The impact of Brexit on the pharmaceutical sector Contents

Conclusions and recommendations


1.We welcome the Government’s positive, collaborative approach so far, and trust it will continue as negotiations progress. The Government must continue to seek to preserve and build upon the success of the UK pharmaceutical sector, and the effective collaboration between industry and Government, as it undertakes negotiations on future trading arrangements with the EU. (Paragraph 6)

Tariff barriers

2.The World Trade Organisation’s Pharmaceutical Tariff Elimination Agreement means that relying on WTO rules in the event of a ‘no deal’ scenario would not have as significant impact on the pharmaceutical sector as for other sectors that Committee has considered. However, there are still significant concerns that it could injure the UK’s position as a manufacturing base, a global supply hub and as a manufacturer and recipient of new and innovative medicines. The Government should pursue a trade agreement with the European Union, and with other trading partners, that includes all finished and component pharmaceutical products, and is not limited to those currently listed under WTO rules. (Paragraph 16)

3.The extended delay in adding new pharmaceutical products and ingredients to the World Trade Organisation listing is already harming global access to medicines and offers no benefit to the industry or nations. It is for World Trade Organisation negotiations rather than Brexit negotiations to resolve this; however, falling back onto WTO rules could mean harmful tariffs for new and innovative medicines and components being traded between the UK and EU. As a global leader in the pharmaceutical industry, the Government should work internationally to ensure that the WTO updates the list of pharmaceuticals and components covered by the Pharmaceutical Tariff Elimination Agreement. (Paragraph 17)

Non-tariff barriers

4.Burdensome customs procedures would diminish the highly productive nature of the pharmaceutical industry, act as a disincentive for further investment for manufacturing facilities in the UK, and diminish access to medicines for patients in the UK and the EU. We support the Government in seeking as frictionless a border as possible; they must prioritise the absolute minimum additional costs and bureaucracy for the pharmaceutical sector. (Paragraph 27)

5.The Government should ensure that, in addition to achieving as frictionless border as possible to protect the competitiveness of British pharmaceutical businesses, arrangements are put in place to ensure the cross-border transfer of short-life pharmaceutical products for emergency treatments and public health cases, in the mutual interest to patients in the UK and the EU. (Paragraph 28)

Regulatory alignment

6.We welcome and support the Government’s recognition of the benefits to the UK and EU of our continued membership of the EMA to ensure the UK and the EU can access the fullest possible range of new and innovative medicines and support the UK pharmaceutical sector accessing this market. (Paragraph 36)

7.What little benefits there may be of regulatory divergence would be greatly overshadowed by the costs and loss of markets and influence the UK would face. It makes commercial sense for the UK to remain aligned with standards in the EU market, given the significant amount of trade it provides for both the UK and EU and the access it gives both to medicines. The Government should pursue this approach. (Paragraph 42)

8.The success of EU-wide regulation of manufacturing and regulation of testing and release of medicines, with the Medicines and Healthcare products Regulatory Agency an integral and influential part, means the Government should prioritise a form of membership with the European Medicines Agency that maintains cooperation and does not require replication of manufacturing sites, testing or roles. The Government has set out its desire for continued cooperation and a form of Membership. The Government should as a priority now seek from the European Commission an explanation as to the Commission’s approach. (Paragraph 46)

9.We recommend that the Government continues to take a pragmatic approach in relation to any potential continuing ECJ role in the pharmaceutical sector. (Paragraph 48)

10.While it is necessary for the European Medicines Agency to move its headquarters to a Member State once the UK leaves the EU, there is a beneficial case for both the UK and EU for the EMA to retain a residual staff in the UK to support a continued relationship between the UK’s influential Medicines and Healthcare products Regulatory Agency and the EMA, and to support EMA employees who do not wish to leave the UK. We recommend that as part of a new association with the EMA, the Government should seek to retain a presence for EMA jobs and facilities in the UK where it would benefit the operation of the EMA and the MHRA, supporting UK businesses to continue to access the European market and European businesses to access the UK market. (Paragraph 50)

Transitional arrangements

11.The agreement of a 21-month transition period as the UK leaves the UK is less than the minimum amount of time we were told is required to avoid serious issues for some businesses. It is, however, a positive step in so far as it provides business with some certainty. The UK Government must, alongside the European Commission, now ensure a speedy decision is taken on the new relationship for the UK and the EMA, early enough to minimise unnecessary contingency planning costs currently being borne by the pharmaceutical sector. (Paragraph 53)

