costs of medicines.

Richard Freudenberg: Yes.

Q7 Chair: Before I move on to other areas to look in more detail, as a broad brush, what are your thoughts about what absolutely has to be done to improve resilience?

Martin Sawer: From our perspective, it would be on 30 March to carry on as we are for medicines supply, because, as far as our members are concerned, they are businesses and cannot plan for uncertainty. Uncertainty is where we are at the moment. Come 30 March, when we have left the EU, then we would be able to work on how the arrangements are going to work post being in the EU. I would suggest that a transition phase of at least two years is needed. We have certainly been talking to the MHRA and the Department of Health about these issues in very much the same way I am talking to you now, so they are fully aware of it. The MHRA is a very good regulator and has worldwide distinction, but without a political guideline—and with the best will in the world—it cannot work out what the post‑EU world is going to be like. For us, it is to carry on immediately after leaving the EU as now, but then work on what the new arrangements are going to be.

Dr Dickson: I would echo that. Whatever happens, we need to be able to assure the supply as quickly and efficiently, with no disruption, as we do now. Without that, there will be an implication on patient care and on diagnostics. Patients will be diagnosed and treated as if there will be an uninterrupted supply up to that date, and if there is not a supply at that time those individual patients would be disadvantaged.

Dr Grainger: It is almost a question of what resilience is. One of the tenets of preparing organisations to be resilient is to understand how procedures currently work. Given that trade logistics is incredibly complex, with many different parties involved, it is an exercise that probably no one ever needed to do so far. Working out what the baseline is so that you can prepare for an event that requires resilience, be it Brexit or anything else, requires preparation. My sense is that in many areas this is the first time we have had to engage with questions such as this. Certainly, when you speak with companies—understanding when to take action, understanding the relationships up and down the supply chain, and the contractual arrangements—these are complex systems. Therefore, it is very difficult, even for the people right at the heart of it, to predict what might happen. There is uncertainty but also there are many unknown unknowns.

Q8 Chair: Do you think people have put all their eggs in the transition basket? Do you sense that your colleagues are active—that people are actively preparing for there not even being a transition?

Dr Grainger: I am aware that some organisations are beginning to think about it, but it is very practical things. I am in academia; I know, for example, that in the United Kingdom not many organisations provide something very basic such as training. Other member states in the European Union are much better prepared. They have, for example, a profession of customs professionals. My sense in the United Kingdom is that, if you work in trade and customs, it is something you stumble upon by accident, and it is a very small community; in other member states there might be thousands at hand. I have spoken to some freight forwarders and logistics service providers who have struggled to find expertise in this country and, almost jokingly, have suggested, “But I do know I can find them in Poland or Serbia, and places like that.”

Richard Freudenberg: For us, too, resilience is hard to plan for because, essentially, this is a black‑and‑white—an existential—issue for us, as in a certain set of circumstances my members’ business would cease to exist altogether. It is very difficult to make investment plans for the future in this and in other areas of legislation and regulation such as the falsified medicines directive.

Q9 Maggie Throup: I want to explore the supply chain aspect in a bit more detail. We do not know what the deal is going to be—whether it is going to be transition or, at the other end, we crash out and burn, or anything in between. We have touched on supply chains, but can we talk in a bit more depth about what risk Brexit poses for supply chains of medicines, medical products and devices? What would this mean for patient access to these products?

Martin Sawer: I will kick off and I am sure others will want to comment. On the access to products, our perspective is that there will be a varied impact of no deal. For example, a manufacturer may make some products in an EU country and not supply them to the UK until, let us say, a few weeks before they are required. Our members typically hold about 10 days’ worth of stock, but, behind that, for a lot of manufacturers there are massive pre‑wholesalers where they store, say, four months’ stock. Some manufacturers in some products—I cannot identify any particularly—will manufacture a product but send it to the UK maybe only a few weeks or a few days before we get it, so they have their own storage arrangements, maybe centrally, for the whole of the EU.

Once you get a licence in the EU, access to patients is about 28 countries being able to get it equally. Three of my wholesalers have operations in other European countries, so product can move around. With our members working with Richard’s members, we will import products when perhaps they are in short supply to make sure we can top up provision in the UK. We can import them from other areas of the single market, which we would be unable to do if we had a so-called hard Brexit.

It is very varied, and it is very difficult to generalise about what the impact will be. It might mean that fewer products are available for UK patients if there is no deal because we would not be able to get some products quickly.

