Calling for an in-out referendum on the UK’s EU membership, Prime Minister David Cameron spoke of a ‘…crisis of European competitiveness, as other nations across the world soar ahead’.
He also described ‘excessive regulation’ on business as a ‘self-inflicted wound’.
Now, as the UK contemplates so-called Brexit, pharma and medical device companies are asking how market access and competitiveness in the global life sciences industry would be affected.
The prognosis is not good. As one commentator puts it:
Britain is currently an attractive environment for pharma investment with its beneficial pricing regime and relatively speedy reimbursement authorization process, but that attractiveness would likely diminish significantly outside of the European legislative landscape.
‘Years of chaos’
While polls suggest the British people are not currently persuaded to ‘vote leave’, the consequence of this decision would be a protracted period of negotiation as the UK sought new trade and regulatory settlements with individual member states.
The instability this would create for the life sciences industry would likely be very damaging. In a recent statement, the EFPIA highlighted its concerns:
Pharmaceutical companies across Europe face considerable uncertainty at the prospect of the UK leaving the EU. Brexit has the potential to impact on regulation, the status of the EMA, finance, employment, the transfer of personal data and the European research ecosystem.
Some of the world’s largest drugmakers, including AstraZeneca and GlaxoSmithKline, have joined a growing chorus of voices opposing exit.
While it’s impossible to be sure what the overall impact would be, an increased regulatory burden is one potential hazard among many identified by industry analysts, including:
- Possible relocation of headquarters, manufacturing or administrative sites
- Weaker links with EU academic centers, less access to EU clinical data
- No benefit from EU trade deals (e.g. TTIP)
- Reduced funding for R&D
- Higher labor costs and import duties
A new Switzerland?
The Swiss model is often pointed to as a way to do business with the EU without joining the club. Eurosceptics cite the massively successful Swiss pharmaceutical industry as evidence that life sciences companies can flourish in a post-EU landscape.
But it may be that giants like Roche and Novartis have thrived despite the hurdles. Analysts at BonelliErede note that:
Comparisons with R&D funding into Switzerland over a decade show they received less than half of R&D payments into the UK, despite pro-industry incentives and an IP-friendly environment.
Perhaps the most significant concern for manufacturers seeking access to the UK market is the prospect of an exit not just from the EU, but from the European Economic Area (EEA) as well.
As a non-EEA member, Switzerland does not automatically accept drugs approved by the single European Medicines Agency, making it more difficult for drugmakers to access the market.
Speaking at the recent Davos conference, GSK chief executive Andrew Witty made clear the considerable benefits of a unified regulatory approach.
Europe has gone from 27 fragmented, independent, not-talking-to-each-other regulatory authorities in the healthcare space to one. That’s a big deal.