Sector News

A state of confusion

April 23, 2019
Life sciences

The prospect of Brexit-related drugs shortages is looming, although a snarl-up may yet be avoided.

The government’s efforts to prepare for Brexit-related trade blockages have not been going well. First it was forced to pull a crucial contract it had granted to a ferry company with no ferries. Then it had to give Eurotunnel £33 million in compensation for not allowing it to bid for that contract. And now it is being taken to court over the plans it has put in place to mitigate drug shortages.

Those plans, which were approved in February 2019, permit pharmacies to provide alternative medicines to patients if the one prescribed is not available. Dubbed the ‘Serious Shortage Protocol’, the legislation offers pharmacies four ways of dealing with such a shortage: dispensing a reduced quantity, a therapeutic equivalent, a generic equivalent or an alternative dosage form of the drug.

Soon after the protocol was approved, however, the Good Law Project (which is, among other things, campaigning against Brexit) issued a lawsuit against the government. Its lawyers argue that, in some cases, these alternative treatments could end up harming patients, contravening the government’s obligation to provide suitable care. The association claims to have the backing of several patient groups and charities.

The government, on the other hand, is also under an obligation to combat what many pharmacies say is a worsening shortage of medicines – and prepare contingency plans in case Brexit makes things worse. Ever since the UK voted in favour of exiting the EU in June 2016, pharmaceutical companies and healthcare providers have been warning that it could have an impact on the free flow of pharmaceuticals to and from the continent. The risk is particularly high if the UK quits with no transition deal on March 29.

Border delays

That is not what The Economist Intelligence Unit expects to happen. Our core forecast is that the prime minister will reluctantly agree to delay the UK’s exit from the EU beyond the end of March. Given the tensions in parliament, we then think that the UK will probably be forced to hold a second referendum to determine what type of Brexit (if any) the public actually wants. Even so, the chances of a no-deal Brexit are rising amid the current confusion, regardless of whether that happens at the end of March or later.

If the UK leaves the single market without trade terms in place, then border delays seem inevitable, at least in the short term. While nearly all trade will be affected, for pharmaceuticals such delays could be life-threatening. Although pharmaceuticals will not be subject to tariffs even under World Trade Organisation rules, they will lack the paperwork needed to be shipped and sold. The UK has said it will continue to recognise EU medicine approvals even after a no-deal Brexit, but the EU has made no such promise in return. As some in the industry have pointed out, this will not only affect UK shipments, but also some shipments to the Republic of Ireland.

Indeed, EU negotiators have specifically said that, without a deal, UK approval of pharmaceutical products will no longer be valid within the EU. So those companies that obtained approval from the MHRA for their products will have to transfer their marketing authorisation from the UK to an EU-based regulator as quickly as possible, paying a fee to do so. Eventually the MHRA will also demand the same in return for medicines that were approved in the EU but are intended for sale in the UK. To make matters worse, media reports suggest that the EMA is not willing to do a data swap to ease the process, so all information will have to be refiled.

Many pharmaceutical companies have, of course, prepared for this and have already transferred their authorisations. They have also put other contingency plans in place, by rerouting supply chains and stockpiling some products. Some distributors, pharmacies and even patients also appear to be doing some ad hoc stockpiling. But with so much uncertainty over what regulations would be in place – or not – it has been difficult for anyone to prepare fully. Moreover, no part of the industry has full control over the supply chain, which relies on a lot of moving parts working together.

Not just Brexit

After all, drug shortages are not just a Brexit phenomenon. The European Association of Hospital Pharmacists has been campaigning on the issue since 2012. Its latest survey, in 2018, found that 73% of pharmacies across 38 European countries ran short of some medicines on a daily or weekly basis. The most common shortages were for antimicrobials, but they also affect some cancer medicines and vaccines. Globally, vaccine shortages have been steadily worsening for a decade or more thanks to comprehensive vaccination programmes and a growing global population.

A series of reports by The Economist Intelligence Unit in 2017/18 pinpointed the complex reasons behind these shortages. In some cases the causes were economic: the end-prices of the treatments were too low, or the cost of raw materials too high, making it unprofitable for enough manufacturers to produce them. In some cases, shortages were caused by issues with manufacturing, such as safety shutdowns or accidents, or logistics problems and delivery delays. Sometimes, regulators made matters worse, by changing regulations or delaying crucial approvals.

The UK itself suffered drug shortages well before Brexit, although they do appear to be worsening. One measure widely used in the industry is the number of times that the Pharmaceutical Services Negotiating Committee (PSNC) has to temporarily hike prices in order to procure certain medicines that are in short supply. This problem peaked in November 2017, when 91 drugs were on its short-supply list. The number drifted downwards during 2018, but then rose again to 80 last December.

Then, in February 2019, a survey of 598 doctors by GP Online found that most were already reporting widespread drug shortages. The main culprits appear to be widely used medicines such as anti-inflammatories, as well as some antidepressants. In each case it is not entirely clear what is causing the shortage, although pre-Brexit stockpiling is not likely to help.

The problem is that a no-deal Brexit is likely to bring all of these problems together, and more. Economic issues with drug supplies will increase. Most directly, the price of raw materials may well be affected by rising trade barriers and, if confidence in the pound seeps away again, a weaker exchange rate. Logistics problems and delivery delays seem inevitable. Plans to single out priority shipments seem unworkable, given the sheer volume of traffic. And regulations will be confused for several years, until agreements are ironed out.

The hope is still, of course, that even a temporary snarl-up can be avoided. Much depends on the frantic negotiations taking place in Westminster and in Brussels, as well as at the EMA’s new headquarters in Amsterdam. But, as all along with Brexit, the pharmaceutical industry and patients still have to be prepared for anything.

By Ana Nicholls, director, industry operations, at the Economist Intelligence Unit

Source: Pharma Times

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