U.K. Vote to Leave EU Likely Would Damage Life Sciences Sector

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By John T. Aquino

June 17 — A U.K. vote on June 23 to leave the European Union would irretrievably change and likely damage the country's life sciences sector, attorneys and industry stakeholders said.

Many stakeholders assert that a vote to leave will delay innovation and deprive patients of life-saving therapies, while some are preparing contingency plans for creating a new system if the country votes to leave the EU, or “Brexit.”

A poll released June 16 by the U.K. market research company Ipsos-Mori indicated that 53 percent of voters favor the U.K. leaving the EU and 47 percent support the U.K. remaining in the EU. This is a dramatic reversal from the same poll the month before in which 40 percent of voters backed Brexit and 60 percent supported remaining.

If U.K. voters ratify withdrawal from the EU, life sciences attorneys, associations and executives interviewed by Bloomberg BNA said they envision a world in which:

  •  the European Medicines Agency (EMA), the European equivalent to the U.S. Food and Drug Administration, leaves London and the U.K. loses influence on European drug approval policy;
  •  London won't house an EU Unified Patent Court and the whole Unitary Patent System, which has been slated to begin in 2017, may collapse as a result; and
  •  small and mid-sized U.K. life sciences companies no longer have access to EU research funding.


Act of Folly?

Tom Leonard of the law firm Kilburn & Strode, London, told Bloomberg BNA in a June 15 e-mail that Brexit likely would reduce the total research funding made available to U.K. institutions. “In an ever increasingly competitive global market, taking steps to weaken the U.K.’s position on the world stage seems an act of folly,” Leonard said.

Sam Fazeli, head of Bloomberg Intelligence and senior large pharmaceutical analyst covering the global industry, told Bloomberg BNA in a June 16 phone call, “I can't think of a single positive thing about it as it affects the life sciences, although the impact on larger biopharmaceutical companies will be a great deal less than on smaller ones, for whom the loss of EU research funding will be irreplaceable.”

In the flurry of comments and speculation over Brexit impacts, some stakeholders even suggested that the U.K. would partner with the U.S. Food and Drug Administration (FDA).

BioPharmas Weigh In

The Brexit movement was started by the U.K. Independence Party. Supporters of Brexit note that the U.K. already has opted out of the EU's monetary union, it doesn't share open borders with other European states, the EU's bureaucracy is a drag on the U.K.'s economy and EU laws and regulations threaten British sovereignty.

British Prime Minister David Cameron supported a referendum on whether the U.K. will remain in the EU. But Cameron, saying that compromise he reached with the EU regarding the U.K.'s membership addressed his concerns, now is leading the campaign for the U.K. to stay in the EU.


The U.K.'s BioIndustry Association (BIA) has taken a leading role in warning of the negative impact on life sciences. On June 15, a week before the Brexit vote, it released a report describing the current strength of the biomedical sector in the U.K.

In its warnings against Brexit, the BIA has stressed that the U.K. is currently part of the integrated regulated market for biopharmaceuticals in the EU, which is 27 percent of the global market, and the U.K. attracts a third of the life sciences innovation capital available in the EU.

If the U.K. were to leave the EU, it would be an island of 3 percent of the global market for the biomedical industry, the BIA argued in a Feb. 24 letter to the Financial Times (10 LSLR 07, 4/1/16).

Among those signing the letter were representatives of MedImmune Cambridge, a subsidiary of London-based AstraZeneca, and GlaxoSmithKline (GSK), also headquartered in London.

Vanessa Brown, global media relations director for AstraZeneca, told Bloomberg BNA in a June 16 e-mail that the company firmly believes that the U.K. would be better off staying within the EU.

“Specifically for AstraZeneca and the U.K. pharma industry, the benefits of an integrated yet competitive environment are clear, with access to a single trading market, a skilled talent base, common regulatory and [intellectual property] standards. Today, we have one single regulatory authority, one process that facilitates sharing data and information across countries and gives approval for a new medicine across the entire European Community—this is effective for companies, health systems and ultimately for patients.”

Exiting the EU holds the risk of increasing the complexities and costs of getting medicines to those who need them most, Brown said. “Alongside this, EU funded research and development helps the strong life sciences ecosystem in the U.K., which AstraZeneca actively supports, helping job and wealth creation.”

A spokeswoman for GSK reiterated in a June 14 e-mail the company's position that there are advantages in the U.K.'s remaining part of the EU, where the GSK Group would continue to have easy access to a significant economic bloc, be able to operate within an established and harmonized regulatory approval system and continue to benefit from EU advocacy in international trade discussions.

She added that a Brexit would create uncertainty and add complexity to a wide range of GSK's business activities, with some short-term disruption likely. But the company has plans in place to mitigate these effects and doesn't currently believe that there would be a material adverse impact on the group’s results or financial position, Brown said.

