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Hard Brexit could wipe out UK’s parallel trade in pharmaceuticals

Speaking at a seminar held by the Pharmaceutical Industry Network Group, solicitor Julian Maitland-Walker also warned that a hard Brexit would increase medicine prices, reduce access to some drugs and increase risk of supply chain shortages. 

Julian Maitland-Walker warned that a hard Brexit would increase medicine prices, reduce access to some drugs and increase risk of supply chain shortages

Source: Pharmaceutical Industry Network Group (PING)

Julian Maitland-Walker (left) and Pete Gough (right) warned of considerable disruption to the UK’s pharmaceutical industry in the event of a hard Brexit

A hard Brexit would eliminate the UK’s parallel pharmaceutical distribution market, according to legal counsel to the British Association of European Pharmaceutical Distributors (BAEPD).

Solicitor Julian Maitland-Walker made his prediction at ‘Brexit: What’s Next for Pharma?’ a seminar held by the Pharmaceutical Industry Network Group (PING) at Hatfield House, Hertfordshire, on 5 June 2018.

He said a Brexit resulting in the elimination of free movement of goods and development of regulatory divergence would result in increased medicines prices, reduced access to some specialist drugs and greater risk of supply chain shortages. It would also see the loss of around 3,000 jobs, he added. 

Maitland-Walker also told seminar attendees that parallel distribution is effectively a function of the single market. The size of the EU market in pharmaceutical distribution is around €5bn, and the UK accounts for 22.7% of this figure. The sector has an annual import value of around £1bn, while the annual export figure approximates £600m. In a submission to the House of Commons Health Committee in October 2017, the BAEPD said that a post-Brexit hard border, with a new customs regime, would cause delays in medicines importation and that tariffs on pharmaceuticals would “seriously impede the import of medicines into the UK”.

EU membership has a “profound effect” on pharmaceutical intellectual property (IP) rights, Maitland-Walker said. Currently, trademarked medicines manufactured in one EU country can be sold anywhere within the EEA without infringing the manufacturer’s IP — the principle of ‘exhaustion of rights’. Post-Brexit, exhaustion of rights will cease to apply to the UK, making import and export a costly business and in a worst-case scenario could “effectively kill” parallel distribution, he said.

To ensure the sector survives, Maitland-Walker told delegates that the BAEPD wants to see IP exhaustion of rights maintained between the EU and the remaining EU states, together with regulatory convergence but the UK government’s current mood does seem to be in favour of this.

Also speaking at the seminar was Pete Gough, executive director at NSF Healthcare Limited, who warned that the sector needs to plan for “considerable supply chain disruption”. 

He said pharmaceutical companies would like to continue future trading as if the UK had never left the EU, but he believes that this scenario is “unlikely” as the EU has said sector-specific deals are not an option.

Citation: The Pharmaceutical Journal DOI: 10.1211/PJ.2018.20204980

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