Deal or No Deal? The Impact of Brexit in Pharma

In a month of high drama and heated debate that laid bare the UK's bitter ideological divisions, the Brexit debate remains still open after over 3 years, just as the general understanding of its overall implications.

The Pharmaceutical Industry is not immune to the uncertainties that such major operation bring to the table. One of the biggest challenges is the uncertainty surrounding how the UK will handle regulation post-Brexit, with some of the major unknowns including whether the UK will follow the same process currently in effect or diverge from the system in effect in the EU, among others.

Given these uncertainties, bigger questions loom as well: Will it make sense to use UK-based manufacturing and packaging vendors? Will it make sense to open clinical sites in the UK? Pending the long-term resolution of these issues, many biotech firms are developing short and medium-term plans in which they will stop relying on third-party vendors based in the UK, and move to logistics firms based on the continent.

The impact of Brexit in the EU also affects most small and mid-size biotech companies that outsource services around the manufacturing, packaging, and labeling of their drug product to third-party vendors. They also often rely on external consultants, sometimes provided by the third-party vendors, for certification of their products. The most important of these external roles, for instance, is the Qualified Person (QP). The QP is a licensed pharmacist, biologist, or chemist who, in accordance with EU regulations, certifies every batch of a medicinal product before it can be released for use. As noted above, many of the QPs working in the EU as a whole are based in the UK but after the UK leaves the EU in 2019, QPs in the UK may not be allowed to release drug products for the EU market or for clinical trials performed in the EU.

Another change post-Brexit will be the movement of drug products within the EU. Currently, these products can be moved and distributed without import or export duties. After 2019, drug products manufactured in the UK will be subject to a value-added tax (VAT) if they are shipped outside of the UK. Thus, drug products currently stored in the UK should be transferred to a post-Brexit EU country now to avoid the future import VAT on existing inventories. To mitigate the risks, some manufacturing and logistics firms are building new facilities to serve the post-Brexit EU, even though it will take them time to complete construction and get their staffing up to the necessary standards.

A major concern that exacerbating the differences between the UK and the rest of Europe may eventually lead to isolationism remains. It could also limit the effectiveness of European and global health initiatives, such as pandemic responsiveness and the fight against antimicrobial resistance. Therefore it is a key item on everybody's agenda to ensure Public Health is a priority for both European and British citizens.

Regardless of when the actual Brexit will take place, the time to think about its implications is now. While nobody can know what Brexit holds, it’s vital that all organisations take a proactive stance: considering what the potential opportunities and challenges may be, and devising strategies to mitigate risk and ensure that they are ready for opportunities that may arise.