With the referendum vote looming, Sarah Phillips asks a group of UK payers what impact Brexit would have on businesses, the NHS and patients

On Thursday 23 June, UK citizens will cast their votes in a referendum on whether to remain in or leave the European Union. There is ambiguity in the evidence provided by both sides of the debate, and it is likely that a significant proportion of the public will make their decision based on emotion, as the consequences of exit are multifaceted. It has been discussed in PharmaTimes how an exit may be detrimental to the pharmaceutical industry, yet there have been few definitive comments from the pharmaceutical industry itself.

In January, John Lechleiter, CEO of Eli Lilly, told the Financial Times that it would be a "shame and mistake" if Britain left the EU as it "would isolate the UK, more to its detriment", although he felt it would not hurt Lilly's drug sales in the UK, saying, "from a business point of view, we can live with it".

The pharmaceutical industry has benefited from a reduction in bureaucracy through the pan-European regulation of drugs, so a possible Brexit raises questions around its impact on access and approval. To understand this further, we spoke to payers in the UK at all levels – local, regional and national – to assess how prepared they are for a Brexit scenario, and to capture their views on its potential impact.

None of the payers who participated in the research had made any preparations for a potential Brexit scenario. In fact, many had not even thought about the impact of each referendum outcome on access to drugs. However, preparation at this stage may be a waste of time; no one expects the outcome of the referendum to have any overnight impact on the regulation and supply of drugs, and it is generally agreed that any consequences will take several years to filter through.

The consensus amongst UK payers was that the most significant impact of a Brexit scenario would be on the regulation of drugs – all of the payers felt that Brexit would mean removing the UK from the authority of the EMA.

While payers were divided on the effectiveness of any alternative to the EMA, all agreed that the role of regulator would fall to the MHRA. For some, the MHRA would need to upskill, invest and develop its own processes, while others believed that the necessary regulatory skills were already present in the UK as the country already set the standard in terms of supervision and monitoring (hence the EMA being headquartered in London), and so the transition would not be too difficult. However, all agreed that the impact on the pharmaceutical industry would be negative.

"The big concern is access," said one UK payer at a local level. "Pharmaceutical companies would have to do two applications for marketing authorisation – what if the MHRA said 'yes', and the EMA 'no' – then what? Or each could license different indications; this all leads to inequity."

This leads to the question of whether a UK outside the EU would be a significant enough entity for companies to tolerate such a lack of efficiency in regulation. Payers were split on the point; around half thought that the size of the UK market, with its single customer in the NHS, would always be important enough to the pharmaceutical industry, while others feared the rest of Europe and other growing markets, such as India and China, would see the UK eclipsed. However, both sides agreed that the most significant consequence of a change to regulatory approvals would be a delay to the launch of drugs in the UK, thereby forcing patients to wait longer for innovative medicines.

Brexit could have an impact on the supply of drugs in the UK, according to payers. While the NHS is considered to be in a very strong position in terms of negotiating with pharmaceutical companies, supply and distribution could be disrupted by parallel imports caused by divergent pricing, the impact of which was a concern to all payers. On pricing, payers thought that the UK would either be more competitive or stay the same, with heavy negotiations on discounts and rebates. If the UK were successful in negotiating a favourable price, there could be consequences in terms of supply in the UK, hence negative consequences for patients.

Payers also expressed their views on the impact of Brexit on the level of pharmaceutical company investment in the UK, varying from no change – as the industry needs UK academic skills – to the wholesale withdrawal of pharmaceutical companies, their investments and headquarters to mainland Europe. Payers were more concerned about the potential loss of EU investment funds, specifically the Innovative Medicines Initiative, and wondered where this shortfall would be made up.

Predicting the outcome of the referendum, all payers thought that the UK would vote to stay in the EU – in spite of their own personal views – largely because the majority of people do not like change.

There are many unknowns around a Brexit, after all, if it were a straightforward decision without such wide-ranging implications, a referendum would not be required. Most payers thought that there would be a high turnout on 23 June and that the arguments on both sides were still in development. Whether people vote for change or not, it is likely to be a close call.

Prescient Healthcare conducted n=10 interviews with UK-based payers in April 2016 to support this article. 

Sarah Phillips is a partner at Prescient Healthcare. She can be contacted at sphillips@prescienthg.com