The chemicals and life sciences sector is set to be heavily impacted by the UK’s exit from the European Union. Many in the industry feel much remains to be answered, particularly on the future of regulatory cooperation with the EU.
Recently, the EU27 decided the London-based European Medicines Agency will relocate to Amsterdam upon Brexit. Countless European capitals had campaigned to host the organisation, demonstrating the importance of the pharmaceuticals sector in terms of prestige and economic value.
As part of the IoD’s Navigating Brexit series, we brought together members of the Institute along with policy experts, industry specialists and politicians to move beyond the headlines.
Here we include a summary of the fascinating suggestions from our guest speakers on how the relationship impacts upon areas such as NHS resources and clinical trials. The panel firmly agreed that Britain has plenty to offer the EU when it comes to research and regulation…
Key facts and stats
- UK contributes significantly to the global research workforce, and is second only to the USA in terms of the number of science graduates trained. Approximately 16,000 students from other EU countries are registered on biomedical courses at UK higher education institutions, of whom around 6,500 are postgraduates.
- UK plays a significant part in strengthening EU scientific research, contributing to almost 20% of the total research work carried out within EU health programmes between 2007 and 2016.
- The UK accounts for 8% of global R&D spend in science
- UK-led research resulted in the time taken to sequence the human genome from 10 years to one day allowing researchers to understand the genetic factors behind human disease
- 36.4% growth for combined global pharma/ biotech/ life science/ healthcare equipment and supplies markets between 2011 and 2016 in the UK.
1) Dr Virginia Acha, Executive Director, Research, Medical and Innovation - Association of the British Pharmaceutical Industry
ABPI represents the research-based pharmaceutical industry and their activities in the UK.
The ABPI’s priorities are…
Regulation: Aligning with a common regulatory framework with the EU
Trade: Ability to trade and move goods and capital across borders
Research: Long-term, predictable funding and ability to collaborate
People: Ability to access the best talent
What is already happening?
Acha said, “For research, we have been reliant on the European structures for cooperation to support the Innovative Medicines Initiative - the biggest private-public health partnership in the world. That is very much contingent on the way research is going to be resolved between the UK and the EU.”
She added that notice has already been served by the IMI to the UK that if you are in an existing project you will be removed from that project after Britain leaves the EU in March 2019.
“So, you are already seeing a de-selection of some partners in partnership arrangements. We might be able to resolve all these issues in negotiations but the problem is that the timelines for companies are not the same as the government.”
What should happen next?
Acha stressed that, “it matters for me to be able to deliver a patient medicine on day one after the withdrawal from the EU in 2019.”
“What people might not have thought about is the importance of supply chains. Our supply chains are integrated across Europe. It is not uncommon for a product to cross borders at least four times before it’s completed.
“Any time you introduce a barrier in trade terms you are introducing a delay and a slowdown particularly for our most advanced products. For a viral vector (which are currently being developed to treat viruses) I can’t hang around for a day at Dover. Half an hour is too long.
“Research is critical to our sector. There is a very important reason why the UK is so prominent within the industry – it’s the quality of science here in the UK and we are very concerned that continues to be that case.”
2) Dr Beth Thompson MBE, Head of UK & EU Policy - Wellcome Trust
The Wellcome Trust is a leading biomedical research charity. Thompson said, “We spend $1bn every year, and 75% of that is in the UK, by allowing great ideas to thrive.
“The quality of science here is excellent but we also have a fantastic eco-system which includes pharma companies and SMEs as well as the academic base.”
Wellcome’s post-Brexit priorities are…
- An economy that is open and welcoming to talent in science and innovation, at all career stages.
- Straightforward access to the European pharmaceutical market and harmonised regulation so cross-border trade and research can flourish.
- Access to EU science funding programmes so that UK researchers can take advantage of a range of funding that stimulates excellence and collaboration.
Thompson noted that, “none of these things can be separated. They all have to work together.”
When carrying out a clinical trial, Thompson explained the issues that must be taken into consideration are data privacy, ethics approval and clinical trial legislation and Good Clinical Practice.
What is currently happening?
“We know there are similar views (on research) both here and among the EU-27. The government has put out a very positive paper on the future relationship with the EU on science and innovation. It calls for a deep and special partnership on research and how we need to get a more ambitious relationship,” she said.
“The sentiment is good, it needs a lot more work on the details and we’ll be looking to help the government and EU partners in that discussion over the next few months.”
What should happen next?
Thompson recognised the current regulations around clinical trials are ‘not perfect’ but stressed that the European Commission recognised those problems and that new, streamlined regulation will come into force before we leave the EU that will enable pan-European collaboration.
