The United Kingdom referendum outcome to leave the European Union has generated much uncertainty for both the UK and the other member states of the EU. There is a lack of clarity even at the highest levels of government about the path for exiting the EU, and the long term implications. One thing is clear though – the process is unlikely to be quick with a period of at least two years expected before the UK formally leaves the EU.
Amidst all this turmoil, it is clear that there will be significant implications for the life sciences sector and the companies that operate within it. There are potential challenges along the drug development and commercialisation continuum that could arise from these changes, from the earliest stages of research and innovation through to increased pressure across Europe for brands in the market.
For example, the UK could lose access to the Horizon 2020 EU program for research and innovation, which encompasses the Innovative Medicines Initiative (IMI). This programme is the world's biggest public-private partnership (PPP) in the life sciences, with over 50 live projects providing funding for the UK Medical Research Council (MRC) amongst other partners and universities in UK and Europe for research into new drugs. With the exit, UK research councils and universities could be excluded from the IMI network and the funding it provides. This could lead to fewer early phase research studies including UK patients.
Later stage clinical trials could be affected. Currently, the UK has a good reputation for clinical trials, but a planned 2018 reform will introduce a single EU portal for industry to apply through that gives approval to conduct trials in all member states. This may make it more complex and costly to conduct in trials in the UK if excluded from this reform. Equally, with a focus on raising standards across EU countries, the new legislation may also increase quality in other countries thus reducing the pull industry may currently feel towards conducting trials in UK.
As well as the clinical trial implications, there is uncertainty about the regulatory approval process for pharmaceuticals. The European Medicines Agency is headquartered in London, and is in fact the largest European Union organisation based in the UK. The EMA will need new headquarters with Italy, Denmark and Sweden already offering it a new home. With Brexit, it remains to be seen whether UK can remain part of the centralised procedure for approving medicines in Europe. If not, a separate regulatory path will be needed for drugs entering the UK market. There will likely be an impact for medical devices too, as many manufacturers seek medical technology approvals in Europe before doing so in the US via the FDA.
Once drugs are approved, there will be added complexity in getting them to patients. There will be a need to re-shape some of the distribution channels which currently allow free movement of goods across member stages, and which results in parallel trade across countries.
Thinking about the UK itself, the anticipated recession and need for further austerity measures will bring increased pressure on price, particularly in terms of funding at local levels, slowing access and uptake for newer, more expensive medicines and increasing price pressure for established brands. This price impact could be felt more broadly due to the central role that the UK plays as a benchmark for international reference price calculations. Lower prices in the UK could translate to lower prices in the large number of countries around the world that include the UK in their price calculations. Additional pressure could come if one of the other major uncertainties – will other EU members choose to leave the union? – becomes a reality.
Amidst this uncertainty, what can manufacturers do? Several of the key challenges described can only be solved by pan-industry efforts at the national (e.g. UK’s ABPI) or European (e.g. EFPIA) level. When it comes to individual products or portfolios, the fundamentals of demonstrating value remain the same – in fact there will be greater pressure to understand what is needed to make it in regulators’ interests to approve, and payers’ interests to invest, in new medicines given the increasingly difficult choices they have.
Choosing the right patient populations, comparator and endpoints for a brand in development only increases in importance. Delivering clinically meaningful differences on those endpoints via robust evidence becomes more critical. Doing so at a price that is sustainable is essential. None of this is new for a continent that has been payer-driven for many years, but the screw is tightening further.
The enhanced need for payer relevant differentiation and evidence in theory should make new brands more compelling for stakeholders in other geographies including US, Canada, Australia and Japan; however, delivering such evidence comes at greater financial cost and technical risk – could we see more US-only or at least non-EU brands launched?
What Brexit means at an overall UK level is currently highly uncertain, and this uncertainty definitely applies to the life sciences industry. Greater volatility should be expected, further pressure on price and uptake. Life sciences companies will need to consider use of differentiation and evidence to best insulate themselves from this turbulence, recognising that this action itself brings increased risk.
To learn more about Brexit and how it affects you, fill out the form below to speak to Jason Ward, Partner, DRG Consulting.