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UK industry would be weakened by exit from EU

Leaving the European Union would mean less political influence on medicines directives and yet the same regulatory obligations.

UK exit from EU

If the UK decides to leave the European Union, it would be detrimental to its pharmaceutical industry in the UK as it would lose any say in the legislative process, but would still be bound by European laws and policies.

A significant part of our medicines law comes from Europe. In the past three years alone, we have seen new directives on pharmacovigilance, the recognition of prescriptions, falsified medicines, professional qualifications and clinical trials. The medicines code, a directive adopted back in 2001, sets out detailed rules on everything from wholesaler licences to labelling. Many new medicines are authorised by the European Medicines Agency, based in London. Parallel import and export are made possible by EU rules and decisions of the EU Court.

Eurosceptics might think that the sheer volume of pharma-related legislation coming out of Brussels is a good reason to leave the EU. Surely, they argue, it is up to the British people to decide on licensing decisions for medicines and the rest. To take just one example, why should we recognise prescriptions coming from other EU countries if we prefer not to?

The problem is this: all this legislation is related to the development of the EU single market. You may think it goes too far (in some cases I would agree), but few doubt that the UK’s economic interests lie in integration with the world’s biggest single market, which happens to be located on our continent.

Of course, we can still be in the single market and outside the EU. Norway and Switzerland are outside the EU and show absolutely no inclination to join. However, in each directive the UK goverment and UK MEPs were involved in negotiating and approving the legislation, and used their considerable weight to defend British interests.

It is common to hear EU legislation blamed on Brussels bureaucrats. To be sure, European Commission officials are influential in developing new laws. But the ultimate power to adopt or reject measures lies with the European parliament and national governments. Yes, that means the UK has to compromise on some points, or sometimes accept things it does not like, as do all member states. But without the occasional compromise the real trade benefits of a single market would otherwise never emerge. The alternative is continual deadlock and national economic silos. Even Margaret Thatcher believed that.

Norway is not part of the EU but is part of the European Economic Area (EEA). There, pharmacists will soon have to go about the task of electronically authenticating medicines (like every country in the EU), as a consequence of the Falsified Medicines Directive. Whatever the merits and demerits of that, Norway had no say in the legislation.

But what about Switzerland? Switzerland is not part of the EEA. However, like the UK, it has a world class hi-tech manufacturing industry in pharmaceuticals. It also has a highly innovative pharmacy sector comparable to the UK in the range of services provided in pharmacies. Being outside the EU does not seem to have damaged its pharmaceutical sector — or Switzerland more generally — by any measure you care to think of, the country is hugely successful.

The EU Commission prefers relatively deregulated pharmacy models like the UK’s, where chain pharmacies and general sale list products are permitted.

But wait. Although Switzerland is not part of the EEA, over the years it has negotiated a series of bilateral treaties with the EU which, in effect, mean European internal market rules and principles apply across large areas of the economy. Like Norway, it even makes a contribution to the EU budget. And its pharmaceutical industry is a big beneficiary. It is estimated, for example, that around 45% of employees in the Swiss pharmaceutical industry are immigrants from other EU countries, a state of affairs greatly facilitated by the EU rules on free movement of workers. Its universities and research institutions — key to any flourishing life science industry — have access to EU funding and student exchange schemes, as of course do UK universities. This is only possible because Switzerland has agreed that certain EU rules should prevail in its territory — rules over which (unlike the UK) it has no influence.

Earlier this year the Swiss people voted narrowly to put a cap on EU immigration. That is, of course, their democratic right. But the estimates from the Swiss themselves suggest economic growth will be reduced and 80,000 fewer jobs created. In a country with the population of London, that is a big deal. The funding for universities and research institutions (€1.8bn) could well be cut off.

What about UK pharmacy? The EU Commission prefers relatively deregulated pharmacy models like the UK’s, where chain pharmacies and general sale list products are permitted (this is not the case in countries such as Germany or France). In the areas of remuneration, drug pricing and reimbursement, the EU has no law-making powers, so a “Brexit” should leave these areas untouched.

But who knows what might happen in the future? Maybe some new initiative will come along which does affect these areas. If so, where will the UK be? Will it be using its huge influence in Brussels (believe me, it is huge) to defend its interests and perhaps bring to bear the British virtues of pragmatism and common-sense? Or will it be sitting at home, gazing in on itself, waiting for the email from Brussels telling it what it has to do?


John Chave is secretary general of the Pharmaceutical Group of the European Union

Citation: The Pharmaceutical Journal DOI: 10.1211/PJ.2014.20065542

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