5Continued collaboration in other areas of the life science sector
Research and development and clinical trials
Current participants in clinical trials
93.The first stage in the life science product cycle involves research and development and clinical trials. We heard that almost a quarter of all clinical trials in the EU are multinational; and that international recruitment of patients will be an increasingly important aspect of clinical trials, as the move towards personalised medicines–involving targeted treatments - means that many trials will involve patient cohorts with more specific requirements.106 We received evidence that raised the issue of those patients in the UK and EU who are currently engaged in clinical trials which involved some form of cross-EU collaboration. As Aisling Burnand of the Association of Medical Research Charities noted in oral evidence:
Currently, there are over 1,500 clinical trials taking place that have a UK sponsor and 50% of those are going to continue post 2019. There will need to be clarity on what happens to patients involved in those trials and what the legal status is of some of those things.107
94.Clinical trials are regulated by the EU Clinical Trials Directive, which was transposed into UK law in 2004.108 The harmonisation of clinical trials regulations facilitates the conduct of trials across all EU Member States, as there is only one set of standards to comply with, reducing the financial and collaboration burdens on organisations and researchers.109 The EU in 2014 approved the new EU Clinical Trials Regulation (CTR), which will streamline the operation of multi-country EU trials through greater harmonisation, with a single portal for all applications.110 As the implementation of the CTR has been delayed, the CTR is not covered by the EU (Withdrawal) Bill that is before Parliament, and so will not automatically become part of UK law on Exit day. Emma Greenwood of Cancer Research UK told us:
From a clinical trials perspective, a new regulation will be coming in. What we do in the UK has to be sufficient for them [the EU] to agree that we can continue to co-operate. The way the regulation is currently drafted you have to be a member state. Although there is willingness to get to the right end point, we have not yet seen what it would take for the other member states in the EU to endorse that approach.111
95.There was a strong consensus in the evidence provided to this inquiry that the UK should adopt the new CTR into UK law.112 However, adopting these regulations into law will not guarantee that the UK can benefit from the new regulations, as simple statutory alignment does not guarantee continued collaboration, which also demands mutual agreement to continued co-operative working. We were told that if the UK is unable to secure continued harmonisation on clinical trials after exiting the EU this could create a variety of issues, the most urgent of these being the status of those UK based patients who are currently engaged in multinational EU Clinical Trials. Emma Greenwood of Cancer Research UK told us:
My understanding is that the MHRA is currently working under the assumption that we will essentially be aligned [on clinical trials], but this is only possible if there is agreement that the EU will endorse that approach. Until there is more detail, it is impossible for the EU to say whether that [allowing the UK to participate in the CTR] would prove to be acceptable to them for an arrangement. If you are a business making decisions in the next six months, it is not enough certainty.113
Continued participation in clinical trials
96.In addition to the short-term considerations around current participants in clinical trials, we heard evidence that for the UK life science industry, the NHS and UK patients, it is critical that the UK achieves long-term continued participation in EU clinical trials. If the UK does not adopt the CTR and is unable to access the infrastructure that has been developed within the EU to underpin them, a variety of issues for patients and the life science industry could emerge both in the short and medium to long term:
- Added burdens would be placed on researchers and clinical trial sponsors, as they would have to apply different rules in the UK and the EU. This is particularly important as over half of UK trials currently in operation have sites in the EU.114
- Problems could arise in recruiting sufficient cohorts of patients for clinical trials, particularly in the case of paediatric medicine and rare diseases. The UK has a much smaller population (66 million) than the EU (512 million) and the US (323 million). If isolated, the UK could be a less attractive destination for cutting-edge research, thereby restricting UK patients from being able to participate. For example, patients are increasingly being stratified based on the genetic profile of the cancer, which further reduces the number of eligible patients an individual country. On paediatric medicine, the number of children involved in clinical trials increased by 6000% following the EU Paediatric Regulations.115
- A negative impact on the UK’s position as a market leader in clinical trials. Sanofi told us that it invests around £44.5 million in research and development trials in the UK, which form part of multi-site, multi-country trials. This has been made possible by the UK’s participation in the EU’s harmonised regulatory processes, and they gave the stark warning that such investment would either be limited or non-existent if the UK could not access EU clinical trials.116
- Patient participation in clinical trials and access to treatments could become more difficult. If diagnosed with a relevant condition, 89% of patients would be willing to participate in a clinical trial.117 The Association of Medical Research Charities told us that alignment with EU clinical trials regulations is important to ensure that UK patients can participate in trials.118 For example, according to the Genetic Alliance, clinical trials are a key means by which patients can gain accelerated access to new and innovative treatments, which risks seriously affecting those with a rare disease.119 Dr Jayne Spink stated in oral evidence that:
In terms of rare disease research, it is completely impractical to imagine a clinical trial within one state just because there are too few numbers. There has been about €900 million of funding since FP7 into 160 projects that are researching orphan medicinal products in the context of rare diseases. The ability to participate as part of those funding collaborations and clinical trials collaborations is fundamental to patients in the UK.120
97.The Medical Technology Group similarly argued in written evidence that:
The UK’s success at R&D in the pharmaceutical sector is driven by the unique potential of the NHS in hosting clinical trials, the recognition of UK clinical trials across the rest of the EU, and our ability to develop and attract talent. The UK’s departure from the EU threatens this base and it is thus essential that steps are taken to mitigate these risks, through harmonisation with the EU Clinical Trials Directive. Establishing a regulatory regime for clinical trials that diverges from EU standards would increase the burden on UK researchers. This would make the UK a less appealing destination to conduct trials.121
Box 2 Potential delays in access to new medicines for rare disease patients
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Duchenne muscular dystrophy is a severe type of muscular dystrophy for which there is no cure and limited treatment options available. At any one time, there are estimated to be 26,000 patients in the EU, and 2,500 people affected by Duchenne muscular dystrophy in the UK. There are several promising treatments progressing through the clinical trials process and a number of these are awaiting authorisation by the EMA. One particular drug could be assessed by the EMA in the next few years. If successful, these medicines could effectively slow down the progression of the condition and result in significant benefits to those affected. Without a UK link to the EMA’s medicines approvals process, and considering the small population size and market opportunity for pharmaceutical industries, individuals with Duchenne muscular dystrophy in the UK could face lengthy delays in accessing the medicine compared with patients with the same condition living in EU countries. |