Q10 Maggie Throup: That is the end product. What about the supply chain? There are different parts of the manufacturing process.

Martin Sawer: When you are talking about getting products on to the market, do you mean new medicines particularly?

Q11 Maggie Throup: No. Sometimes different parts of the product are sourced from different countries. One part may be made in the UK, and then go to another country and back again.

Martin Sawer: Indeed, and I imagine that without a deal that would become much more complicated. I know, for example, that different parts for inhalers for those with asthma are made in different EU countries. The UK would suffer from not having an arrangement with other EU countries, and some of those products may not even be able to be released in Europe if the UK made a certain part of that. I do understand that, yes. The manufacturing organisations are probably better placed to answer that question.

Dr Grainger: On general principles, supply chains are inherently complex and evolve, and no two supply chains are alike. Every part has parts. Manufactured goods or parts might cross borders many times and might be just within the chain of producing things, but sometimes it is just about where you keep spare parts. You might have the manufacturing chain but have a spare parts depot somewhere else. You might send things off to testing, and each supply chain is probably quite unique. Every time there is a disruption it will reconfigure, but there will be an adjustment period. Some organisations might be quite responsive, whereas others might have leaner, cost‑focused economies of scale‑type operations, which might be less flexible, and that will differ from sector to sector.

Dr Dickson: On supply chain issues, medical radioisotopes, for example, decay at a certain rate—their activity reduces. If you buy, say, the equivalent of 100 doses and you have the uninterrupted supply chain that we currently have, you get 100 doses delivered to your various hospitals so that you can treat 100 people. If you delay that at customs or through border issues, you have paid for 100 but you get 50 doses. You therefore cannot treat the patients adequately. You have no way of predicting that until the shipment arrives, and you are incurring a massive cost for the NHS. In this country, we do not manufacture iridium, but we do import and process it into radioactive iodine seeds, which are then exported. There is a risk to that manufactory and those jobs if the supply chain is disrupted in that way.

Q12 Maggie Throup: An individual patient may either get access to radioisotopes or not.

Dr Dickson: Yes. Patients’ diagnostic pathways will be interrupted. As I have said, you can shift many tests. You can always substitute something else, but that comes with a cost to the taxpayer. The radioisotopes, for example, which look at bone disease, generally cost £10 or £20. The radioisotopes we would use, for example, for a PET-CT cost £120.

We produce those in cyclotrons in the UK. Actually, that is about a fifth of what we do. Do we have an extra four or five times the capacity at the right point in time, even if we had the cash to pay for it? I am not sure about that.

If you do not go for the radioisotope use, most of those would be done by radiology departments. You would be going for MRI tests, which again are more expensive. We do not have a huge number of MRI scanners in the UK per million of the population compared with other European countries, so they are at virtual capacity anyway. You are talking about a longer test, which not every patient can have because of medical reasons, which is then pushed over to a diagnostic workforce—not the same diagnostic workforce—which currently has a 10% vacancy rate and almost 10% of EU graduates as well. You are talking about a diagnostic workforce that is under stress, so those patients will be waiting longer for the outcome of the tests. Yes, you could prioritise cancer if you chose to, but in diagnostic tests you do not know what the diagnosis is until you have got there.

Q13 Maggie Throup: At that stage it is just a name, yes. Richard, do you want to add anything from a patient’s point of view?

Richard Freudenberg: I have one thought, and it is about the loss of the authority of the European Medicines Agency after Brexit. I guess that the medicines that we are used to receiving that are authorised, in the sense of an authorised process, will have to be re‑authorised by the MHRA in the UK between now and March 2019. With only 15 months or so to go, I am not sure that there is time for that whole process to be completed and whether it will have an impact on patients. It is hard to judge.

Q14 Maggie Throup: What should the Government seek to secure in a future trade deal to prevent disruption to the supply chains and minimise impact on patients?

Martin Sawer: To minimise the impact on patients, the future trade deal needs to mirror and replicate, for example, a lot of the EU regulations, which for the last 20 years have spent a long time being developed to benefit patient safety. That is not to say that in the longer term the MHRA may have more variability of how those rules are implemented on the ground, but the broad structure that business can then respond to needs to be very similar, because tablets and drugs cross boundaries, as you have seen, and are made in many different countries, in part or in whole. If we had something that was at odds with that, it would put a lot of cost into the system and indeed produce supply shocks, which would be to patient detriment.

