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HDA UK Media And Political Bulletin – 25 April 2017

Don’t let Brexit disrupt European Medicines Agency, warn pharma leaders

Pharmaphorum, Andrew McConaghie, 24 April 2017  

 

Heads of research & development at major pharmaceutical companies have signed an open letter from the European Federation of Pharmaceutical Industries and Associations (EFPIA) to warn of the risks associated with the relocation of the European Medicines Agency. Calling for a decision to be made at the European Council of Ministers in June, a spokesperson for the EFPIA stated that its main concern was “regulatory continuity”.

 

The full letter is available here.

 

Decisions, decisions

The Pharmaceutical Journal, 21 April 2017

 

The Pharmaceutical Journal discusses the decisions lying ahead for the UK Government to exit the European Union and transfer EU laws to the UK. In pharma, the future of drug approval or patient access to new medicines remain unclear, and more particularly the future role of the Medicines and Healthcare products Regulatory Agency (MHRA) and how it can unpick the web of mutual reliance with its EU counterpart, the European Medicines Agency (EMA).  While the MHRA brings huge experience and expertise to the EMA, the UK represents only 3% of the global drug market compared to 25% for the European Union. Nonetheless, Brexit offers opportunities for the MHRA who should adopt a system of reciprocal regulatory approval if it splits from the EMA.

 

The impact of a ‘hard Brexit’

Pharma Times magazine, Ana Nicholls, May 2017 issue

 

Pharma Times reviews what the Prime Minister’s statement “no deal for Britain is better than a bad deal” would mean for the pharmaceutical sector. A ‘Hard Brexit’ scenario broadly forecasts a cut in health expenditure and pharmaceutical sales combined with a rise in the UK pharmaceutical’s spending. While this is not the core forecast, the healthcare sector will still face high disruption in areas such as recruitment, patients’ reciprocal rights to treatment, medical research and procurement.

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Don’t let Brexit disrupt European Medicines Agency, warn pharma leaders

Pharmaphorum, Andrew McConaghie, 24 April 2017  

 

Heads of R&D at all major pharma companies have come together to express their concerns about severe disruption to the European Medicines Agency (EMA) as it faces a Brexit-induced relocation.

 

The UK’s decision to leave the European Union by 2019 means that the EMA, the world’s second most important drugs regulator after the US FDA, must leave its current home in London.

 

The open letter, published by Europe’s pharm industry association EFPIA, is signed by 19 big pharma R&D leaders, who have called for a swift resolution to the issue.

 

They have urged for a decision to be made in June at the meeting of the European Council of ministers.

 

This summit is where the remaining ‘EU27’ will begin to decide on their collective position on a huge number of questions raised by Brexit, including the terms of the UK departure and life after 2019.

 

The open letter states that the EU member states have benefitted from the EMA’s co-ordination in approvals and pharmacovigilance for two decades, and warns that this mustn’t be disrupted.

“It is a stark and alarming reality that such fundamental activities would undoubtedly be impeded were the operations of the agency to be disrupted as a result of the United Kingdom’s exit from the EU.”

 

It added: “To put it concisely: in the event of obstruction or failure, Europe possesses no backup option.”

 

This warning chimes with comments already made by EMA chief Guido Rasi in the media.

 

Rasi says the uncertainty around its future has already prompted some staff to leave, and warns that a badly-handled transition could ultimately disrupt the approval of new medicines.

 

Major cities in EU27 nations, including Dublin, Barcelona, Amsterdam and Stockholm are queueing up to become the new location for the organisation, which currently around employs 900 experts at its base in Canary Wharf.

 

The UK’s chief Brexit negotiator, David Davis, has even suggested that the UK could retain the EMA as part of a broad negotiation with Europe’s leaders – even though this idea will almost certainly be dismissed by the EU27.

 

Among the signatories of the open letter are Novartis’s research supremo Jay Bradner, Elias Zerhouni’s R&D chief at Sanofi, Patrick Vallance, president of R&D at GSK and Pfizer’s Mikael Dolsten.

 

These leaders represent respectively a Switzerland, France (EU), UK and US headquartered firms – but an uninterrupted flow of decisions at the EMA is vital to all global companies, as collectively it represents the second most important global market, even once the UK departs.

 

The letter adds that the “well oiled machinery”  of the EMA continues to function with the current level of “internationally-acknowledged efficiency”.

 

A spokesman for EFPIA says the pharma organisation has no view on whether the EMA could stay permanently in the UK or not, or if it could remain in London after 2019 under transitional arrangements.

 

The spokesman said the pharma industry has been following the Brexit process with “both concern and interest,” and says the impetus for the open letter has come from its members and from the EFPIA board.

 

Asked if EFPIA had a view on the ideal timelines for decision-making and relocation of the EMA, the spokesman concluded: “This is a matter for the European institutions and our only concern is regulatory continuity.”