Source: Brexit and the impact on patient access to medicines and medical technologies - Brexit Health Alliance, January 2018
98.A point made across evidence submitted to this inquiry was that simply aligning with EU rules on clinical trials will not be enough to ensure the same level of collaboration with the EU as the UK currently enjoys. As Dr Beth Thompson said in oral evidence:
There will need to be some legislative fix to manage clinical trials, but it is not as simple, if that is simple at all, as fixing the legislation itself. We also need to negotiate alignment because it is a partnership. We cannot just unilaterally say we will take part.122
99.The regulation of clinical trials across the EU in the future will also require common access to supporting IT infrastructure such as the Clinical Trials Portal which is currently under development.123 The Association of Medical Research Charities argued that the UK’s participation in EU systems such as the Clinical Trials Portal would be essential to ensuring patients have access to health innovations after Brexit.124
100.Sir Hugh Taylor, Chair of the Brexit Health Alliance, also made the point that clinical trial participation and the holding of these trials in the UK benefits clinicians and the treatment they are able to provide. He noted:
By participating in clinical studies, from the clinician’s point of view, they get to experience the use of medicines under development, so that when those medicines are approved they know some of the advantages and disadvantages of those medicines. Of course, if they do not partake in those, they are going to miss out and will only know about those medicines when they are approved.125
101.Clarity is therefore needed on the future of UK clinical trials. In oral evidence, Dr Ian Hudson of the MHRA told us that after Brexit:
The ability to run a multinational trial including the UK does not change … You will still be able to have the same protocol that is submitted for approval in the UK and the clinical trial run in the UK, and that data combined with data from the study done anywhere else.126
102.However, while Dr Hudson is technically correct that the UK will not be physically unable to run clinical trials after exiting the EU, this does not adequately take into account the relative desirability of conducting trials in the UK as opposed to conducting them elsewhere for businesses. If the UK has no access to the new Clinical Trials Portal, and has a divergent regulatory system from the remainder of the EU, it may be that we are able to conduct clinical trials here, but that the increased regulatory and financial burdens make it sufficiently undesirable to dissuade businesses from doing so. Dr Hudson stated that: “The UK is a great place to do clinical research. None of that changes, whatever the outcome of Brexit.”127 We believe this is an understatement of the risks that Brexit poses for UK clinical research.
103.For the benefit of the UK life science industry, the NHS and UK and EU patients, UK participation in cross-EU clinical trials is important. If the UK does not adopt the CTR and is unable to access the infrastructure that has been developed within the EU to underpin them, a variety of issues for patients and the life science industry could emerge both in the short and medium to long term.
104.The Government should recognise that while a commitment to transferring the Clinical Trials Regulation into UK law is a positive starting point for patient safety in the UK, this is insufficient to guarantee continued UK access to EU clinical trials. This will demand co-operation and willingness from other stakeholders in the EU. The Government should make public its contingency planning for the possibility that the UK is unable to secure continued participation in these trials, both for current participants in trials and for the future of UK clinical trials.
105.We welcome the Government’s aim to play a full part in new clinical trials regulations and medical devices regulations.128 We would like to see much more detail of what this will entail in practice, and we expect to see that detail in the Government’s response to this report.
106.We urge the Government to commit to adopting the new Clinical Trials Regulation into UK law following Brexit and to secure a joint statement with the EU committing to continued collaboration on clinical trials following the UK’s exit from the EU.
107.We recommend that the Government provide urgent confirmation of the status of UK citizens currently engaged in ongoing clinical trials. It is critical that this is covered in the Withdrawal Agreement that the UK strikes with the EU, ideally in the provisions on citizens’ rights.
Regulatory alignment over EU rules for data protection
108.We heard that data sharing across the EU is essential for public health, and that UK compliance with EU rules on data protection will secure patient access to products, minimising the potential for adverse impacts of the UK’s withdrawal from the EU and maximising opportunities to enhance services.129 As highlighted by the Wellcome Trust, the UK is currently a world leader in genomics and research using health data, both of which rely on international collaboration and sharing data across borders. In order to ensure this collaboration continues, a straightforward exchange of personal data with the EU and other countries after Brexit will be important.130 The UK Government and wider life sciences sector have been instrumental in shaping the direction of the General Data Protection Regulation (GDPR), and the outcome is a system agreed by stakeholders to be beneficial for UK health research.131 We heard that the Data Protection Bill currently before Parliament must therefore maintain the provisions of the GDPR, and the UK must harmonise legislation on data sharing with the EU.132
109.We were encouraged by the statement made by the Prime Minister on 2nd March which argued that:
… The free flow of data is also critical for both sides in any modern trading relationship too. The UK has exceptionally high standards of data protection. And we want to secure an agreement with the EU that provides the stability and confidence for EU and UK business and individuals to achieve our aims in maintaining and developing the UK’s strong trading and economic links with the EU.
That is why we will be seeking more than just an adequacy arrangement and want to see an appropriate ongoing role for the UK’s Information Commissioner’s Office. This will ensure UK businesses are effectively represented under the EU’s new ‘one stop shop’ mechanism for resolving data protection disputes.133
110.The European Commission has the power to offer an ‘adequacy statement’ under Article 45 of Regulation (EU) 2016/679), which determines whether a country outside the EU offers an adequate level of data protection, whether by its domestic legislation or by virtue of the international commitments it has entered into. The effect of such a decision is that personal data can flow from the EU (and Norway, Liechtenstein and Iceland) to that third country without any further safeguard being necessary, meaning transfers to the country in question will be assimilated to intra-EU transmissions of data.134 The draft text of the European Union’s negotiating position states that:
In the light of the importance of data flows in several components of the future relationship, personal data protection should be governed by Union rules on adequacy with a view to ensuring a level of protection essentially equivalent to that of the Union.135
While we understand that this statement reflects an initial negotiating position rather than an unchangeable position, and therefore over-scrutiny of the fine print may ultimately lead to misguided conclusions, this text from the European Council suggests that an adequacy agreement alone will be all that is on offer to the UK regarding data flows in the upcoming negotiations.
