The EU-UK future relationship from an innovative-medicines perspective


Nathalie Moll,
EFPIA, European Federation of Pharmaceutical Industries and Associations,
Brussels, Belgium

Koen Berden,
Executive Director International Affairs,
EFPIA, European Federation of Pharmaceutical Industries and Associations,
Brussels, Belgium


On the 23rd of June 2016, the UK citizens voted with 51.9% in favour of Brexit, to set the UK on the path to leave the EU: “Brexit is Brexit”. The main question that has been asked since then is ‘Brexit is Brexit, but what does Brexit mean?’. On the 31st of January 2020, the UK left the EU formally with a transition period to 31st of December 2020. The EU and UK are currently negotiating to shape their future relationship.

Industry characteristics: heavily regulated, high risk, high-cost and long-term R&D

The innovative medicines industry is heavily regulated at EU and EU member state level. There are clear rules and regulations that guide the R&D process from discovery through to clinical trials, followed by regulatory approval procedures, as well as pricing and reimbursement decisions. Once a drug is on the market, further research into its effectiveness and safety requirements continue to apply. On top of that, the industry is global in nature with R&D, manufacturing and distribution facilities scattered across many countries. The development process for new medicines has three core characteristics that drive policy needs for the industry: 1. R&D is very risky (only 1 in 10.000 tested molecules will eventually become a medicine); 2. Taking a medicine from discovery to placing it on the market is very costly (these costs, including failures, is Euro 1.9 billion); 3. R&D takes a long time (10-15 years from patented molecule to medicine on the market).

In addition, the value chain integration between the EU and UK is very deep: according to the OECD Trade in Value Added (TiVA) database, the share of UK value added in EU final demand is 33% and the share of EU value added in UK final demand is 54%. This means that for each Euro spent in the UK (EU) the value added for the EU (UK) is 54 (33) cents. This is one of the deepest levels of integration in the world.

Challenges for the industry

From an economic perspective, while respecting the referendum result, it is important to be pragmatic and to not turn Brexit into an act of harm for both the EU and UK. For the innovative medicines industry, the most crucial element is that supply chains do not get needlessly interrupted and patients continue to have access to their treatments. That is why we need to put ideology aside and support a future relationship between the EU and UK that is as close as possible. This is an ask that has become amplified by the Covid-19 pandemic the world is facing today.

Brexit poses several enormous challenges for the industry, given the nature of pharmaceutical R&D and the deep level of EU-UK integration. Despite the UK having left the EU on the 31st of January 2020, many uncertainties remain: about the nature of future regulatory cooperation, access to EU databases for the UK, what the IP regimes will become, what tariff agreement will be struck, etc.

A future EU-UK free trade agreement

‘… and what does Brexit mean’ is slowly becoming clearer. We know that the EU and UK – given the political red lines – are moving towards a bilateral Free Trade Agreement (FTA). For the innovative medicines industry, given this political context, the following elements are crucial elements for a future deep FTA:

  • A Mutual Recognition Agreement (MRA) covering batch and import testing by manufacturers as well as GMP inspections, based on global Good Manufacturing Practice standards. This would avoid duplicative inspections, delays of medicines for patients, and save resources for both industry and the European medicines regulatory network. This is the most immediate ask of the entire pharmaceutical industry; it is relatively simple to agree since it is based on global standards to which the EU and UK already adhere. Most importantly it should have a major impact on mitigating the disruption to supply chains caused by the move to an FTA.
  • Maintaining the greatest possible cooperation on regulatory standards to ensure early and efficient patient access to innovative treatments. For example, aligned EU and UK safety requirements or similar therapeutic area guidelines for the development of new medicines.
  • Continued alignment on data protection legislation between the EU and UK, and a comprehensive sectoral adequacy assessment to support data transfers. UK access to relevant EU databases and processes, including those supporting regulatory procedures, pharmacovigilance and security against falsified medicines.
  • Smooth import clearance processes to avoid disruption of delivery of sensitive goods and simplified and rational rules of origin, based on common, defined chemical and pharmaceutical processing activities.
  • Strong Intellectual Property Rights (IPRs) and effective mechanisms for IPR enforcement.
  • Inclusion of a pharmaceutical-specific annex to provide a platform for cooperation on wider policy issues for pharmaceuticals.

Consequences of a No-Deal or ‘shallow’ EU-UK FTA

Some EU Member State governments think that if the deep value chain ties with the UK are partially of wholly severed by concluding a shallow tariff-focused (not regulatory-focused) FTA or even a No-Deal, pharmaceutical actors will move their value chains from the UK to the EU. This is not likely to happen. There are several potential consequences of a ‘tariff-only’ deal:

  • The main impact is for patients who may come to face delays in the supply of medicines– especially when combined with other international developments like Covid-19, the Airbus-Boeing rebalancing tariffs, and Indian and Chinese quality issues.
  • The European medicines regulatory network in the EU and Medicines and Healthcare products Regulatory Agency (MHRA) in the UK will face very significant increases in the burden of (double) inspections.
  • Industry will face higher costs due to double inspections of Euro 1 million per inspection.
  • Competitiveness of the combined European pharmaceutical industry, for these reasons, may be negatively affected – both in the EU and UK because a severing of the deep value chain ties will lead to higher costs, but also negative impacts for the overall innovation climate in Europe.

The current Covid-19 pandemic illustrates the relevance of and need for a well-functioning global pharmaceutical industry and innovation framework. A strong future EU-UK relationship can be an important contributor to both and is in the interest of both the EU and UK.


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