Just one year after the United Kingdom voted to leave the European Union in the Brexit referendum, surprise national elections slated for June 8 have the potential to shape the challenges—and the opportunities—for industry.
According to the polls, the front-runners are the Conservative Party (the Tories), led by the current Prime Minister Theresa May, and the Labour Party, led by the Leader of the Opposition, Jeremy Corbyn. There are a number of other parties also in the mix, including the Liberal Democrats, the Scottish National Party, and others, such as Brexit’s biggest supporters, the United Kingdom Independence Party. The election itself was a surprise, a U-turn from Prime Minister May, who took over when former Prime Minister David Cameron resigned following the shocking verdict of the Brexit referendum.
At the start of the campaign, some polls had the Tories with almost double the vote share of the Labour Party, seemingly indicating a landslide victory in the future for the Prime Minister May. However, since the April election announcement, the gap has narrowed considerably, with the Tory lead dropping from around 18 points to fewer than 10. However, this should perhaps all be taken with a grain of salt, as the “shy Tory” factor is infamous in UK polling, and the spectacularly wrong polls leading up to the general election in 2015 suggest that anything could happen on June 8.
So what does this mean for the pharmaceutical industry?
One of the major issues of the election is the United Kingdom’s exit from the European Union—Brexit. Neither of the major parties plan to go against the June 2016 referendum results (although the Liberal Democrats have put the option on the table), but there are stark differences in how the Tories and Labour believe that the exit negotiations should be handled, and what a future relationship with the EU could look like. As I’ve previously discussed at length and within DRG’s Global Market Access Solution, that relationship is crucial to the pharmaceutical industry and market access in the UK. Although the UK’s regulatory body, the Medicines and Healthcare products Regulatory Agency, has expressed a desire to continue cooperating with the European Medicines Agency, it is unclear whether that would be politically viable, either in the UK or on the continent.
The crux of the Tory position regarding Brexit is to leave the single market and customs union—a move universally seen as bad for the pharmaceutical industry and market access—while seeking a “deep and special partnership” with the EU, a vague statement that does not inspire much confidence. The Labour Party seems more willing to stay in the common market, saying that it would scrap the Tory white paper on Brexit and replace it with fresh negotiating positions that place emphasis on the single market and customs union. This is potentially a better option for pharma, an industry which lobbied fiercely against Brexit before the referendum and has been warning against the dangerous R&D and market access implications since.
In addition to Brexit, the other key area of interest for pharmaceutical manufacturers is the campaign pledges on healthcare, particularly healthcare expenditure. The Tories have pledged an £8 billion ($10.3 billion) increase to the NHS England budget by 2022–2023; Labour has committed to more than £30 billion ($38.7 billion) in extra funding for the NHS in England over the next five years. For context, the 2016–2017 NHS England budget is £107 billion ($137.8 billion). At a time when industry has faced greater challenges—including the changes to the CDF —this increase would be welcome news to pharma.
Like June 2016 before it, June 2017 promises to be a consequential month for the United Kingdom—and for the pharmaceutical industry. In addition to the election, the new headquarters of the EMA are also expected to be announced, as the agency will have to leave its current headquarters in London in the wake of Brexit.
What kind of UK the EMA will be leaving, and what kind of future relationship it will be entering into, will become clear on June 8. If the Tories stave off Jeremy Corbyn and Labour’s late surge—which experts agree they are likely to do—it is very possible that the election will result in a minority government, which will create considerable difficulty for making policy and for Brexit negotiations.
Overall, there is considerable uncertainty ahead for the pharmaceutical industries of Europe and the United Kingdom. The best policy is to remain prepared by keeping up to date with developments and understanding the possible scenarios. It should be of comfort that the pharmaceutical industry is one of the most globally harmonized industries in the world, with strong international standards in a number of areas, and these standards are unlikely to change—whether going through the MHRA or the EMA.
About Global Market Access Solution
DRG’s Global Market Access Solution (GMAS) allows global teams to monitor and assess the evolving market access environment—through a country, indication or therapeutic lens. Commercially focused data and insights support strategic activities with global revenue implications by helping businesses to scope global opportunities, shape relevant messaging, calibrate go-to-market planning assumptions, and achieve and maintain maximum access & reimbursement. Find out more: Global Market Access Solution