111.We strongly support the UK Government’s desire to seek ‘more than just an adequacy agreement’ under Article 45 of the General Data Protection Regulation with the EU so as to secure lawful data flow, including of personal data for health research, between the EU and the UK. We look forward to seeing further detail of the arrangements which the Government is seeking to achieve. We note the Council’s preparedness to reconsider its offer should the UK position evolve.136 We urge the Government to be ready to be flexible, should detailed proposals of arrangements for lawful data flow require such flexibility. The Government should clarify whether it will look to secure these arrangements with the EU from UK ‘Exit Day’ or at the end of any transitional period.
Research and collaboration networks
112.We heard that scientific research in the life science sector is international and intrinsically collaborative.137 Easy movement of researchers, innovators and specialist technicians has given the UK a competitive advantage over non-EEA nations, by opening up access to skills and international networks.138 International movement is a feature of researchers’ careers–72% of UK-based researchers spent time at non-UK institutions between 1996 and 2012. 27.7% of academic staff at universities are from outside the UK–31,600 from other EU nations and 23,000 non-EU internationals.139 We were told that across the life science sector, NHS healthcare scientists lead on a variety of European Commission funded research grants, with research and development projects often benefitting from multicentre collaborations from a larger pool of viable participants and specialist researchers than exists at national level. The Royal Pharmaceutical Society elaborated on this in their written evidence submission, stating:
Over recent years the rapidly increasing cost and complexity of research has meant that collaboration with colleagues both within and beyond the EU has become more important.140
113.Sir Hugh Taylor of the Brexit Health Alliance noted in oral evidence that UK access to EU funding programmes has greater than purely financial benefits:
We are a net beneficiary at the moment from the European funding on research. There is the potential for the Government to match EU funding. But it is not just a question of funding, but of using that funding to access trials and collaboration networks.141
114.UK access to EU research funding means that a number of UK medical research charities are listed as participants across Horizon 2020 and Innovative Medicines Initiative projects.142 Horizon 2020, for example, provides an established platform for collaborating with European partners for six of the UK’s top ten research partners, allowing access to a multi-national financial resource that promotes collaboration and the sharing of expertise, which ultimately improves clinical outcomes. We heard that a loss of UK partners in EU backed research projects would affect the expertise available in these projects, and therefore the clinical outcomes both in the UK and the EU.143 Conversely, even if the UK matches science funding from current EU sources, UK science is likely to lose out by having many collaborations made significantly more complex.144
115.Research carried out in isolation would potentially limit the UK’s ability to translate research into products in the market due to the financial and logistical requirements, and, as the UK currently has the largest pipeline of therapeutic treatments in Europe, while 25% of the world’s top prescription medicines were discovered in the UK, the risk this could pose to the UK life sciences would be considerable.145
116.The UK should continue to be a member of EU research and development funding and research mechanisms such as Horizon 2020 and the Innovative Medicines Initiative after leaving the EU, if possible on the same terms as they currently enjoy. If the same relationship is not possible, we still advocate membership of these funding and research systems in order for UK R&D to enjoy the collaborative opportunities they provide.
Free movement of researchers
117.We also heard evidence that the ability of the UK to continue to attract researchers from the EU and around the world would be integral to the future of R&D in the UK. John Maingay of the British Heart Foundation told us in oral evidence that the key to minimising the potential negative effects of Brexit on UK R&D would be to develop:
… a simpler and fairer immigration system post Brexit that will apply to all these researchers across the world that helps us retain and attract the highest-quality researchers. It really does come down to what sort of immigration system is going to apply to future researchers wherever they are from.146
118.In response to this, we welcome the statements from the Government that the (Withdrawal) agreement should also facilitate bilateral and multilateral research relationships, which will be important for maintaining strong links with individual Member States once the UK has left the EU. In particular, the UK and the EU must ensure that their research communities can continue to access the high-level skills that support innovation in science and technology. The Government has made clear that, although freedom of movement will cease to apply in the UK, the UK will continue to welcome the brightest and best.147
119.We welcome the Government’s statements of their desire to have a future immigration policy that recognises the value that life science researchers bring to the UK, but would like to see further details about what this policy would look like. The failure to achieve an immigration policy post-Brexit that helps the UK to retain and attract the highest-quality researchers could have a significant adverse impact on UK research and development.