 

Given that the EMA is such as prized institution in Europe, competition to be its new home will be fierce. This will mean that the decision-making process will have to observe due process, which suggests that a final ‘winner’ from the process will take time to emerge.

 

The EMA receives 36,000 expert visits every year, and EFPIA points out that any EU city must meet fundamental logistic demands, such as having a large number of hotel rooms to host these legions of visiting experts.

 

Decisions, decisions

The Pharmaceutical Journal, 21 April 2017

 

On 29 March 2017, the UK’s EU representative Sir Tim Barrow hand-delivered the letter signifying the UK’s official intention to leave the EU within two years. In the days since, the European parliament has agreed a negotiating stance and the UK government has released its white paper on the ‘Great Repeal Bill’ to transfer EU laws to the UK. Formal discussions await. In the increasingly likely event of a so-called ‘hard Brexit’, the future of relationships between Britain and the many institutions that have been formed as a result of the country’s 40-year EU membership remains unclear. The UK government has remained vague about what Brexit will really mean, and many decisions must now be taken — for example, on how new drugs will be approved for use and monitored safely in the UK. A preferred post-Brexit model for patient access to new medicines may also be required. The future role of the UK’s drug regulator, the Medicines and Healthcare products Regulatory Agency (MHRA), and how it can unpick the tangled web of mutual reliance with its EU counterpart, the European Medicines Agency (EMA), also remains unclear.

 

The EMA does not have its own scientific assessor for drugs, but relies on 50 medicines regulatory authorities in the EU/European Economic Area (EEA), including the MHRA, to evaluate drug submissions and monitor safety reports. The MHRA brings a huge amount of expertise and experience to the European drug regulatory landscape, a contribution that is underpinned by its access to comprehensive external advice via the UK’s Commission on Human Medicines and its expert advisory groups across the range of drug disciplines. The MHRA also contributes to the EU regulatory network of national competent authorities in decentralised and mutual recognition procedures. For example, the MHRA is among the countries most commonly selected to account for around 4,000 licensing procedures across the EU/EEA. It is also responsible for about 50% of new marketing authorisation applications submitted in the UK.

 

Brexit means that the MHRA will lose the benefit of work-sharing for those applications in which it does not act as co-rapporteur at the EMA, which equates to around 70% of new marketing authorisation applications. However, the MHRA has committed to continuing to prioritise a full and active role in regulatory procedures for drugs. If the MHRA is to duplicate the EMA’s work, it would need to substantially increase in size. And such expansion is not cheap.

 

The UK as a drug market is dwarfed by the EU, which represents 25% of the global market. The UK alone accounts for only 3%, making it of less importance to pharmaceutical and biotech companies when planning product approvals and launches. Recent announcements from GSK and Takeda, headquartered in London and Osaka, Japan, respectively, confirming long-term investments in the UK are encouraging signs for the UK’s place in research and development and manufacturing. But the uncertainty surrounding the future of the UK pharmaceutical industry means confidence is low among industry leaders. One major uncertainty is how European pharma companies can do business with and inside the UK following a hard Brexit. Similarly, there is little understanding of any possible knock-on effect the disruption will have on the global pharmaceutical industry.

 

The UK is one of the top five European markets, and is part of the core global market for launching innovative new drugs. However, financial problems in the NHS and barriers in its local organisations raise challenges for market access to new drugs, especially for rare diseases. In a report published on 16 March 2017 on access to rare disease treatments, data — collected and analysed by Office of Health Economics Consulting, and commissioned and funded by Dublin-based pharmaceutical company, Shire — showed that the average time to the treatment of rare diseases being funded following EMA authorisation in England is just under 28 months, compared with 9 months in Italy, and almost immediate reimbursement in Germany.

But Brexit will also create opportunities for the MHRA, which should adopt a system of reciprocal regulatory approval if it splits from the EMA. The MHRA’s influence and expertise, and its central involvement in EU regulatory process and granting marketing authorisations, may be a key bargaining point for the UK in any negotiations regarding existing marketing authorisations and future collaborations.

 

One option for negotiation would be to seek continued mutual recognition, which means the UK would remain as attractive for trials and early drug introductions as it is now. But this would also preclude the UK departing from EU rules on issues such as clinical trials, seen by some as a potential opportunity afforded by Brexit. The EU Clinical Trials Regulation, which aims to harmonise the assessment and supervision processes for clinical trials throughout the EU, is due to come into force in 2018. The regulation provides more streamlined approaches for the multi-centre trial approval process and also provides more coordination between national competent authorities and ethics committees, both of which should benefit sponsors. The UK should consider implementing equivalent legislation in the UK post-Brexit. But to do so, it would need some form of agreement with the EU. Companies conducting clinical trials in the UK would need to prove that they are complying with standards that are equivalent to those in the EU, otherwise these trials would not be able to go ahead because they would be considered to be taking place in a third country.