At the moment the EU is one of the largest markets for medicines. It is perhaps unique. We are quite unique as a sector. A product can be put into the market and be available in 28 countries once the licence is established and the batches are released for particular countries. Indeed, the UK has already adopted EU legislation—the falsified medicines directive—which is barcoding every group of medicines. Ironically, that is due to be implemented in February 2019. At that point, one would hope that the medicines within the EU are going to be much safer than they are today. We think it certainly makes sense to carry on with that.

The medical devices directive is again providing unique numbers for all devices. That arose out of the breast implant scandal, as you are probably aware.

Those are two pieces of legislation that are just coming into the UK. We would hope that they are going to be implemented in full. Some of the regulations are zero tariffs on medicines, as exist now; otherwise, again, the cost, which the NHS is largely paying for, would go up quite considerably.

Q15 Maggie Throup: Andrew, do you want to come in on that?

Dr Grainger: Yes. As a better regulation principle, the mutual recognition of controls and procedures, if that can be achieved, has the benefit of cutting out duplication. One country’s export is another country’s import. If a shared responsibility can be achieved for that, you reduce the regulatory burden by half.

Q16 Luciana Berger: Dr Dickson, you have set out some of the problems that Brexit could pose if there is any shortage or delay in the supply of medical radioisotopes. For the benefit of the Committee—and, forgive me, I did not quite hear you—will you repeat the figure on how many diagnostic or therapeutic procedures use medical radioisotopes in our country?

Dr Dickson: Approximately a million use medical radioisotopes, of which about 700,000 depend on Technetium, which is one that we have to import because we do not have a source of manufactory for that.

Q17 Luciana Berger: Of those 700,000, how many patients is that? Presumably, some patients will have multiple exposure.

Dr Dickson: It is difficult to be precise. It is pretty close to 700,000, because most of those are diagnostic tests. There are relatively few therapeutic treatments, and not many are duplicated. A number are duplicated, but not many, so you are certainly close to that as the absolute number of patients affected.

Q18 Luciana Berger: We previously experienced shortages and delays in the supply of medical radioisotopes following the channel tunnel fire in 2008 and industrial action in Calais in 2015. Will you share with the Committee what the impact was for patients and the supply of medical radioisotopes at that time?

Dr Dickson: With the 2008 tunnel fire, that was a short period of time with a definite view that things would get back to business as normal within a defined time. So, patients were re‑prioritised; some patients were pushed towards other therapies or other diagnostic tests, as I have said before; and for some patients treatment was deferred where, clinically, that could be done. For some patients, what access was used was prioritising the clinical patients there at the time, but because of the relatively temporary nature of the disruption that could be done for a period of time. The concern that we have going forward is that, if it is an unknown period of time and the supply chain does not work as efficiently and effectively as it is doing, the guarantee of supply will not be there and what comes out at the end will not be what, essentially, we have paid for.

Q19 Luciana Berger: Would members of the panel like to add anything about concerns you might have that Brexit would pose for the supply of medical radioisotopes and its impact on patients, which you have not raised already?

Dr Dickson: We import 80%-plus of our radioisotopes from Europe. As I have said, the drugs are time limited, so the longer they take to get to the UK, the less activity is delivered and the fewer patients you can treat for the same amount of radioisotopes. You can import from other places—you can import from South Africa—but you lose more activity and therefore reduce the number of patients you can treat.

As Andrew alluded to with customs, I understand there are concerns about increasing the number coming in by air. Most of the medical radioisotopes currently come through Coventry airport, and there is a good bulk of expertise there on how to manage them efficiently and effectively. Does it have the capacity if we increase the amount coming in by air? We do not think so.

Q20 Johnny Mercer: I have a great little company in Plymouth—well, a not so little company—called Becton Dickinson, which is involved in the manufacturing and is the largest supplier of needles and tubes for blood collection in the NHS. Its products are manufactured in Plymouth; it has just undergone a huge £172 million expansion. They then go to Belgium. What impact is Brexit going to have on that sort of operation?

Dr Grainger: It is tricky. I would not be able to comment on a specific company, but, yes, I could imagine—

Q21 Johnny Mercer: With that sort of operation, where we are manufacturing things here and they are going abroad, and then potentially coming back to the UK—the company is the biggest supplier into the NHS—how is Brexit going to affect that supply chain for patients? Is it going to make it harder for them to get tests and results?

