BioPharma, Policy

Drugmakers’ fears of ‘no-deal’ Brexit remain strong, analysts say

Many supporters of the UK's withdrawal from the EU say "no deal, no problem," but drugmakers' actions suggest "no deal, big problem."

EU Commission President Jean-Claude Juncker and UK Prime Minister Theresa May during a meeting at the EU headquarters in Brussels, Nov. 21, 2018

The latest actions by multinational drug companies indicate they’re pessimistic about whether the UK can pull off an orderly withdrawal from the European Union, according to a new analysis.

The analysis, by Fitch Solutions, showed that global drugmakers are still planning for a “no-deal” Brexit amid fears of short-term disruptions to supply chains and long-term regulatory problems.

With the Brexit scheduled to occur March 29, a “no-deal” scenario means the country would exit the EU without any agreement with the bloc on trade or other relationships between them. Attempts to forge a deal, whereby the UK would continue to be governed under EU rules and regulations while the two negotiated the terms of their future relationship, have failed in the House of Commons. However, many of Brexit’s strongest supporters have argued that crashing out with no deal would not pose a problem for the UK.

On Jan. 25, Swiss drugmaker Novartis said it was stockpiling drugs in the UK amid concerns that a no-deal Brexit would threaten its supply chains. The same day, staff at the European Medicines Agency – the EU’s counterpart to the US Food and Drug Administration – symbolically lowered the 28 EU member nations’ flags at the London offices of the agency, as it prepared to move to Amsterdam due to Brexit. London had been home to the EMA since 1995. The agency regulates drugs in a manner similar to the FDA across all the EU member states, plus the European Economic Area member states of Norway, Iceland and Liechtenstein, but not Switzerland, which has its own agency. Under a no-deal Brexit, the UK would be left to its own devices in the regulation of medical products, with the Medicines and Healthcare products Regulatory Agency assuming responsibility.

Fitch said the increasing likelihood of a no-deal Brexit “continues to represent a significant risk to multinational pharmaceutical firms.” The analysts wrote that they expect the risk to take the form of disruption to supply chains in the short term and growing divergence in regulations between the UK and EU in the long term. That, they wrote, has led companies to continue taking action to mitigate risks, but also to seek greater government action to help planning efforts.

Potential scenarios for drug regulation in Britain, one expert said in November, include full independence like Switzerland’s Swissmedic or forming a coalition with other international regulatory authorities. However, he pointed out that even Swissmedic has provisions that allow for a lighter-touch approach to approving products already approved by major regulators like the EMA, FDA or Health Canada, and such a go-it-alone approach for the MHRA would make the UK less attractive for product launches. Meanwhile, the coalition approach would be cumbersome to build.

That includes two of Britain’s largest drugmakers. In October 2018, AstraZeneca said it would freeze UK investment and increase stockpiles of medicines by about 20 percent, in addition to duplicating product-testing facilities in Sweden at a cost of 40 million pounds ($52.3 million). GlaxoSmithKline is also duplicating testing facilities, as well as transferring its marketing authorizations, updating packaging and leaflets, amending licenses for manufacturing and importation and obtaining new warehouse space. Costs to GSK are estimated at 70 million pounds ($91.5 million) for the next two or three years and 50 million pounds ($65.3 million) per year thereafter.

Companies based in other countries have been taking measures as well. US-based Johnson & Johnson is looking to ensure it is not overly reliant on UK distribution centers, while Merck & Co., Switzerland-based Roche and Denmark’s Novo Nordisk are stockpiling drugs.

Photo: JOHN THYS, Getty Images

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