 

The UK government may decide to go down the route of divergent regulation, in line with talk of leaving the European single market and standing beyond the reach of the European Court of Justice. If so, the MHRA and NICE may have a role in advising on changes in regulatory processes and on what the UK can do to limit damage to clinical trials and new product introductions. Unilateral recognition of drugs approved in Europe or the United States to retain the UK’s prompt access to new drugs, might be one possibility.

 

The impact of a ‘hard Brexit’

Pharma Times magazine, Ana Nicholls, May 2017 issue

 

In January, the prime minister, Theresa May, warned the EU that “no deal for Britain is better than a bad deal” when it comes to Brexit. Although her government is now edging away from that position, the statement raised the question of what no deal would actually mean for the pharma industry

 

To answer the question of what a ‘hard Brexit’ would mean, The Economist Intelligence Unit recently assessed how our economic and healthcare forecasts would change if the UK did drop out of the EU in 2019 with no deal at all – which means no mutually agreed transition arrangement, no immediate prospect of a formal trade agreement, and scrambling even to assert its trade rights under World Trade Organization (WTO) rules. We drew up a detailed Hard Brexit scenario of how it could happen, and compared that to our baseline forecast, which is that the UK will manage to secure a phased agreement (a scenario we call Softish Brexit).

 

Under the Hard Brexit scenario, we assumed that the negotiations that are now underway would break down in late 2017 or early 2018, probably because of disputes over free movement of labour. When the two-year transition period ended in 2019, the UK would have to renegotiate its existing EU trade agreements under its own name (including WTO ones). Even under the best circumstances, this would take several months. In the meantime, trade would be disrupted and that would lead to a dramatic slowdown in the economy, with GDP growth falling to 0.3% by 2019 and proving very slow to recover. By 2021 total GDP would be around 2% lower than under Softish Brexit.

 

One effect would be to cut health expenditure and pharmaceutical sales. We calculate that, given lower tax revenues to fund the NHS and lower consumer spending on health, total health spending in 2021 would be £2bn lower. Compared with projected total spending of £207bn, that is not a huge amount (although it is on top of the £22bn in NHS ‘efficiencies’ already expected). That is largely because we assume that, as now, health spending would be ring-fenced in government budgets, and even in household budgets. However, the effect would be exacerbated if the government, instead of adopting an expansionary monetary policy to dampen the effects of Hard Brexit, instead reacts by trying to turn the UK into a low-tax economy, competing with the likes of Ireland. That could cushion business, but it does mean that in the short term there would be even less money for the NHS.

 

‘The economic damage of Brexit will be limited, although we still expect growth to be slower than it would have been inside the EU’

 

Moreover, one counter-intuitive effect of our scenario is that we actually expect the UK’s pharmaceutical spending to rise under a Hard Brexit scenario, ending up around £600m or 2.8% higher than it would be under a Softish Brexit. That is largely because we expect the exchange rate to be worse under Hard Brexit, which would make imported drugs more expensive – and the UK runs a big trade deficit in pharma. One sideeffect of this extra spending on drugs will be less money for other parts of the healthcare system. Given that we also expect that NHS wages will go up as it becomes more difficult to recruit staff, the squeeze on actual patient spending will be much harder than the headline numbers seem to suggest.

 

To repeat, this is not our core forecast. Although negotiations will be difficult and there are multiple points where talks could break down, we do still think that the UK and EU will manage to agree a transition deal (probably at the last minute). Under this scenario, the UK would leave the single market in 2019 but would gradually phase in a free-trade deal and customs agreement with the EU. In that case, the economic damage of Brexit will be limited, although we still expect growth to be slower than it would have been inside the EU.

 

The healthcare sector will still face huge disruption over recruitment, patients’ reciprocal rights to treatment, medical research and procurement. As for the pharma industry, it will still face higher trade barriers. There would be no actual tariffs on pharmaceutical trade under either of our scenarios – even the WTO rules set tariffs at zero for humanitarian reasons. However, the UK pharma industry is relying on an amicable deal with the EU to reduce the non-tariff barriers. If we fail to secure EU agreement on issues such as mutual recognition of marketing approvals, our ability to secure third-party trade deals, harmonised rules on clinical trial data, or the ability to be involved in pan-European research projects, then the effects will be far-reaching.

 

Softish Brexit in itself will be no picnic. The European Medicines Agency will still leave the UK and the pharmaceutical industry will still find it harder to trade in the EU. However, as the House of Commons Foreign Affairs Committee warned in its March report, a Hard Brexit would be ‘a very destructive outcome leading to mutually assured damage for the EU and the UK’. Let’s hope it doesn’t come to that.

HDA UK Media And Political Bulletin – 25 April 2017

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