Dr Grainger: Under current customs legislation, there are all sorts of procedures in place, such as outward processing relief, where you start the manufacturing process in one country, you take it to somewhere else and you take advantage of skills or expertise that might exist somewhere else. That might cross borders a few times, each of which might have certain customs control implications.

With the UK being separate from the European Union and the other member states becoming de facto outside, companies such as the one you are referring to might have to start considering this rather complicated customs regime, such as outward processing relief, coupled with inward processing relief, which would require sophisticated IT systems that would need to be able to track each and every part in their inventory, in their manufacturing process. These are sophisticated, complex operations that do require expertise, which brings me back to one of my earlier points as to whether that expertise would be readily available. I am not sure, because even the number of consultants is quite limited. You are dealing with uncertainty.

Q22 Johnny Mercer: Richard, do you have anything to add to that?

Richard Freudenberg: It is not my area of expertise.

Q23 Johnny Mercer: Does anyone else have a comment? It seems that there is no pleasant answer to that question.

Martin Sawer: It certainly does not sound like it. One could imagine that, if it becomes more challenging for businesses generally, if they are small businesses that is going to be a big cost problem, and if they are larger businesses they might move. Our members respond to lots of regulation and laws, and you would understand that. With medicines, it is very important to get everything right for the patient, and there are so many legal challenges here. All the licences, as Richard mentioned, that the MHRA has issued—2,500 wholesaler licences—would have to be rewritten. All the marketing authorisation holders—there are 1,200 of those—would have to be rewritten and reapplied for. The logistics of trying to make this legal in one year’s time is almost impossible.

Dr Dickson: One other thing I would add is that all the products you are talking about are sterilised. They are generally now sterilised using a medical radioisotope. So, again, it depends where that would be done, and the importation of that might be threatened as well.

Q24 Johnny Mercer: What customs arrangements could be adapted to support the import of time‑sensitive medicines such as radioisotopes? You mentioned a couple there, but, to be honest, I did not really understand what you said. What sort of things for the layman could be done to make this work?

Dr Grainger: In essence, these are control regimes where customs acknowledge that certain manufacturing processes probably are best done outside the customs territory. When you reimport it, you do not want to pay the full customs duties on the value added that has taken place abroad and you take advantage of that. That is the principle.

Q25 Dr Cameron: What could the impact be if the UK diverges from the EU regulations covering manufacturing, batch testing and distribution, both for the industry and for patient care?

Martin Sawer: I can talk about distribution. It would put up the cost of distribution, because at the moment there is a template to follow that has been well established and proven. If we were to start diverging in regulations and producing new types of licences or being inspected in a different way, the standard training for our members’ staff would have to change and the type of responsible QPs or RPs would have to be retrained. The costs can only go up, which would impact on the cost of medicines because we get paid, basically, by the NHS to distribute medicines. That is how it works. The costs, I think, would definitely go up on regulation.

Q26 Dr Cameron: When you say the costs would go up, is this a minimal amount or quite a significant increase? Can that be estimated?

Martin Sawer: The volumes are huge. We distribute 2 billion packs of medicines every year, so the volumes are very large, and, as you know, the medicines bill is very large. We get paid on a margin within that, which is agreed, and therefore you can imagine that the amount of money could be quite large because of the turnover of the sector. We are talking about billions, really.

Q27 Dr Cameron: Does anyone else want to comment on patient care?

Richard Freudenberg: There is a small part of what Martin was referring to, and you will be aware, Dr Cameron, that batch release is done by a QP—a qualified person—which is a European qualification. If we are not part of that process in future, and we already suffer from a shortage of QPs in the UK as it is, in that particular area alone it is going to increase costs and have an impact on availability.

Q28 Dr Cameron: What should the Government be doing to prevent the loss of expertise from qualified persons?

Richard Freudenberg: The expertise will have to change. If we do not follow the existing EU rules in the future, we will have to change and retrain our existing specialists.

Q29 Dr Cameron: How long would that take? How long does it take to train a qualified person?

Richard Freudenberg: It takes a long time. Is it three or four years, Martin?

Martin Sawer: Yes.

Q30 Dr Cameron: It cannot be done in time.

Richard Freudenberg: Not in a very quick way, no.

Q31 Dr Cameron: How would that impact on patient care?

Richard Freudenberg: It is going to have an impact on availability as well as cost.