Research and development funding
120.In 2015, the UK contributed approximately 20% of pharmaceutical industry R&D spending in the EU.148 In response, clinical medicine has received more funding from EU government bodies than any other discipline in the UK, with universities alone receiving around £120m a year (in 2014/15).149 The Government has pledged to underwrite the funding for all successful bids made by UK participants for Horizon 2020 projects that are submitted before the UK’s EU exit, even when specific projects have a timeline that extends beyond March 29th 2019.150 However, we received evidence that such short-term funding options do not adequately provide for the UK’s life science industry post-Brexit. For example, in written evidence to this inquiry, Quintiles IMS stated:
There needs to be long term commitment to ensuring that medical research is adequately funded and the UK can keep its status as a world leader.151
121.We welcome the Secretary of State’s comment in oral evidence that “We may well choose to continue to be part of European research programmes” in the longer term,152 which would allow the UK to secure at least some level of continued EU research funding. However, we heard the clear message from other evidence during our inquiry that while non-EEA countries such as Australia already participate in EU funding mechanisms such as Horizon 2020, the funding that is afforded to them is generally less than that which is offered to EEA nations, and makes up a fraction of the total that the UK currently receives.153 We heard that only 7% of research money allocated by the European Research Council in the past decade has gone to non-member states.154 While the UK could pay into the EU science budget and apply for funds (similar to Israel and Switzerland), the ‘Juste Retour’ principle traditionally means that the funding received from EU programmes by participants from a country is roughly equivalent to the amount of funding that country contributes to that programme as a whole.155 The American Pharmaceutical group argued that to ensure the same degree of participation as now in future research programmes, the Government should commit to contributing funding at least equivalent to the amount currently received by UK participants in EU funding systems such as Horizon 2020, and that this should be part of a long-term approach that is also maintained in successive research partnerships.156
122.The UK should also look to continue participation in the European Investment Bank (EIB) and access to the European Investment Fund (EIF), including shareholding, financial contributions and, as a result, a seat on the Board. We heard that between 2012 and 2016 alone, 11% of EIB investments in the UK were allocated to education and health initiatives, including health system infrastructure and SME support, many of which are responsible for innovation in the sector.157
123.However, the text of the EU draft negotiating position which was published on 7th March states:
… regarding certain Union programmes, e.g. in the fields of research and innovation … any participation of the UK should be subject to the relevant conditions for the participation of third countries to be established in the corresponding programmes in the next Multiannual Financial Framework.158
That text suggests that participation on the same terms as currently enjoyed may not be achievable.
124.To ensure the same level of participation in future EU research programmes as the UK has currently, the Government should confirm that it is willing to contribute funding at least equivalent to the amount currently received by UK participants in EU funding systems such as Horizon 2020. Failure to do this would undermine the Juste Retour principle that has traditionally applied in EU research networks, and may jeopardise future UK involvement. However, we note that the text of the draft negotiating position from the EU suggests that participation on the same terms may be unworkable, and therefore urge the Government to publish contingency planning on how they intend to make up the resulting funding shortfall.
Access to EU pharmacovigilance systems
125.Having gone through the research and development process, the next stage in the pharmaceutical life cycle involves safety testing. Pharmacovigilance efforts in the EU are coordinated by the EMA and are conducted in each member state by the National Competent Authority or Authorities (NCAs) for that state. The MHRA is the NCA for the UK, and conducts safety monitoring of medicines on a UK-wide basis. This includes undertaking inspections of UK-based marketing authorisation holders to ensure that they have an effective system for monitoring medicines, maintain documentation, and have sufficient staff to undertake this work. The MHRA assesses more drug applications for the EMA than any other NCA, and the UK is home to several important databases used in pharmacovigilance which are owned by the EMA.159 The Drug Safety Research Unit is amongst a number of UK academic and research centres which belong to the European-wide network in pharmacovigilance: the European Network of Centres of Pharmacovigilance and Pharmacoepidemiology (ENCePP). In addition, currently, the EMA runs the Pharmacovigilance Risk Assessment Committee (PRAC), which is the committee responsible for monitoring safety issues for medicines, and undertaking assessments. PRAC has been chaired since its inception in 2012 by June Raine of the MHRA.
126.We heard that after Brexit, the UK will no longer be represented on PRAC.160 Although representatives may attend PRAC meetings as non-voting observers as Norway and Iceland currently do, we are concerned that this would effectively represent a loss in UK influence, as the UK would become a ‘taker’ rather than a ‘maker’ of pharmacovigilance decisions. We heard that the UK has, until now, been a world leader in pharmacovigilance for a number of reasons, including the concentration of highly skilled scientific staff, the availability of the NHS as a data source and the location of the EMA in London.161 The NHS is highly sought after by international pharmaceutical companies which need to monitor the safety and utilisation of their medicines.162 Several key databases used in pharmacovigilance are based on the NHS’s medical records. Many GP surgeries and hospitals are involved in pharmacovigilance studies, bringing in welcome income to the NHS.163
127.We heard that after Brexit, pharmacovigilance which is conducted in the UK may not be accepted in the EU, meaning that it will need to be duplicated elsewhere in Europe.164 The UK EU Life Sciences Steering Committee notes:
Patient safety may be compromised. No longer having UK involvement in the European Database of Medical Devices (EUDAMED) and integrated EU vigilance processes will impact the quality and coverage of the systems used to detect side-effects and manage safety issues. In addition, losing access to the European Centre for Disease Control could impede the UK’s ability to manage pandemics and delay vaccine supply.165
128.Similarly, RB Reckitt Benckiser argued that:
It is not possible to move to any new arrangements immediately post-29 March 2019. For example, if the UK was to withdraw from the EudraVigilance pharmacovigilance system, there is not time to build a UK-based system by March 2019, nor would a UK system provide the same level of public safety as it would cover a much smaller population.166
129.We heard that a possible solution to concerns over public health relating to the UK’s withdrawal from the EU could involve a UK agreement where it maintains membership in some capacity of the major pharmacovigilance systems and organisations. The Association of British Healthcare Industries’ written evidence said:
We strongly encourage the UK Government to consider mutual recognition agreements in relation to manufacture and distribution of pharmacovigilance services. If the UK was to withdraw from the Eudravigilance pharmacovigilance system, there is no time to build a UK-based system by March 2019, nor would a UK system provide the same level of public safety as it would cover a much smaller population. The MHRA is playing an active and equal partner role on PRAC, and to ensure patient safety, the MHRA should at least have a guaranteed observer status in such committee.167
130.We also heard that limitations on the use of UK pharmacovigilance in Europe would be significant not just for the UK, but also for public health in the EU. The MHRA has robust data collection which adds significant value to the data captured in EU pharmacovigilance databases, and in this way MHRA collaboration with the EMA helps to protect EU patients and continued UK access would be mutually beneficial. Lord O’Shaughnessy told us that:
The contribution that the MHRA makes to patient safety across the European Union … is worth emphasising, I think, that it is a quarter of the centralised marketing authorisation procedures, about 40% of the decentralised procedures and 40% of safety referrals. It goes way beyond any other member state.168
131.We recommend that the UK seek mutual recognition of pharmacovigilance studies by the Medicines and Healthcare products Regulatory Agency and the EMA as a priority in the next round of negotiations. In addition, the UK should seek to ensure that all UK pharmacovigilance organisations continue to be members of the European Network of Centres for Pharmacoepidemiology and Pharmacovigilance, as the failure to do so could affect patient safety both in the UK and the EU. The UK must also maintain membership of all of the major EU pharmacovigilance systems and databases, including the European Databank on Medical Devices (EUDAMED) and Eudravigilance.
