Since the fateful Brexit vote of June 2016 – where the citizens of the United Kingdom voted to leave the European Union in an advisory referendum vote – a month has not gone by without alarming Brexit-related headlines. With issues ranging from British drug companies struggling to attract foreign talent to pharmacists worrying about Brexit-related drug shortages, Brexit has been a source of consternation and heartburn for multi-national drug companies and their European strategies. While some of the impact can be felt already, most disconcerting for industry is that the real Brexit impact has yet to come.

The official divorce date for the U.K. and the E.U. is March 30, 2019, but the outline of the post-Brexit world is still unknown. One of the biggest unknowns is what the post-Brexit relationship between the U.K. and the E.U. will look like, which has a significant impact on the pharmaceutical industry. This relationship shapes everything from market authorization to supply chains to research funding.

In January 2018, there was seemingly public confirmation that the U.K. was pushing to remain under the European Medicines Agency’s (EMA’s) regulatory authority after Brexit, though it remains unclear whether European countries – and factions within Prime Minister May’s own government – would be happy with that solution. Without knowing what the relationship between the EMA and the U.K.’s Medicines and Healthcare products Regulatory Agency (MHRA) will be, everyone from manufacturers to these agencies have been preparing for the worst-case scenario – a “hard” Brexit with no working relationships or special deals.

The EMA has issued guidance treating the U.K. as outside of the EU’s regulatory framework, meaning that U.K.-based companies may have to transfer market authorization for all their products to legal entities in the EU or apply for new authorization — a not-insignificant burden. Furthermore, any authorizations that were handled by the MHRA under the current decentralized mutual recognition procedure would have to be transferred to other member states’ agencies. The same must be required for licenses under the decentralized procedure that were handled by other E.U. member states, requiring them to be duplicated in the U.K.

Perhaps the most visible change to outsiders is that the EMA itself will be leaving its headquarters in London and moving to Amsterdam, and taking thousands of experts with it. Based on the EMA’s own internal analysis that was released prior to the vote in an unnuanced attempt to sway voting, the EMA made it abundantly clear that the move to Amsterdam would cause the least disruption for the agency and, consequently, for industry. However, even this best-case scenario will take the agency three years from which to recover fully. Many employees of the EMA have said that they will not making the move to Amsterdam, which will undoubtedly be disruptive for agency function and expertise.

It is not just market authorization that will be impacted, as current supply chains in Europe mean that there is a steady traffic of pharmaceuticals leaving and coming to the U.K. According to the Association of the British Pharmaceutical Industry (ABPI), the U.K. exports 45 million medicine packs to the EU each month, and imports 37 million. Over 2,600 medicines are manufactured in the U.K., and many of these are then sold throughout the E.U. The U.K. is a crucial element in the European pharmaceutical supply chain, and Brexit has been a great disruptor. Manufacturers have already started to reorganize their supply chains, and changes are likely coming in terms of post-regulatory pharmacovigilance.

Given the market authorization and supply chain implications – and not even delving into the many other aspects of healthcare that will likely be affected – what avenues of hope for an easy Brexit exist for industry? Aside from the possible continuing relationship between the EMA and MHRA, industry is also pinning its hopes on a post-divorce date transition period. In the event of a “hard” Brexit and no special trade relationship or special market authorization relationship, pharmaceutical – and other – industry organizations have pushed for a transitional period of at least two years. In a January 2018 statement, the MHRA confirmed that in the event of a hard Brexit, it will push for an “implementation period” that would allow for a smooth transition, as well as a close working relationship after the implementation period is complete. A 21-month post-Brexit transition period has been tentatively agreed upon between the U.K. and E.U., but nothing is yet set in stone.

Brexit negotiations between the U.K. and the E.U. are set to complete by October 2018, allowing for the E.U. and its member states enough time to ratify the final agreement prior to the divorce date. By then, we will have a much clearer picture of what the future holds for the pharmaceutical industry. Until then, manufacturers are likely served best by arming themselves with the necessary tools and knowledge to prepare them for the worst-case scenario.

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