Q32 Dr Cameron: If we do not have these qualified people—

Richard Freudenberg: You need to start planning now.

Q33 Dr Cameron: Yes, and you say three to four years.

Richard Freudenberg: Absolutely. The question is a theoretical one at the moment. We hope it will continue as it is, but at the present time the UK is having to bring in qualified persons from other European member states to fulfil the demand in this country as it is today, never mind post Brexit.

Q34 Dr Cameron: How much will it cost to train or retrain the additional qualified people?

Richard Freudenberg: It is supply and demand, but I think these are not cheap individuals. A typical salary for a qualified person is £100,000 a year.

Q35 Dr Cameron: It sounds as though we are not ready.

Richard Freudenberg: I do not think we are ready, unless Martin would like to add to that, but I do not think we are ready.

Martin Sawer: No, we are not. Again, it boils down to my point that businesses will only budget and plan when they have something certain to plan for. They have their shareholders to be answerable to. They are not going to try to put something in the budget line that they are not sure about, and I have already been told by a couple of members that 8 January next year is their cut‑off time for budgeting through Brexit; so, it is just not feasible unless there is a transition period.

Q36 Dr Cameron: What should the Government be doing now or what can the Government do?

Martin Sawer: To be fair, we are engaged with the Government on their own Brexit working parties, so there are operations within the respective Departments that we have been engaged with where we have been talking to them about this. The Government have a political negotiation, and for businesses the sooner that is set in place the better, whatever that is, so that we can plan for the future. I cannot really answer your question specifically, and certainly I am not aware of planning going on. As Richard said, it is almost academic or theoretical, and we cannot work on that basis.

Q37 Dr Cameron: My concern is that if we do not have these qualified persons in place who are able to apply the current regulatory framework or a new one, given that potential circumstance, what does that mean for the consumer? What does that mean for patients?

Martin Sawer: To be pragmatic, if that was the situation, business would be sensible and carry on with the rules as they are and wait to be challenged by the authorities. They would have to use existing rules until they were challenged. I would hope that the MHRA would not challenge that because there is nothing against which they can challenge us for or even be ready for. Other regulations get delayed because industry is not ready. There are other precedents for that, so I think that would be the case this time as well.

Richard Freudenberg: A longer transition period would help.

Q38 Dr Cameron: It sounds as though the Government have to act extremely urgently on this issue.

Richard Freudenberg: I know that the MHRA is busy on this issue at the present time, yes.

Q39 Chair: To be clear, as I understand it, qualified persons have been told already that they have to relocate to the EU after we leave, so we could end up with almost none.

Richard Freudenberg: I do not think so. The question was whether the qualifications or the methodology will change after Brexit, so it is not so much about the location of the QP. If that were to change, if we applied different standards in the UK than are currently practised across all of Europe, we would have a problem.

Q40 Chair: But, as far as you are aware, they have not been told that they have to relocate to the European Union.

Richard Freudenberg: No, far from it.

Chair: Thank you for clarifying that.

Q41 Andrew Selous: What would the impact on the UK be if on 29 March 2019 the UK went on to World Trade Organisation rules? What would be the impact on the trade in life sciences for the United Kingdom?

Richard Freudenberg: Martin has painted a rather broader picture, but specifically for my sector it would be quite difficult. There is trade in European products from within the EEA in both directions in the UK at the moment, so we both import into the UK and export from the UK to the rest of Europe. In the circumstances you describe, my understanding is that certainly exports from the UK would cease. My learned friend will correct me if I have got that the wrong way around, but in certain circumstances imports could continue with agreement. This is the question, as I mentioned earlier, of exhaustion of rights. At the moment, we operate under what is called a regional exhaustion within the single market. If the UK were to go towards a more international model of exhaustion, that would be a completely different criterion. It would mean, technically, from a trademark and legal point of view, we would be able to trade with the rest of the world, but medicines regulations would not be in place to bring those in line with the trade rules.

Q42 Andrew Selous: Martin, do you want to add to that?

Martin Sawer: I do not think so, only to say that, as I understand it, under WTO rules—there was a quote from the WTO head last week, I think—most medicine products are quite low tariff, 2% to 3%. If we were able to move product appropriately, clearly the cost would go up, as would all the bureaucracy associated with trying to deal with WTO rules. That is all I would add.

Q43 Andrew Selous: Have you looked at comparable jurisdictions outside the European Union—reasonably wealthy countries with advanced health services—to see how they cope on a WTO basis? Have you done any of that preliminary work of scenario planning just in case we do go to WTO rules?