132.The UK should also look to retain full membership of the Pharmacovigilance Risk Assessment Committee (PRAC), and if this is not possible should endeavour to be present in PRAC meetings as an observer as an absolute minimum.
133.Evidence presented to us made the point that failure to gain access to EU pharmacovigilance systems would have serious consequences for UK medicine and drug safety. It would not be possible, let alone desirable, to draw up a UK standalone system by the time the UK exits the UK. Contingency planning in this area would highlight the risks of failure to access EU pharmacovigilance systems and needs to prompt urgent action.
Trade, customs and supply chains
134.Having undergone safety monitoring and clinical testing and having been approved for use in the UK, the final stage in the life science journey involves the supply of the product to patients, either via the NHS or pharmacies. NHS care is dependent on a network of highly integrated, complex and time sensitive supply chains for the delivery of medicines, medical devices and substances of human origin. Martin Sawer, Managing Director of the Healthcare Distribution Association, expressed how:
… quite rightly, we take the supply chain for granted. A doctor writes a prescription; the patient might go into a pharmacy in the morning and the pharmacy says, “Come back in the afternoon and the medicine will be there.” We are invisible, and we should be, but I think it is important to recognise that that supply chain is there and operating all the time. A jolt to it like this could throw a lot of cogs out of a very complicated machine.169
Supply chains
135.During their life-cycle, medicines, medical products and technologies cross multiple countries for material sourcing, manufacturing, packaging, sterilisation and other processes.170 UK and EU supply chains for medicines and medical technologies are highly integrated, for both finished products and components. Pharmaceutical sector supply chains across the EU involve the exchange of medicines, active pharmaceutical ingredients, clinical materials–including the trade and exchange of samples–and raw materials. The delivery of NHS care also depends on the seamless flow of time-sensitive products, such as medical radioisotopes. Teva UK, a global pharmaceutical company, told us how it is reliant on its ability to move products smoothly across borders:
[Teva UK] …imports from 17 different countries within the EU, representing a value of approximately €69m and requiring around 1,765 customs entries. Regarding exports from the UK, we are responsible for around 1,063 shipments of finished products worldwide, of which 525 go to EU countries. In value, this represents approximately €337m (around 45 million within the EU). We favour a future regulatory system as close as possible to current arrangements, with additional administrative procedures avoided.171
136.Bector Dickson, the largest supplier of needles and tubes for blood collection in the NHS, manufacturers its products in Plymouth before they are transported to Belgium for product checking and distributed back to the UK.172 Businesses are understandably concerned about that potential introduction tariff and non-tariff will add costs into these supply chains. Tariffs would in effect add costs several times, since goods may touch several jurisdictions before they reach their destined market.173 Warwick Smith from the British Generic Manufacturers Association explained that within the generic industry:
Once a medicine comes off patent, a dozen or 20 companies will pick it up, so there are many more generic licences out there than there are originator licences, if I can put it that way. The risk there is that, as costs go up, some companies will relinquish their licences and their marketing authorisations, so there could be fewer manufacturers in the marketplace, and that, at the moment, keeps the market, in normal times, pretty resilient. The more manufacturers there are of the same molecule, the more options we have if there are supply difficulties. That is a key objective for the generic industry in keeping that competitive multi-source market going.174
137.However, the Brexit Health Alliance raised concern about the more immediate impact on patient care, saying:
… if post-Brexit trading agreements make it harder to move things around, then supply could be affected. If containers cannot move freely across borders, there is a possibility that supplies for patients could be affected. These factors could make the UK an unattractive market for producers and when supplies become low, the UK would not be a priority, meaning patient access to innovation is impeded.175
138.The Department of Health and Social Care confirmed that there is ongoing work to prepare for scenarios including the future relationship Government hopes to negotiate with the EU through to the “very unlikely scenario in which no mutually satisfactory agreement can be reached and the UK exits without a deal.”176 The Department informed us this includes an ongoing programme to monitor and manage the supply of medicines, medical devices and other ‘clinical consumables’ used by the NHS. The Department of Health and Social Care has involved suppliers and experts from across the sector to identify and mitigate risks. Lord O’Shaughnessy told us he was not able to share details of the Government’s contingency plans in order “to make sure that we do not prejudice negotiations and make sure that we are in lockstep with the rest of Government.”177 In his oral evidence to us on 23 January 2018, Lord O’Shaughnessy stated that the Government had commissioned Ernst and Young to conduct an external analysis of the supply chain, in which they will be speaking to companies to gather their insights and concerns. He was unable to tell us whether this work was underway or whether it was about to start, but suggested that, even though the publication would be restricted, the Committee could see a summary.178
Box 3: Case study: Imports of plasma