“For something like rare diseases this is critical because there are not enough patients in the UK to run a significant clinical trial. Two in five clinical trials that are happening right now in the UK are also happening across Europe.
“Therefore, we need to see alignment on clinical studies. It’s not as simple as cutting and pasting EU law into UK law. We have to negotiate an agreement that allows us to work with our EU counterparts and we need to have access to the EU database which is critical to making this work.
“GDPR (General Data Protection Regulation, which comes into effect across Europe in May 2018) has important implications not only for how data is used in research but also how it transfers across borders.”
In conclusion, Thompson said “We need an agreement that will allow that data to flow freely between countries. Otherwise, we end up with enormous bureaucracy added to our data flows.”
3) Dr Camilla Alexander-White - Programme Manager, Environment & Regulation, Royal Society of Chemistry
The RSC has more than 50,000 members, of which more than 30,000 are in the UK.
Alexander-White said, “We’ve had discussions on what the future of chemical regulation could look like on EU exit.
“When exit day arrives we already know that you must be a member (of the EU) to play a part in the scientific committees and decision-making groups in Europe and you have to be member to access data.
“So, we already know we have to do something different. There needs to be a mechanism where we have a UK authority to make decisions on chemicals regulation.”
The RSC’s pre-Brexit priorities are…
- to establish how regulatory decisions will be made in the UK, including how expert scientific input will feed into that process
- what legal relationship the UK will have with EU bodies, such as the ECHA (European Chemicals Agency).
What does ‘good’ look like for the future of UK chemicals regulation?
- Clear, efficient and simple processes
- Systems that are proportionate and coordinated. There are more than 300 chemical regulations in the EU that need to be transposed
- Pragmatism in regulatory decision-making
- Regulation informed by scientific evidence
- Consistency and harmonisation with global principles. We work with WHO and OECD to harmonise internationally
- Understand the risks of de-regulating
Alexander-White warned that it is ‘highly unlikely’ that whatever functions are being transferred back to the UK will be up and running by 2019.
On a more positive note, she adds that “it is very clear that the government doesn’t want to see a decrease in standards in environment and health protection. That doesn’t mean to say there isn’t the opportunity for improvements in regulation. Nor does that mean the government won’t diverge in future on certain areas if there was a benefit to trade or industry.”
4) Douglas Leech, Technical Director, Chemical Business Association
The CBA represents the UK’s chemical supply chain. Leech said it must consider “the stark reality of no deal” and “what it means for the UK to be a third country.”
The CBA’s post-Brexit priorities are…
- Continued access to
- Single market
- Customs Union (although that cannot happen under the terms of leaving the EU)
- Sensible “time defined” transition. There is usually 18 months to phase in any sort of new legislation.
- Regulatory stability – continued access to ECHA.
Results of a recent survey of CBA members revealed tha81% of respondents see continued membership of the Single Market as “important” or “very important” and this included a number of UK-centric SMEs who only buy and supply chemicals in the domestic market.
Why is ‘no deal’ is a bad deal?
Leech explained, “Every hour that a lorry is delayed costs something in the region of £50. An hour delay in Calais and an hour in Dover, you’ve got an extra cost that didn’t exist before. Companies might add a bit extra on top of that to cover their margin and eventually you end up with £200 extra expense to get from one end to the other. A lot of supply chains can’t rely on that.”
What should happen next?
“When it comes to regulation we want the status quo. We’re one of the most highly regulated industries. Compliance with these specific EU regulations by UK industry has represented an investment of many millions of pounds.
“If we want to sell to the EU we have to comply with EU regulations otherwise the industry will simply migrate to where it's cheaper.”
Based on conversations with the HSE (Health and Safety Executive), Leech believes that the UK is working towards setting up a new chemicals agency but echoed a concern raised by Alexander-White about its ability to handle the workload.
Leech also warned that multinationals within the CBA are looking to take their operations elsewhere.
5) Dr Hilary Thomas, Partner and Chief Medical Adviser, KPMG
KPMG provides professional services, including tax and advisory for businesses around the world.
What is unlikely to change according to KPMG?
- Need for regulation
- Need for talent
- Demand from ageing and rising population
- National Institute for Health and Care Excellence as a world respected body
- UK universities punching above their weight
What is already happening?
Thomas said, “Between 2011 and 2013 we fell from the sixth to the eighth largest market in the world and we’re around ninth now. If I talk to the leaders of the big Pharma companies that are not based in the UK, and even some who are, they say, ‘you’re becoming an increasingly irrelevant market for us.’
“The quote from GlaxoSmithKline (after announcing it would be moving parts of its production overseas) is that ‘four per cent of our global sales are in the UK.’ So, UK PLC was not doing too great before Brexit but add in the complication of Brexit and it’s going to be difficult for us.”