Martin Sawer: No, we have not done that. There has been talk about whether the regulator—the MHRA—should or should not think about partnering with Australia, Canada or other countries for common regulations. We are mainly concerned with UK distribution. Export is not a major part of our operations. Sourcing medicines and getting them into the country is usually a manufacturer’s operation, because once they are in the country we distribute them. If you like, we are one step removed from trying to understand what might happen with WTO rules or otherwise, but clearly there are other options.

For example, if we were to strike some sort of open trade agreement with America, which has been mooted—they do not allow parallel imports into the USA at the moment, but if that were to happen—I would probably vouch that a lot of medicines would start leaving the UK. These things are not necessarily attractive, because in America the same medicine would probably cost 50% more at least, so there would be a very big export trade from the UK. We are a very low‑price market. The NHS has done a great job in negotiating prices in this country. We are only worth 2.5% of the world’s pharmaceutical business, and, therefore, we have to be careful about doing trade deals with other quite—as you say—well-off countries because it could start sucking medicines out.

Q44 Andrew Selous: That is helpful and it leads me on to my next question. What would happen if the United Kingdom were to lose access to parallel trade after Brexit, and what would the impact of that be on patients and the NHS? The Committee has been given some figures. Parallel trade is estimated to have saved the NHS €986 million between 2004 and 2009, which backs up the point you were making, Martin. Richard, I think this is your particular area of expertise, is it not?

Richard Freudenberg: Those figures were from a period when sterling was particularly strong. We were importing a lot of products—more than we do today—in that period. Sterling is particularly weak now. I think it is also in our submission that we measure imports at about £1 billion a year, which saves the NHS about £100 million a year, based on the clawback that operates in pharmacy reimbursement. It is a much lower figure these days than it was in the past, but even that figure would be lost in certain circumstances were parallel trade not possible within the EEA in the future.

Q45 Rosie Cooper: Notwithstanding the comments you have already made, how would the Government look to ensure a smooth transition for the life sciences sector?

Martin Sawer: The best thing from our perspective is that on 29 March we have everything as it is now and then work probably for two years, I would suggest—I know Astra Zeneca have suggested three—with the regulators, industry and obviously the EU, because then we know on what basis Brexit is being negotiated, to establish mutual recognition and how broad it is. It is really the Irish border situation writ large, if you like. We are going to have to see how it is going to work, because it has to work. Patient safety is at stake here, so it has to work. I think that is the only way.

I know there is a life sciences strategy, which is very well developed, and the distribution of medicines would flow from that, because the life sciences strategy is more about releasing new medicines and being able to cross borders because they are manufactured in lots of different countries. Our type of regulation for distribution of medicine must flow from that. It is building on the work that has started, but it is not going to be able to be completed until there is a political settlement and the structure is understood about how we relate to the EU after March 2019, I am afraid.

Q46 Rosie Cooper: I understand how difficult all this is. You mentioned Astra Zeneca talking about three years for a transitional period. We have had evidence that would suggest that lots of people have different views of that, from two years to five years, and whether you are a large company or an SME would shape your view of how you would get to that. Is two years, which is the minimum period I have heard talked about, long enough for the science sector to absorb the necessary changes it would have to make?

Martin Sawer: Distribution‑wise, again, which is what I represent, two years would be time in which we could adapt. Given the fact that we are going to have to work with the regulator on all the new procedures, the mutual recognition and the licensing issues, it would be down to how quickly the regulator could work and what its resources are. I cannot speak for the life sciences sector because that is about getting a licence and a patent, and batch-releasing different products and all that type of thing, but certainly for distribution two years could be realistic, yes.

Dr Dickson: What we are concerned about predominantly is that life sciences is not just about the drugs or the medical radioisotopes. It is about the workforce. As I say, the diagnostic workforce is at least 10% primary EU qualification, and for cancer treatment it is about 5%. We have a significant vacancy rate in radiology for diagnostics. The research component is very concerning for us. Yes, the Government have underwritten the Horizon 2020 funding, but we have been a net beneficiary of EU research funding.

Again, it is not just about specific drugs and radioisotopes. It is about the whole of life sciences in terms of academia, making the UK attractive to bright things, making it easy for people who have those skills that we need still to immigrate into the country.

