Further delays to our departure will give pharma companies a much bigger headache than no-deal
As Conservative leadership candidates debate - or disavow - leaving the EU with no deal, the fears of shortages and disruptions that have circulated since the referendum in 2016 are back in the spotlight once more.
People are rightly concerned about the availability of medicines, given that we import billions of pounds worth of pharmaceuticals - mostly from the EU - and timely supply is vital. With the extended exit date of 31 October coming just ahead of winter, some have cited the disruption to the supply of flu vaccines as a risk with huge potential knock on effects.
Common fears around medical provisions can be broken down into three main areas: tariffs, regulations and logistics.
Firstly, though some have claimed that the prices of pharmaceutical products would jump under no-deal because, lacking a free trade agreement, the UK and the EU would have to impose duties on imports from each other under WTO rules, in reality most finished medicines and medical devices are already tariff-free, wherever they are imported from.
True, the EU does impose tariffs on some products, like active pharmaceutical ingredients. But outside the customs union, and with control over our external tariffs, the UK should unilaterally eliminate all tariffs on pharmaceutical ingredients and medical devices, and this is what the UK’s no deal plan for tariffs would broadly do. We cannot compel the EU to do the same, so if no free trade deal is agreed they may choose to apply tariffs to their imports of some pharmaceutical products from the UK but this will not affect prices here.
Elimination of tariffs would also avoid the administrative burden of applying for reliefs from duties where ingredients cross borders at different stages of manufacture. All this will ultimately benefit UK consumers, and save money for the NHS.
The fear here is that, because medicines and medical devices are subject to the EU’s rigorous licensing and regulation, when the UK is no longer a member the licences will cease to apply and we will not be able to regulate medicines safely or import EU-licensed products. But this is not the case.
Though the EMA is the relevant EU authority, much of the regulatory work in medicines is in fact carried out by national regulators and Britain’s regulator, the MHRA is widely recognised as one of the most effective and expert authorities in the sector.
As part of its no deal planning the UK government has decided to continue to recognise authorisations issued by the EMA and to allow imports of medicines that are authorised and manufactured in EU member states. The MHRA has been praised for its pragmatic approach as it seeks to minimise the cost and burden on importing medicines.
Medical devices (which include everything from syringes to apps) are not subject to the same process of authorisation and licensing. They must meet applicable regulation on safety and some have to be independently certified by a notified body. Here too the MHRA has announced that the UK will continue to recognise EU regulations and certificates to allow imports of medical devices from the EU to continue.
The third concern is that pharmaceutical supplies will be delayed at ports and airports. There are many steps in respect of customs that the government can take in the interest of all trade. HMRC announced a wide ranging programme of facilitations to simplify importing from the EU in a no deal scenario and keep lorries moving through the ports.
Ahead of the original planned exit date the Government worked with manufacturers and distributors to ensure sufficient stock would be available in the UK. Medicines suppliers have already made changes to their routes from the EU to avoid bottlenecks at Dover and have invested in warehousing capacity so they can hold enough supplies in the event of disruptions to imports.
The current risks to supplies of medicines in fact stem from the lack of certainty from Government as to what the industry is expected to prepare for, and when. Pharma companies spent millions preparing for Brexit on 29 March, to be ready on 31 October they will need to repeat the exercise of stockpiling.
To get this right, and to avoid wasted effort and money, businesses need the government to end what the managing director of drug giant Sanofi has called the “interminable wait” and finally decide the nature and timing of Britain’s exit from the EU.
Victoria Hewson is Senior Counsel at the Institute of Economic Affairs