Thomas added that companies are “making decisions not to set up opportunities in the UK that would have had a Europe-wide role and moving those roles elsewhere.”
“However, it’s not all doom and gloom,” she said. “We’ve seen market growth.
“We contribute to 8% of global R&D spend, we have three of the top 10 universities for science. It’s how do we continue to capitalize upon that? And we do have fantastic science in this country. Let’s hope that can be an opportunity.”
6) Phil Brown, Director, Technical and Regulatory at the Association of British Healthcare Industries
The ABHI’s work focuses on UK market, ethics and compliance, international business development and the regulation of medical devices.
The possible impact of no deal…
Brown says, “If there is ‘no deal’ there will be the short-term unavailability of product, services and parts. The medical device industry has a strong maintenance repair process so companies will bring their products into the UK for repair and that could be impacted by tariffs.
“Cost is one of those tricky things. Medical device companies bring in product in much the same way as the automotive industry by crossing a number of European borders. This will only increase costs. How will that impact upon the cost of devices used by the NHS?”
What happens next?
“It is important that we remain part of the CE Marking process (a requirement of all medical devices to demonstrate they have met EU standards).
“Around 55% of all CE marks granted for every medical device placed on the European market is impacted by a UK notified body.
“What is unlikely to change is our trade with the U.S. Around 47% of all medical device trade from Europe is with the U.S. But what we shouldn’t forget is the CE mark is not only respected throughout Europe, it forms the basis of the regulatory process in Australia and the Middle East.
“The question of certainty is the biggest issue. For larger organisations, they can say ‘if the government cannot give us the certainty we need, we’re large enough to make our own certainty. We can set up our own offices in Europe.
“It’s already happening with notified bodies. The British Standards Institute is setting up offices in Holland to work on the CE marking process. So, we’re effectively seeing a brain drain.
“For SMEs, things like regulatory information and quality information and all the engineering that go into those products is something they can’t cope with. So, it’s sink or swim. Larger companies are swimming. Smaller companies are, unfortunately, looking at an abyss.”
What does Europe stand to lose from the UK leaving?
Thompson: “The loss of UK influence in setting the agenda. It will be interesting to see how EU regulation develops without the UK’s influence.
“It goes beyond people and the contribution that UK researchers make and the contribution that researchers based in the UK make when they are participating in EU research programmes. They want the EU framework to be the strongest in the world and they know to do that the UK has to be part of it.
“We should look for the win-win. If we can rise above the politics we could come to something that really works for both parties.”
Alexander-White: “The European Chemicals Agency employs a number of UK nationals, around 600 scientists in total, a good proportion are from the UK and if we don’t have a transitional agreement in place they will have to leave”.
Similarly, on regulation “the voice of pragmatism from the UK will be missed. The voice from the UK is not excessively precautious but is realistic and tries to weight socio-economic arguments with the risk assessment arguments”.
What are the possible benefits of leaving the EU?
Brown put forward some ideas as to how the UK could think and act differently after we leave.
“Maybe if the government or MHRA (Medicines and Healthcare products Regulatory Agency) formed its own notified body, it could streamline the way we work within the UK and it might even mean people want to come from overseas and do research in the UK.
“Maybe a cliff edge wouldn’t be a bad thing. It gives us an opportunity to start those trade agreements quicker and work in a faster, more streamlined way.”
He also noted that there might be “Nissan-type deals” which allow manufacturers to set up in deprived areas.
“From a personal positive what it’s currently doing is making the regulators and the government work closer with our industries and our sectors and they are understanding our sectors a lot more than they ever did.”
The panel made clear that the UK walking away from the EU with no deal in place could amount to a lose-lose situation for both sides.
The EU would lose access to our talent, multinational pharmaceutical companies might move operations out of the UK and British SMEs will struggle to meet the extra cost of exporting products to Europe.
A no deal situation also raises major concerns about the knock-on effect for the supply of drugs and medicines along with access to data and the ability to run pan-European clinical trials. Not knowing the terms of future trading arrangements was ‘the elephant in the room’ but there was a danger of trying to cherry-pick a UK-only approach in certain areas.
However, there may be opportunities to think differently and with greater flexibility, particularly in terms of regulation. Britain has a lot to offer the EU, especially in the quality of its scientists, and it would be to the detriment of both sides to freeze the UK out completely. The UK’s pragmatic approach to regulation is a strong card; this needs to be leveraged in negotiations with the EU and likely means continued alignment.
Allie Renison, who chaired the session and is Head of Europe and Trade Policy at the IoD, suggested that the EU “has to think outside of the box” and not be quite so “process driven” in its negotiations with the UK.
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