The UK is set to approve a withdrawal deal and leave the EU by the end of next month after the Conservatives swept to victory in the UK general election with the largest majority since the 1980s. Prime minister Boris Johnson said the result of the election gave him a “powerful new mandate” to “get Brexit done”.
The result was announced on 13 December following a night of huge losses for the opposition Labour and Liberal Democrat parties, with the LibDem leader Jo Swinson losing her seat and Jeremy Corbyn saying he would not lead Labour in any future election. North of the border, the Scottish National Party made strong gains and will seek the UK government’s permission to hold a second independence referendum, something Johnson has said he will not do.
The prime minister, who said that Brexit had become the “irrefutable, inarguable” decision of the British people, now has the numbers to get the EU Withdrawal Agreement Bill through parliament, probably before Christmas. The deal will then go to the European Parliament, which is expected to vote it through early in the new year, paving the way for the UK to leave the EU by the deadline of 31 January 2020.
The EU will also be keen to move on to the next stage of the Brexit process. The new president of the European Council, Charles Michel, said he expected a UK parliamentary vote as soon as possible and that the EU would “negotiate to ensure to have a close cooperation in the future with the UK” after Brexit.
Brexit was never popular with the life science industry because of its implications in areas like trade flows, the UK's participation in the EU regulatory network and research programs, and the movement of scientists and researchers. But at least the sector now has a better idea of what will happen next year and will be relieved that a no-deal exit, with all the complications that would entail, has been avoided.
The withdrawal deal will bring with it a transition period to the end of 2020, during which time things will pretty much stay as they are, although the UK will not have any decision-making powers at EU level. The UK will remain part of the customs union and single market, meaning that trade with EU countries will be unaffected. In the life sciences area, EU centralized drug marketing authorizations will still be valid in the UK, and companies will still be able to use the EU approval procedures, although the UK will no longer have any role as rapporteur for these procedures.
Mutual recognition of manufacturing and distribution licences and good practice inspections will continue during the transition period, and the UK will be treated as an EU member state for the purposes of international agreements such as mutual recognition agreements.
However, regulatory complications could arise because the withdrawal deal negotiated by the prime minister includes special arrangements for Northern Ireland, under which the UK will leave the EU customs union, while Northern Ireland will remain aligned with EU rules on goods and to some extent on customs.
This, according to Steve Bates, CEO of the UK BioIndustry Association, means the UK regulator, the MHRA, will have to operate two sets of rules for Great Britain and for Northern Ireland. Under the withdrawal agreement, he said in October, it was “hard to see that the UK would be a pure third country to the European Union in terms of medicine regulation, so there now needs to be a detailed technical discussion on how this would operate. This is a new issue which we will pick up with colleagues in Brussels.” (Also see "UK Industry ‘Exasperated’ As Third Brexit Extension Prolongs Uncertainty" - Pink Sheet, 28 Oct, 2019.)
On the domestic policy front, industry will be watching to see whether the government honors the pledges made in the Conservative party’s election manifesto last month.
Among these promises were measures to improve access to medicines, a £500m Innovative Medicines Fund (building on the existing Cancer Drugs Fund), a rise in public spending on basic science research, and a modest rise in health spending. The industry welcomed the proposed new fund, saying it would help to get breakthrough drugs, particularly those for rare diseases, to patients more quickly. (Also see "UK Conservatives Promise ‘Innovative Medicines Fund’ If Re-Elected" - Pink Sheet, 25 Nov, 2019.)
The Association of the British Pharmaceutical Industry congratulated the prime minister on his win, saying he was “elected with a manifesto which included strong commitments to improve the availability of new medicines to NHS patients, the uptake of vaccines, and to place life sciences at the centre of an innovation-based economy.”
Its CEO, Mike Thompson, said the ABPI “supports these ambitions and we look forward to working with our members to bring new investment to the UK to further strengthen our world-leading science base.”
Bates said the BIA looked forward to "working with the new Government on implementing their manifesto pledges, including the creation of the Innovative Medicines Fund, expanding R&D tax credits, and fulfilling the Prime Minister’s personal pledge of the ‘fastest ever increase’ in R&D spending. Our key priorities are ensuring companies can continue to access the capital and talent they need, working in partnership to deliver the life sciences strategy and ensuring NHS patients continue to access the latest innovative medicines."