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The European Scrutiny Committee’s 2016 report into the Blood and Human Tissues Directive from the EU in 2016 pointed out that the UK’s CJD mitigation strategy depends on the ability to import plasma, which in cases of emergency can be required in short time frames. Creutzfeldt-Jakob disease (CJD) is one of a group of diseases called Transmissible Spongiform Encephalopathies (TSE) or prion diseases, which have long incubation periods and cause severe and irreversible damage to the central nervous system resulting in death. UK cases of Variant Creutzfeldt-Jakob disease (vCJD), a form of CJD which predominately affects younger people, are mainly believed to have resulted from the consumption of BSE contaminated meat products. We heard that the UK currently cannot use domestically sourced plasma for its health needs because of variant CJD,179 meaning some plasma used in the UK is brought from the US, and the NHS Blood and Transplant Authority also relies on arrangements with Austria for its supply.180 Following Brexit, Austrian suppliers would not be able to export to the UK unless it could be shown that the users of plasma here abided by certain conditions. As the Blood and Transplant Authority does currently comply with relevant directives, this should be possible with some relevant paperwork and planning–but if Brexit saw a collapse in talks, there would be the risk of the UK experiencing a lack of plasma. At the European level, numerous initiatives related to the blood and plasma sectors have been undertaken since 1989. Directives on standards were developed with regard to quality and safety for the collection, testing, processing, storage and distribution of human blood and blood components, including traceability requirements and notification of serious adverse reactions and events were also addressed. Plasma derivatives follow mainly pharmaceutical regulations. Nevertheless, as blood components are used to produce plasma derivatives as starting material, the requirements on collection and testing and the relevant implementing Directives apply. In addition, guidance is provided for the interpretation of the principles and guidelines of Good Manufacturing Practice (GMP) 9, for the requirements on the scientific data for a Plasma Master File (PMF)10 and on Epidemiological Data on Blood Transmissible Infections. The UK’s arrangements for the safe supply of plasma are thus crucially reliant on European-wide arrangements such as GMP and GDP, and regulations. Following Brexit, major efforts will need to be undertaken, starting with a comprehensive understanding of a number of challenges that stakeholders and the MHRA as the UK national competent authority are facing today, to comply with requirements on safety and availability of plasma and blood products.181 |
Box 4: Dialysis tubing
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Dialysis is a procedure to remove waste products and excess fluid from the blood when the kidneys stop working properly, and often involves diverting blood to a machine to be cleaned. We heard in evidence that no dialysis equipment for treatment is manufactured in the UK. Instead, they are imported from EU, with many manufactured in plants based on the continent. It was pointed out to us that currently, these material travel without financial or logistical restrictions, and that any change to these arrangements after Brexit would immediately be of great concern to industry, the NHS and patients.182 In 2011 an earthquake which struck Northern Italy lead to a disruption in the supply of dialysis tubing to the UK after the factories which made the tubing were badly damaged. The two factories, which were based in northern Italy, were both damaged by the Emilia Romagna earthquake in May 2011 leading to a disruption in production. Only limited numbers of the tubes remained useable after the earthquake, and as they could not be re-used, the US-based company in charge of manufacturing the product rationed supplies to prevent panic buying until it could dispatch fresh products after October of the same year. The shortages affected any hospital which used the Baxter dialysis machines, with no other companies producing compatible tubes which can only be used for 72 hours at a time. An inventory of stock, coordinated by the Department of Health, showed some hospitals feared their supplies would run out well before new supplies were received, and the situation was managed through a combination of extensive stock management and contingency planning. This example demonstrated the fragility of the UK’s supply of dialysis tubing, and underscores the necessity of the UK ensuring that, following Brexit, there are robust arrangements and stockpiling of such products to ensure a reliable supply.183 |
Stockpiling and time-sensitive supply chains
139.After Brexit, due to potential risks to the supply chain the need to ensure sufficient stock is on the UK market could mean stockpiling of those products that allow for it. Manufacturers may not supply certain products to the UK until only a few weeks before they are needed.184 Distributors of medicines in the UK usually keep 10 days’ worth of stock, but many manufacturers stock medicines for up to four months’ in huge pre-wholesaler warehouses.185 Leslie Galloway from the Ethical Medicines Industry Group described how:
… one concern that companies will have is how much stock is transported which way, how much you have on the market, because a medicine usually has a two-year shelf life. A wholesaler will not take it into stock unless it has a minimum of six months. Even if you reach the six months, you’ve got problems. This issue of holding more stock because of the shelf life and so on will be an issue. Transporting across, it is going to be making more sense for companies to manufacture in mainland Europe and export to a smaller country—essentially, the UK—than manufacture in the UK and export to the EU. 186
140.Hugo Fry from Sanofi, a large pharmaceutical company, described how life science businesses compete for warehouse space because they may need to stockpile medicines. He explained how some medicines and medical products are difficult to stockpile, for instance:
… certain complex biologicals, where we are already too late because they have lead times, or certain vaccines have massive lead times. Again, we are right at the edge of the window of opportunity for thinking about stockpiling.187
141.Judging how much to have on the market at any one time is a difficult decision and distributors will often import products quickly when UK provisions are in short supply. We heard that for time-sensitive supply chains, delays in supply could have knock-on effects for patient care and the cost of NHS care. The most newsworthy example, which has attracted attention over recent months, is the supply of medical radioisotopes (see box 5).