We are looking at significant retirements in certain sectors. The cervical cancer retirement rate is about 20% in the next five years, so we know we have a gap. Can we attract people to the UK? It is about the whole of the transition period trying to do the whole of the sector. Certainly, with radioisotopes, partly it is a drug, partly it is radioactive, partly there are time constraints and partly it is about customs. There is not one unified place to go to talk about that for Government. You talk about health, transport and customs; they are all different things. To get a unified voice is quite a difficult thing.

Q47 Rosie Cooper: It is always a difficult thing before you add the complexity of the direction we are taking now. Do you think we can square that circle in the time we have?

Dr Dickson: That would be very difficult.

Q48 Rosie Cooper: My last two questions are more business focused. What do the business end need to transition smoothly, and what clarification, almost, of the arrangements, if there was a transition period, would you need?

Martin Sawer: Close working with the regulator would have to be a given, because we need to understand what the new world might look like. Then, as I say, investment plans can follow from that. That would be a strong message that we would want to put out. Part of that is consultation—for them to consult about how things might affect business and supply chains. That would be important for patient safety, I am sure, as a consequence. We need to be working together on it.

Q49 Rosie Cooper: Is there a timetable beyond which you need the clarification? What is the drop‑dead date almost, if there is such a thing?

Martin Sawer: As I say, we are probably not going to make a move until we hear what some of the structures are going to be like. If the negotiations on Brexit continue up to 28 March, we won’t know until 29 March, will we? That is the trouble. We cannot react against something whose structure we don’t know. We cannot invest behind something that is theoretical. That is the main challenge for us.

Rosie Cooper: It is a very difficult period.

Chair: Thank you.

Q50 Mr Bradshaw: You all seem pretty clear that what we need, to coin a topical phrase of the last 24 hours, is continued regulatory alignment. Would I be right in thinking that that is something we need? Yes, you are all nodding. We need continued regulatory alignment, a bit like Northern Ireland, and a bit like every other sector of our economy that has expressed a view on this. That is very helpful. How about staying in the single market and the customs union?

Martin Sawer: Certainly, from our perspective, we would appreciate that. Richard’s businesses obviously depend on that, but, for supply to UK patients, being able to bring in medicines that have a licence already in the EU can ensure resilience and flexibility in the supply chain, perhaps in the short term, because there may be a forecast by a manufacturer for what the UK needs that is not completely accurate because a disease has taken hold in a certain part of the country and we need more medicines for it. Being able to do that is important for patient safety. It also saves the NHS money.

Q51 Mr Bradshaw: What about the rest of you?

Dr Grainger: The benefit of being in a single market is that there are no barriers.

Q52 Mr Bradshaw: Again, there is unanimity on that too. Are you saying this publicly to the Government?

Martin Sawer: Yes.

Dr Grainger: Yes.

Q53 Mr Bradshaw: You are saying it loudly and clearly.

Richard Freudenberg: To anybody who will listen, yes.

Martin Sawer: Yes.

Mr Bradshaw: That is encouraging, because my worry is that we are hearing from lots of sectors all the time and lots of groups with interests in the health and social care sector, but also in other parts of our economy, who believe it but for some reason think it is not achievable. Let me commend to you the Hansard report of the urgent question in the House of Commons an hour or so before this hearing where there was overwhelming support from the Back Benches on both sides of the House for staying in the single market and customs union. It is achievable. Please keep fighting for it. Thank you, Chair.

Q54 Dr Williams: Following on from Ben’s question, could there be a situation where the needs of UK patients are different from the needs of other patients in the EU? However, as members of the single market and customs union, we have to accept the EU rules, but we do not have any influence to make sure that they take into account UK patients’ needs. Can you think of any scenario where that might happen?

Dr Dickson: It is very difficult. There are different cancer instances, disease instances, across the EU, but not massively so. We are culturally quite a close population. For example, there is certainly more lung cancer in the former eastern European countries than there is in the UK, but there is still lung cancer as our patients get older. Cancer is a disease of the elderly and you still have the same things. The divergence is not as significant as you imply.

Q55 Dr Williams: I guess I am asking because, of course, the consequence of staying in the single market and customs union but not being members of the EU is that we cannot influence the rules. I guess I am asking you whether the organisations you represent would be comfortable with not being able to influence the rules. There would be no Member of the European Parliament. We would not have a seat at the table if we were members of the customs union and the single market but not members of the EU.

Richard Freudenberg: The Norway model.