Bad for Patenting

At a May 20 public summit of the Chartered Institute of Patent Attorneys, Catriona Hammer, an intellectual property consultant and the institute's immediate past president, listed the drawbacks of Brexit for life sciences patenting:

  •  if the U.K. leaves the EU, it's unclear whether the Unified Patent Court that is part of the Unitary Patent System for all of the EU will go ahead and if it does, under which arrangements;
  •  the Supplementary Protection Certificate (SPC) system of patent term extension for pharmaceuticals is an EU creation and any future Unitary SPCs wouldn't be available in the U.K.;
  •  existing SPCs are national rights and would remain in force even if the U.K. leaves the EU, but for future SPCs, transitional arrangements for pending applications would need to be put in place and national legislation would be required for new applications; and
  •  countries have been working together for the last couple of years to achieve harmonization of both procedural and substantive patent law, and if the U.K. leaves the EU, this may affect harmonization discussions.


Kilburn & Strode's Leonard told Bloomberg BNA, “London is the chosen location for the central division of the upcoming Unified Patent Court that will hear cases in the pharmaceutical sector. If the U.K. leaves the EU, then our continued participation in the UPC will not be possible. As European Patent Attorneys, we will still be qualified to act before the UPC, but decisions made by that court will not have jurisdiction in the U.K.”

Bad for Jobs

In addition to its effect on life sciences patents, some expressed concerns about the effect of Brexit on life sciences jobs.

According to an analysis released June 15 by the specialist life sciences recruitment company NonStop Pharma, Brexit could irretrievably damage the U.K. pharmaceutical industry because the sector would still have to follow regulations to sell in the single market and would have no say over what these regulations were.

Matt Beedle, the company's team leader, said in a statement, “Yes, the situation isn’t perfect at the moment. However, the outlook would still be far worse if we were to vote leave. In this instance there’s a high chance that the EMA would relocate and therefore many of the pharma companies headquartered in the U.K. could leave—potentially to Ireland. This is because one of the major reasons many pharma firms have their headquarters in the U.K. is due to the proximity of the London-based EMA.”

The sector would also struggle to keep hold of the thousands of European professionals who currently provide expertise to firms in the U.K., Beedle said. “We have such a powerful industry here that it seems like a huge error to leave, particularly at a time when our industrial output is growing at its fastest rate for four years, which has been heavily boosted by the pharma sector.”

BI's Fazeli told Bloomberg BNA, “From a large pharma perspective, the effect of Brexit would be immaterial. It's a global world, and sales wouldn't see much effect. The only concern I can see for them is scientists leaving the U.K. because they can find better jobs and research funding elsewhere. If the EMA leaves London, there will of course be a loss of jobs. And recruiting for clinical trials might be more difficult in this different environment, especially if the new U.K. regime puts on some restrictions. But the biggest impact will be on the smaller biotechs who do not have the resources of the larger companies.”

Partnership With the FDA?

Jo Pisani of PricewaterhouseCoopers has suggested that if the U.K. leaves the EU there would be a need to create a “superpower” global regulatory authority, a PwC spokeswoman confirmed in a June 16 phone conversation with Bloomberg BNA.

The spokeswoman also said that Pisani had been misquoted by the media as saying that the U.K.'s Medicines and Healthcare Products Regulatory Agency (MHRA) could partner with the FDA, although the press reports that quoted Pisani also cited unnamed sources as supporting this possibility.

Asked about this speculation, Christopher C. Kelly, FDA press officer, declined in a June 1 e-mail to Bloomberg BNA to say whether any preliminary discussions on the matter had taken place.

Kelly said, “The FDA already has strong relationships with MHRA and other individual regulatory bodies in European countries, those who are part of the European Union and those that are not. It is important to be aware that the EMA model is not identical to ours for medical product regulation, with the FDA’s remit being much broader. For example, clinical trials and pre-market development are regulated by individual countries, not EMA.”

He added, “The FDA would work with MHRA as it does with them today, but also as it does with regulators such as Swissmedic, which is not part of the EU or EMA.”

Contingency Plan Needed

The Science and Technology Select Committee, a cross-party committee of U.K. Members of Parliament (MPs), issued a report June 11 warning that the U.K. needs contingency plans in place to protect its life sciences sector in the event of a vote in favor of Brexit.

The committee wrote that it “does not seek to prejudge” the June 23 vote and “does not express a view on which outcome would be best for U.K. life sciences.” It outlined the advantages of staying in the EU, including the collaborations with scientists throughout Europe and access to an EU market many times bigger than the U.K. market alone.

Even if the U.K. were to remain in the EU, the report said, action would still be needed to improve the way the EU works with regards to the life sciences industry. The report called for the introduction of an evidence-based regulatory policy, replacing the existing “process-based approach” with a less complex and more streamlined system. It also called for the introduction of “scientifically-led” conversations on “emotive” issues such as genetic science in the EU. In this area the EU “has so far not come close to satisfactorily demonstrating an evidence-based approach to policy making,” the report said.

“If, despite the clear attractiveness of the UK as a research location, EU research funding was withdrawn after the exit negotiations, new funding could come from research collaborations outside the EU and from the [U.K.] Treasury reallocating funds previously sent to the EU. The Government should therefore conduct a risk analysis of the science and innovation funding and collaboration scenarios in the event of Brexit and put in place immediate contingency plans to protect our science and innovation sector from any adverse consequences and to consolidate any benefits,” the report said.

To contact the reporter on this story: John T. Aquino in Washington at jaquino@bna.com

To contact the editor responsible for this story: Randy Kubetin at rkubetin@bna.com