142.The Government has recognised customs as a significant problem on a disorderly, no-deal Brexit. According to the Institute for Government:
On the day of exit from the EU, the UK authorities will need to perform new functions or face disruption at the border. There will be new document checks and fiscal requirements, which is the primary focus of the Government’s view of customs, but also a number of other key activities that regulate goods crossing borders.188
Medical radioisotopes and Euratom
143.The supply of medical radioisotopes is an example of a time-sensitive supply chain. Radioisotopes are used in around 700,000 diagnostic or therapeutic procedures each year in the UK.189 These materials help diagnose coronary heart disease, detect the spread of cancer to bones and treat thyroid cancer. If the supply of medical radioisotopes is affected by problems with supply arising from Brexit Day, a significant proportion of patients may not have rapid access to, amongst other things, diagnostic imaging to inform them of developments in their cancer.190 We also heard that for treatment radioisotopes from unsealed sources-medical radioisotopes that are ingested or injected-a lack of an assured supply would mean a reduction in the rate of cure in the UK, meaning more people will die of conditions such as thyroid cancers.191
144.Technetium-99m (99mTc), the most commonly used radioisotope accounting for over 80% of diagnostic nuclear medicine procedures, is not produced in the UK.192 Technetium-99m decays rapidly and therefore it is not possible to stock. In 2009, medical operations and procedures in the UK were delayed or cancelled due to a global shortage of Technetium-99m, brought on by the temporary closure of two reactors, and some have speculated that similar outcomes could be expected after Brexit. Obtaining supplies from outside the EU is a possibility, but the rapid decay of these isotopes means less of the isotope will be left by the time it reaches its destination.193
145.Lord O’Shaughnessy told us that the UK will be leaving Euratom as it withdraws from the European Union because the legal arrangements of the two are so intertwined.194 There has been debate about to what extent leaving Euratom will impact the supply of medical radioisotopes. The Government’s stated position is that leaving the Euratom treaty will not prevent trade in medical radioisotopes with the EU, meaning it is not an issue about whether the UK can trade with Europe, but rather on what terms this trading will take place.195 The UK Government’s desire is to have as free and frictionless trade with the European Union as possible through a free trade agreement. So far as radioisotopes are concerned, this agreement will need to include customs arrangements that can process these materials very quickly.196 Lord O’Shaughnessy, recognising concerns about the half-lives of medical radioisotopes, explained that, currently, 96% of imports outside the EU were cleared by HMRC within seconds, and there is a two-hour clearance commitment for urgent goods.197 Customs arrangements are already in place for goods outside the EU, and these arrangements would need to apply for goods coming from the EU if the UK does not secure a free trade agreement.198 He also made the point that the Department of Health and Social Care has had discussions with many of the relevant UK bodies, including the British Nuclear Medicine Society, the Royal College of Radiologists, and the Society and College of Radiographers, to reassure them that some of the popular perceptions about what the Euratom treaty means for medical radioisotopes may not be accurate: that trade is possible and that we do have customs arrangements that are capable of dealing with it.199
146.Nevertheless, concerns continue to be raised on Euratom. The Government’s Nuclear Safeguards Bill is intended to establish a UK nuclear safeguards regime after leaving Euratom and delegates responsibility for this to the Office for Nuclear Regulation.200 While the bill addresses certain functions of Euratom–such as ensuring that “civil nuclear material is not diverted from their intended use”–it does not address other functions such as access to expertise and capital to develop and operate nuclear technology. The Nuclear Safeguards Bill does not specify how the UK will guarantee a supply of nuclear material for energy production and medical use.201
147.The Business, Energy and Industrial Strategy Committee has warned that the impacts of leaving Euratom will be “profound”,202 putting the UK in a much weaker position to drive regulatory standards at a European level.203 They argue the Government should retain as close as possible a relationship with Euratom, and that this should include accepting its delivery of existing safeguards requirements in the UK.204 Throughout their inquiry, “no-one”205 advocated the UK leaving Euratom, but they noted that the UK is now facing the prospect of setting-up its own nuclear safeguarding regime, a regime which will fall short of the Euratom standards.206 This requires the UK to set up its own bureaucracy, which comes at a cost of millions, with very real doubts that it will be ready in time. The committee said it was “highly doubtful” that the UK could deliver safeguards to Euratom standards by the date of the UK’s departure from the EU in March 2019.207
Supply chains: conclusions
148.We are encouraged that both sides of the negotiations are now discussing the terms of a transition period. However, we reiterate the point we made in our letter to the Secretary of State, that if the announcement, and details, of a transition period are delayed beyond March 2018, more businesses will be forced to invest money in contingency plans at the expense of this funding going towards advancing patient care.208 This is an unnecessary cost and distraction, which should be avoided. We continue to believe that far from undermining the Government’s negotiating position, clarity about contingency planning to guarantee patient safety and continued health supplies will strengthen the UK’s hand, demonstrating we have a credible fall-back position.
149.We note and support the conclusions of the Business, Energy and Industrial Strategy Committee, and we call on the Government to keep under review its position on leaving Euratom when the UK exits the European Union. We recognise the significant difficulties which arise from the fact that the legal arrangements of the European Union and Euratom are significantly intertwined, but consider that concerted efforts need to be made to overcome them. We heard evidence that the UK’s continued membership of Euratom would be beneficial to both the UK and the European Union. If the Government is unable to ensure continued membership, we strongly believe that the Government should retain as close as possible a relationship with Euratom, and that this should include accepting its delivery of existing safeguards requirements in the UK.
150.We call on the Government to publish a summary of the external analysis of supply chain issues and to set out their contingency planning to ensure the safe supply of medicines, medical devices and substances of human origin after the UK leaves the EU.
World Trade Organisation (WTO) rules
151.As part of the single market and the customs union the UK benefits from frictionless, tariff-free trade with other Member States in medicines, medical devices and substances of human origin.209 The UK’s withdrawal presents two important issues here. The first is the extent to which the UK’s exit from the European Union affects the status of the terms of trade the UK currently enjoys with other WTO members. The second is that current WTO rules do not cover trade of certain products and need to be updated.
152.Much of global trade in pharmaceuticals happens on a zero-tariff basis. A zero-tariff rule for the trade of pharmaceutical products, including active ingredients, has been in place since the Uruguay Round of the WTO Pharmaceutical Agreement in 1994.210 The UK is a member of the WTO in its own right, but currently the terms of trade between the UK and the rest of the world are set by the EU. After 29 March 2019, the UK may need to re-establish its independent schedules at the WTO, which will determine the UK’s terms of trade.211 It is uncertain whether the UK’s actions will be viewed by other signatory countries as a modification rather than a rectification of the EU’s schedules. This decision could impact whether the UK trade in pharmaceuticals, once outside the EU, on a zero-tariff basis.