Q56 Dr Williams: Yes. You would be comfortable with that.

Richard Freudenberg: It would be better than the worst‑case scenario, certainly.

Martin Sawer: I think my members would be comfortable with it, and, indeed, that would probably imply that the MHRA, at least, had some mutual agreement; and they are certainly well respected within Europe at the moment. Working through the MHRA would give our members a degree of comfort.

Q57 Mr Bradshaw: If we get to a deal, there is also a consensus among you four that we need a transition deal of between two and five years.

Martin Sawer: Yes.

Q58 Mr Bradshaw: We need to know, I think you said by 8 January, that we are going to get one.

Martin Sawer: I have had feedback from certainly a couple of my member companies that they are making investment plans by 8 January for 2019.

Q59 Mr Bradshaw: They will move jobs elsewhere if they do not know by 8 January.

Martin Sawer: What I mean is that they will not be budgeting for changes because they do not know what the changes are.

Mr Bradshaw: Thank you.

Q60 Chair: Does anyone have any more questions? I know, Dr Grainger, you have to leave to catch a flight, but are there any points that any of you, perhaps starting with you, Andrew, feel you would like to make to this Committee before you leave today?

Dr Grainger: I would reiterate the complexity of the thing and that, although we are focusing on health sciences here, of course you would rely on logistics service providers to support the supply chain. Therefore, there are other industries that are tied into this that need to be considered; so there is overlap, I am sure—or I would imagine—with many other inquiries. But you would probably need to be prepared for the unexpected, especially as we are interfering with the regulatory landscape. I could imagine that there are scenarios that people have not thought of yet, and the Government might want to be ready for that.

As an anecdote, a few years back a volcano broke out in Iceland. The UK Government had to repatriate two million tourists back into the UK and the ships that carried them over needed a derogation for lifejackets, otherwise they would not have been able to take people back into the country. That required, I believe, a Minister to take action. These things cannot be foreseeable—just so much happens. Government, I would imagine, would want to be prepared for things like this.

Q61 Chair: Did you want to make a point, Martin, Jeanette or Richard?

Dr Dickson: It is partly the fact that there is the patient there. The patients appear; they come all the time. We are treating them as they appear and we are treating them as they are diagnosed. We are imagining that things will be the same, and, if they are not, the nimbleness to change is very difficult. If you want to increase your oncologist capacity, that is nine years postgraduation from medical school, and for radiology it is seven years postgraduation. As I said, there are significant vacancies and there is a high proportion of EU primary medical qualification folk working in the UK at the moment. It is about the patient because it is the direct impact on the patient of not having the treatment that they should have, but it is also about the workforce to deliver that and the resilience of that workforce to deliver the treatment as and when it is needed.

Martin Sawer: I would make one final point. Quite rightly, we take the supply chain for granted. A doctor writes a prescription; the patient might go into a pharmacy in the morning and the pharmacy says, “Come back in the afternoon and the medicine will be there.” We are invisible, and we should be, but I think it is important to recognise that that supply chain is there and operating all the time. A jolt to it like this could throw a lot of cogs out of a very complicated machine.

Q62 Chair: It already causes severe problems on a very occasional basis when there is a disruption in the supply chain. What kind of extent of disruption are we talking about if we do not end up with a deal?

Martin Sawer: I would hope that common sense is going to prevail because patient safety is too important. Business would carry on until we are challenged. We have contacts, obviously, all around the EU. All the wholesalers around the EU—and I know because I go to meetings—operate with the same principles: we have an obligation continuously to supply medicine. I do think it would carry on for as long as it could. WTO rules or some customs problems would be where we would start running out of medicines, and that would be a challenge—after some months, I would suggest.

Dr Grainger: I could imagine that there are scenarios where the logistics sector might be overwhelmed, and even with the best good will challenges will present themselves just through lack of capacity.

Richard Freudenberg: If Martin’s members are invisible or less visible, we are even less visible than Martin’s members are. Although we are a small part of the market, as I have said earlier, we bring competition to the market that would not exist without us. We are the only price competition that the original manufacturers have in the market here, so we deliver savings to pharmacy and to the Government. We provide competition to keep lids on medicine prices in the UK. Without us, that would disappear. We are also very reactive. We can deal with the shortage issues, and in a small way we are also delivering medicines to patients that are unavailable through any route other than through imports.

Full Transcript Of HDA Appearance Before The Health Select Committee

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