Brexit has thrown the future of British health care and Pharma into uncertainty, with the implications for funding, staffing and drug regulation largely unknown. While it has been speculated since the June 2016 referendum, it is now almost a certainty that the U.K. will be forced to withdraw from the European Medicines Agency (EMA), membership of which is predicated on belonging to the European Court of Justice.
The EMA presents significant advantages to its member states through the centralized authorization procedure, whereby companies are required to submit only a single application to gain approval for their product for all EU, EEA (European Economic Area) and EFTA (European Free Trade Association) member states. This makes Europe a top priority for companies seeking market approval for their drugs, representing 25 percent of the global market. In comparison, the U.K. alone accounts for only 3 percent.
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‘Without a Centralized Drug authorization procedure, timelines for approval could slow’
The loss of this mechanism would certainly make the U.K. of less importance to companies planning product approvals, damaging patient access to cutting edge medicines. This fear has been voiced by the Medicines and Healthcare products Regulatory Agency (MHRA) chairman himself and echoed by industry heads. David Jeffreys, the vice president of Eisai warned:
“The early innovative medicines will be applied for in the U.S., in Japan and through the European system and the U.K. will be in the second, or indeed the third, wave – so U.K. patients may be getting medicines, 12, 18, 24 months later than they would if we remained in the European system.”
This drug lag effect is compounded when considering the other advantages of mutual recognition. Central authorization allows the EMA to review a greater volume of applications in less time, with the burden of the drug approval process shared across the resources and workforce of member states’ individual regulatory bodies. If the U.K. national regulator, the MHRA was to operate entirely independently and without assistance from the EMA, the review time for new drug applications would undoubtedly slow.
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For the patient this presents a significant issue. Health care funding in the U.K. has been in steady decline in the years following the 2008 financial crisis, and Brexit is expected to squeeze NHS budgets further. The Institute for Fiscal Studies (IFS) has projected that even if funding was to stay at its current level, spend per patient will be down 9.1 percent in 2018-2019 compared with 2010-2011. The combination of reduced interest in the U.K. market, increased time for drug approval and a declining health budget threatens to severely obstruct patient access to novel drug therapies.
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By GlobalDataLondon to lose its appeal as a central hub?
The EMA is vital to the U.K.’s status as a gateway to the European drug market. The U.K. contributes heavily to European regulatory policy and the MHRA currently approves about a fifth of all medicines via the centralized authorization procedure. While the whole of the EU stands to lose out with a U.K. withdrawal from the EMA, this loss of prestige coupled with uncertainty over the future U.K. regulatory landscape will reduce the appeal of the U.K. and London as a location of choice for non-European developers. A stark warning was issued In September 2016 by Japanese officials: “If the EMA were to transfer to other EU Member States, the appeal of London as an environment for the development of pharmaceuticals would be lost, which could possibly lead to a shift in the flow of R&D funds and personnel to Continental Europe. ”If the U.K. is unable to prevent the flight of non-native Pharma, the industry could falter significantly as a lynchpin in the economy.
Considering these dangers, the U.K. government and MHRA are likely to pursue disengagement from the EMA which will have minimal impact on regulatory harmonization. The majority of the establishment was keen to maintain the U.K.’s membership of the EMA if possible, and the opportunities offered by deregulation are not as obvious as the status quo. The MHRA released a business plan on the April 21, 2017 describing their priorities for the coming year. Their focus is to develop a “European engagement strategy: working out future relationship and engagement with (their) European counterparts in a post-Brexit context, including the potential for ongoing co-operation in EU regulatory procedures.”
The Potential for Bilateral Recognition
In the document they are keen to highlight British contributions to the current European regulatory landscape, such as the recently developed EU Clinical Trials Regulation. This rhetoric suggests that the U.K. will negotiate for continued bilateral recognition, which would mean that the U.K. would remain an attractive location for doing business, conducting trials and seeking market approval. As the EU also benefit from a mutual relationship, they might be willing to agree.
However, commitment to existing and future EU rules will almost definitely be a requirement, something which has been met with disapproval from euroskeptics in the current government. In particular, the U.K.’s deference to the European Court of Justice has been a point of contempt for the “hard Brexit” wing of the current government. If mutual recognition is not possible, the most likely scenario is unilateral recognition of drugs approved by the EMA and/or FDA by the MHRA. While this could limit drug lag and damage to the British economy, it would diminish its position in the global market and clout in shaping legislation.
Jamie Goodman
Senior Pharmaceutical Analyst
Ali Farhat
Associate Analyst
GlobalData