153.The WTO Pharmaceutical Tariff Elimination Agreement, which facilitates zero-tariff trade between WTO members, was last updated in 2010. This agreement does not cover all finished products or component products. Written evidence from the Association of the British Pharmaceutical Industry (ABPI) and BioIndustry Association (BIA) identified a significant number of products and component products awaiting introduction onto this list. The ABPI and the BIA argue that if UK-EU trade relies on WTO arrangements: “it will be critical that the agreement reflects all completed and component pharmaceutical products”.212
Parallel trade
154.Parallel trade is a process whereby right holders under the ‘exhaustion of intellectual property rights’ cannot prevent the free movement of medicines across the EEA once a product is in circulation within the area.213 As governments in many cases agree prices for medicines with manufacturers, supplies of some medicines are cheaper elsewhere in the EEA. Parallel distributors buy medicines in other EU Member States then transport, repackage and sell these products below the standard local price. The existence of parallel trade benefits the UK by enabling local pharmacies to buy medicines from elsewhere in the EEA for a cheaper price.214 According to the British Association of European Pharmaceutical Distributors (BAEPD), without the option of parallel trade, the financial viability of local pharmacies is at risk. Parallel Trade also provides an element of price competition for branded medicines, which supports the NHS to negotiate cheaper prices.215
155.Parallel trade is estimated to have saved the NHS €986.2million between 2004 and 2009.216 The Department of Health and the Treasury deduct a percentage of the assumed margin from parallel trade from payments to pharmacies. These deductions currently amount to £100m per year.217 Calculating the extent of indirect savings through the existence of parallel trade is difficult. However, the University of York in 2003 estimated that list prices for drugs are at least 3% less than they would have been without parallel trade.218 Some medicines are currently only available in the UK through parallel trade and shifting the manufacture of these products to the UK could take time, meaning that the future supply could be affected by Brexit.219
156.We support the Government’s intention to negotiate continued free and frictionless trade with the EU. To prepare for the scenario in which continued free and frictionless trade is not possible, we recommend the Government clarify in its response whether the UK can participate in the WTO Pharmaceutical Tariff Elimination Agreement in its own right. The Government should also seek clarity on when the WTO Pharmaceutical Tariff Elimination Agreement will be updated. If the agreement is not updated before the UK leaves, we recommend the Government estimate the cost of tariff barriers to trade for the products affected. We also recommend the Government seek to agree as part of the future EU-UK trade agreement arrangements to maintain parallel trade in medicines with Member States.
157.In the meantime, we recommend the Government consider in its contingency planning those medicines used in the NHS that are only available through parallel trade. The Government should also assess the impact of loss of parallel trade to the UK, including the NHS, and should make that analysis available to us.
158.Ultimately, we heard that the effects of Brexit, and of different Brexit models, will be keenly felt across every stage in the life sciences, from early stage research and development, through safety testing and clinical trials, to supply of the product and timely patient access. We heard consistent and repeated evidence during our inquiry that to minimise the risks to all stages of the life sciences sector from Brexit, it is in the interests of patients in both the UK and EU-27 for the closest possible regulatory alignment to continue alongside associate membership of the EMA.
159.The Government should publish contingency planning for the possibility that the UK may exit the EU without a deal. In the technical areas around the safety monitoring and regulation of pharmaceutical products with complex supply chains, public scrutiny of any contingency planning will help to ensure all relevant aspects are covered.
107 Q127 [Aisling Burnand]
108 Parliamentary Office of Science and Technology, Regulating Clinical Trials, October 2017
109 Parliamentary Office of Science and Technology, Regulating Clinical Trials, October 2017
111 Q229 [Emma Greenwood]
112 Quintiles IMS (BRX0018) p.3, Wellcome Trust (BRX0073) p.2 [and others]
113 Q261
120 Q115
122 Q127
125 Q220
126 Q358
127 Q359
137 Brexit Health Alliance (BRX0031) para 8.1
138 Brexit Health Alliance (BRX0031) para 8.1
139 Brexit Health Alliance (BRX0031) para 8.1
141 Q222
143 Brexit Health Alliance (BRX0031) para 8.6
145 British Medical Association (BRX0036) para 5.2
146 Q245
147 Brexit and health and social care - people & process, Health Committee, HC640, Para 62, Government response to the House of Commons Health Committee report Brexit and health and social care – people & process December 2017, Cm9469 p.9
148 “The Pharmaceutical Industry in Figures”, 2016, European Federation of Pharmaceutical Industries and Associations
151 Quintiles IMS (BRX0018) para 19
152 Q404
165 ABPI. Maintaining and growing the UK’s world leading life sciences sector in the context of leaving the EU. UK EU Life Sciences Transition Programme report, for the UK EU Life Sciences Steering Committee.
168 Q385
169 Q61 [Martin Sawyer]
170 ABHI (BRX0059) p.2
172 ABHI (BRX0059) p.2
173 ABHI (BRX0059) p.2
174 Q317
175 Brexit Health Alliance (BRX0031) para 2.4
177 Q344
178 Q344
179 Q64 [Liz Carrol]
181 An EU-wide overview of the market of blood, blood components and plasma derivatives focusing on their availability for patients, accessed 8th March
182 Q107
183 ‘Shortage of dialysis tubes’ after earthquake hits factories, The Telegraph, accessed 9th March
184 Q9
185 Q9
186 Q177
187 Q303
188 Implementing Brexit: Customs, Institute for Government, accessed 8th March 2018
189 Parliamentary Office of Science and Technology, POSTNOTE: Supply of Medical Radioisotopes, Number 558 July 2017
190 Q4
191 Q4
192 Parliamentary Office of Science and Technology, POSTNOTE: Supply of Medical Radioisotopes, Number 558 July 2017
193 Parliamentary Office of Science and Technology, POSTNOTE: Supply of Medical Radioisotopes, Number 558 July 2017
194 Q347
195 Q347
196 Q347
197 Q347
198 Q347
199 Q348
208 Q285, Johnson Johnson (BRX0063) p.8
212 The Association of the British Pharmaceutical Industry and the BioIndustry Association (BRX0022) p.5
215 Q5
Published: 21 March 2018