Failure to complete the first phase of Brexit negotiations is costing UK pharmaceutical companies “an enormous amount of money”, industry representatives have warned.
With less than 18 months to go until the official date of EU withdrawal in March 2019, companies are having to make preparations now, with some setting up facilities and offices abroad at a cost of tens of millions of pounds, MPs were told.
Giving evidence to the Commons Business Committee, the chief executive of the Association of the British Pharmaceutical Industry, Mike Thompson, said the sector was in need of “certainty” from the Government now on issues like post-Brexit alignment of regulations with the EU and the terms of any transition period.
Companies are concerned that separate regulatory systems for the EU and UK could add millions to their costs, and that potential delays at the ports could result in medicines having to be dumped.
Speaking a day after talks intended to move Brexit negotiations on to their second phase – dealing with future trade – broke down in Brussels, Mr Thompson told the committee: “One of the challenges for us is that it is not unusual for politicians to think they don’t need to do a deal until the absolute last minute.
“But for business people, we have to plan ahead. The fact that we haven’t had the time to plan ahead has meant companies have had to take these contingency decisions, which is costing them an enormous amount of money.”
He told MPs that the industry’s message to Government would be: “Can you please get into phase two as quickly as possible, because we need to have some decisions so we can plan to ensure the continuing supply of medicines to patients across Europe.”
The managing director of generic drug producer Xiromed, Peter Ballard, told the committee he “cheered at lunchtime and groaned in the afternoon” on Monday, as the prospect of a deal which might have kept Northern Ireland under single market rules was snatched away.
“I felt if Northern Ireland was adopting that sort of system, it would necessarily apply to everyone else,” said Mr Ballard. “That is our very, very clear preference.”
Other EU countries make up 44% of the £30 billion export market for UK pharmaceuticals, and there is little prospect of increasing market share in other parts of the world which already have established supply chains, said Mr Thompson.
Companies were concerned about the possibility of new tariffs pushing up the cost of medicines, but a greater anxiety was the introduction of delays into highly time-sensitive movements of products which are often moved across borders several times during the production process.
“Quite a lot of them are temperature-controlled, so if you don’t do it within a certain time period, you are out of spec and you have to throw them away,” explained Mr Thompson.
“We are imploring people to understand that medicines are different. If a car is held up at Dover, it’s important but it’s not life-threatening. If medicines can’t get through, it’s life-threatening.
“This is not an issue about UK patients versus European patients. This is about patients across the whole of Europe. Everybody is going to lose out here.”
The chief executive of the Propriety Association of Great Britain, John Smith, said that any divergence between UK and EU regulations would cost the industry “millions of pounds”, as drugs might require safety testing and batch production on both sides of the Channel.
Asked if the companies would benefit from the UK having the freedom to set its own regulations, Mr Smith replied: “Our strong view is if you go down that route, any opportunities are completely outweighed by the costs involved.
“It would add significant costs to our overall business, to the tune of millions of pounds.”