What Would Britain's EU Exit Mean for Drugmakers?

Feb 25, 2014
By Pharmaceutical Executive

By Peter O’Donnell.

As many readers will be uncomfortably aware, discussion about whether the UK will remain within the European Union is throwing increasing uncertainty into the scenario in which every organization with a long-term engagement has to make its calculations. The possibility of a future "Brexit"— a British exit— has been exercising the world of medicines, and the just-published responses to a UK government evaluation of the merits and demerits of EU membership highlight some of the issues.

For Sanofi, for instance, which employs over 2,000 people across our six UK sites, the concerns include issues relating to the free movement of goods, trade & investment, and R&D.

The EU is a good thing, it suggests, in that enforcement of the rules on free movement of goods has led to a substantial reduction of protectionism and discrimination against foreign companies, and eased market access. But, it goes on, "while national governments have a responsibility to ensure access to innovation for their citizens in a sustainable way," and it is "legitimate that they should want to control national reimbursement mechanisms and decisions," the combination of price controls with free movement of goods has a distorting effect on pharmaceutical markets, it argues—citing "arbitrage by parallel traders and the practice of international reference pricing by member states' authorities." In other words, EU rules are keeping the squeeze on manufacturers' prices and bringing benefit to parallel traders.

At the same time, the EU as failed to make incisive improvements in uptake of innovation—in other words, member state governments are just not buying into valuable new medicines. The trend is EU-wide, but "the UK lags behind many other European countries in the adoption of new medicines," Sanofi complains. So it is urging "flexible and pragmatic solutions" that will "improve equitable access to medicines across Europe and ensure a dynamic market for innovation." And the way to do this, it says, is through inter-governmental policy initiatives rather than through legislation. It quotes approvingly the 2013 update to the World Health Organization's Priority Medicines for Europe and the World 2013, with its calls for improved alignment between public health needs and incentives for biomedical innovation. "Considering incentives for innovation alongside health needs could open an improved dialogue between authorities and industry on creating added value for healthcare systems and society through pharmaceutical R&D."

For other healthcare-related respondents, the EU rules relating to clinical trials loom large in their concerns. The Medical Research Council stressed the need for "consideration of the correct legislative instrument" and an approach "which is proportionate and risk-based, avoiding administrative burden where possible." It takes a broadly positive view of the rules currently reaching their final stage, but underlines "the importance of employing the correct legislative instrument, and the very real potential for inconsistent interpretation of European Directives at a national level without clear guidance regarding implementation."

The Ethical Medicines Industry Group, an association representing smaller biopharmaceutical companies, and claiming that its members employ 20,000 in the UK, says it will "welcome any measures which aim to incentivize and promote a prospering UK life sciences sector." So, "it is imperative that the government and European Union foster an environment which supports SMEs to grow sustainably in the UK." It recognizes the merits of the EU's lnnovative Medicines lnitiative or its framework research programs ("although navigating access to the schemes can be complex and difficult for smaller firms"), and it believes the EU's centralized application procedure has made the marketing authorization process more efficient, but it is concerned that the EMA policy on clinical trial data release threatens UK competitiveness on the world stage.

Conspicuously, however, while the respondents give their views on particular issues, none of them come close to expressing a preference for staying in or getting out of the EU. This extensive consultation exercise by the UK government has so far done little to bring much clarity to what is becoming a very confused debate.