Trade opportunities post-Brexit

12.For the UK to continue to be one of the major global hubs for pharmaceutical innovation, it is cooperation as part of regional and global networks to develop new and innovative medicines which is likely to bring continued success. As most manufacturers are multinational with regional supply chains, any trade deals are unlikely to lead directly to a substantial increase in investment and jobs in the UK. Given that the EU represents 44 per cent of the UK’s pharmaceutical exports and 73 per cent of imports, the Government should prioritise continued friction-free access to the EU market and the roll-over of existing free trade agreements over securing new third country agreements. (Paragraph 57)

13.The UK and EU have an intellectual property regime that effectively supports both innovation and access to medicines. Any unilateral changes to this as the UK leaves the EU would risk either the UK’s attractiveness as a base for research and development or the ability of the National Health Service to access the full range of medicines its needs. The Government should ensure that any trade deals struck as we leave the EU do not cause us to diverge from current intellectual property rules. (Paragraph 61)


14.In the short term, the Government should ensure that the industry can continue to have immediate access to the skills it needs, including through effective circulation of staff from around the world to meet skills shortages and to support personal and corporate development. (Paragraph 66)

15.Skills shortages are already a problem in the pharmaceutical industry and could increase depending on the post-Brexit immigration approach as well as any changes to pharmaceutical regulation. The Government must continue to work with the industry to meet its skills gap and increase the number of UK nationals working in the sector for the long term. (Paragraph 67)

Research and development

16.The Government commitment to underwriting Horizon 2020 funding and to seek continued engagement is welcome. As part of its Industrial Strategy and a commitment to take R&D spending to the OECD average, the Government should provide certainty to businesses and research institutions by setting out its approach to R&D collaboration, including whether it will seek an association agreement with the successor to Horizon 2020. (Paragraph 70)

17.In negotiating its post-Brexit relationship with the EU, the Government should ensure that UK pharmaceutical companies can conduct effective clinical trials through continued cooperation with European institutions and with mutual recognition of results. (Paragraph 72)


18.The pharmaceutical sector in the UK is primarily a mix of UK, EU and USA-headquartered companies and one of the most productive and successful sectors in the economy. As part of the wider life sciences industry, the sector has enjoyed support from successive governments who have recognised its importance to society and the economy. The UK’s pharmaceutical sector is heavily integrated into the European market, not least with a significant and influential role in an established and respected regulatory system. Although the UK has a disproportionately large role in regulation and in research and development for European medicines, the size of the European market heavily outweighs that of the UK. As a result, manufacturers are unlikely to prioritise the UK over the EU as a market, and UK manufacturers are already spending tens of millions in contingency planning to access EU markets because of uncertainty. The UK must seek the closest possible regulatory cooperation and the minimum border friction possible to ensure the continued success of the industry. The European Commission has a responsibility to set out their position, to ensure there is no fragmentation of a closely integrated industry that is working to the benefit of patients across Europe. (Paragraph 73)

19.We sought out any potential benefits to the UK pharmaceutical sector from Brexit, but found that any small gains would be hugely outweighed by additional costs or the loss of access to existing, successful markets. The potential for speedier approval of medicines is outweighed by the risk of no access at all to other products. The potential for weaker intellectual property regulation is outweighed by a potential loss of investment in the UK. The potential for stronger intellectual property protection is outweighed by the potentially huge costs for the NHS and harm to the generic pharmaceuticals sector. The potential for change to how we conduct clinical trials is outweighed by the loss of access to huge number of participants across Europe. The potential for new, untapped markets simply does not exist in an already global sector in which the UK is highly engaged. The best potential approach we found for the UK to grow as a world leader in the development, manufacture and regulation of pharmaceuticals is to maintain as close a relationship with the EU as possible. (Paragraph 74)

20.We found no-one involved at a senior level in the sector who was prepared to make a positive case for Brexit for pharmaceuticals. The sector has nonetheless been engaged and realistic since the decision to leave the EU was taken. They have made coherent proposals for the sustainability of an important and influential UK sector, many of which we have echoed in this report. We welcome the positive engagement demonstrated to date from both the Secretary of State for Business, Energy and Industrial Strategy and the Secretary of State for Health and Social Care, and their departmental Ministers. In her Mansion House speech, the Prime Minister set out a positive and compelling case for continued cooperation between the UK and EU on medicines. The Government must now translate words into actions that protect the UK’s status as a world leader for pharmaceuticals. (Paragraph 75)

Published: 17 May 2018