Future UK-EU Deal
With Brexit now looking inevitable next month, thoughts will turn to the future of the relationship between the UK and the EU. The political declaration that accompanies the withdrawal deal calls for “an ambitious, wide-ranging future economic partnership” but leaves many details to be decided during the negotiations and keeps a range of options open.
Negotiations will likely begin in earnest in February next year. The life sciences industry will be pressing for this partnership to be as close as possible in the drug regulatory field, in order to avoid the need for duplication of rules and regulations and to stay aligned with the EU as far as possible. It would also like the UK to continue to play some sort of role in EU regulatory bodies.
“The immediate way forward on the withdrawal agreement is now clear," Bates declared. He said that industry’s "hard work" over the past few years on ensuring that the political declaration allowed the possibility of continued close co-operation on medicines regulation and science and innovation had been "recognised and now frames key parts of the coming negotiations.”
For the ABPI, Thompson said the prime minister's deal included "an important commitment to exploring close cooperation on medicine regulation. Achieving this will be important in prioritising patients and public health as well as the future of the UK life sciences sector.”
But the negotiations will be complex and lengthy, and while a cliff-edge Brexit at the end of January has been averted, the UK could face another kind of no-deal at the end of next year. The repeated delays to Brexit mean that the effective transition period – and therefore the time available for negotiations – has been whittled down to just 11 months, to the end of 2020, rather than the 21 months that would have been left had Brexit taken place by the original deadline of 29 March 2019.
Trade deals like the one envisaged between the UK and the EU traditionally take many years to negotiate, and the UK has the option to extend the transition period to allow more time for talks to be completed. However, the prime minister has insisted that 11 months is enough time to reach a deal, and has ruled out any extension.
This raises the possibility that if the future UK-EU relationship has not been settled by the end of 2020, the UK could fall back onto World Trade Organization rules – an eventuality that the life sciences industry would not relish.
US Trade Deal
The triggering of the transition period also means the UK will have to begin negotiating trade deals to replace those it already has with many countries through its membership of the EU.
It will also be looking to strike a deal with the US. A transatlantic trade agreement has been very much in the spotlight recently, and a great deal is at stake, not least in the area of intellectual property, where the US industry has said it would like to see a longer data exclusivity period for biologics in the UK. Concerns have been expressed that the NHS and UK drug prices will be “on the table” in the talks, although the government has denied this is the case. (Also see "UK Gov't Disowns ‘Secret’ Meetings With US On Post-Brexit Drug Pricing" - Pink Sheet, 30 Oct, 2019.)
Nonetheless, the signs are that the US will be seeking substantial changes when it sits down at the negotiating table. In its negotiating objectives released earlier this year, the US Trade Representative said it wanted to see UK standards that ensured that “government regulatory reimbursement regimes are transparent, provide procedural fairness, are non-discriminatory, and provide full market access for US products.”
In its submission to the USTR, the US pharmaceutical industry body PhRMA said UK pricing and reimbursement processes were characterized by “rigid health technology assessments, government price controls, insufficient health care budgets, and increasingly punitive and proactive national procurement initiatives and local barriers to uptake.”
It said the UK “significantly undervalues innovative medicines and restricts patient access to those medicines” and that drugs should be priced “either through a market-based system… or some type of equivalent system.”
US firms are therefore likely to be seeking higher drug prices in the UK. Whether they will make any headway on this front, at least in the near term, is another matter. Drug pricing in the UK is governed by a complex set of procedures and constraints, including NICE's health technology assessment process and the new Voluntary Pricing and Access Scheme (VPAS), which took effect in January this year with the aim of promoting innovation and access to cost-effective medicines while ensuring the sustainability of the National Health Service.
The VPAS, negotiated by the Department of Health and Social Services, the Association of the British Pharmaceutical Industry association and NHS England, allows free initial pricing of products containing new active substances but places a 2% cap on growth in NHS drug spending for each of the five years of the scheme. Any spending over that limit must be paid back.
The ABPI’s Richard Torbett, who takes over as chief executive of the association next year, said recently that companies in the UK had “voluntarily signed up to a five-year agreement which controls how much the NHS can spend on medicines; this will not change.”
This article has been updated to include comments from the BioIndustry Association.