The following is a summary of Theresa May’s “Road to Brexit” speech, Mansion House, 2nd March 2018.
I wanted to summarise what was said, namely looking at the areas which impact the comparator sourcing market.
Whether this is what Brexit will look like is questionable. However, I feel this serves as a good account of what a Win would look like for the PM.

What was said

Theresa’s Brexit

To begin Theresa May, stated the 5 points she felt should make the foundations of the Brexit agreement:

  1. Any agreement we make with the EU must respect the referendum:
    • A vote to take control of borders, laws and money
    • Inclusive of all communities in the UK
    • It is not an act of separation of the UK from the EU
  2. The new agreement must endure:
    • Both parties should push forward, once a deal is made
  3. Protect jobs and security
    • Achieved by working together, growing economies and keeping people safe
  4. Be consistent with being a modern, open, outward looking and tolerant European democracy
  5. It must strengthen our union of nations
    • Taking into account views of everyone in the United Kingdom

So, to give reassurance that upholding these ideals would be achievable, the PM confirmed that agreements had been reached around withdrawal terms. Furthermore, she acknowledged that similar progress was close surrounding talks on the implementation stage.

In addition, Theresa May elaborated on the Economic Partnership that had been envisaged for the UK. At the forefront of this was the call for a unique and tailored trade agreement between the UK and EU. Versions of existing models, including the Norwegian and Canadian trade agreements were shot down as potential suitors. Subsequently, it was argued these would ultimately result in either restricted access and increased regulation or too much EU influence.

An Ideal deal

Building on the foundations that were previously set, May elaborated on goals that would be essential to a successful deal.

  • A recognition of the Belfast Agreement,
    • No hard borders between N.Ireland and the Republic of Ireland
    • No customs border down the Irish Sea
  • An end of the ECJ’s jurisdiction in the UK
    • Concessions were made to acknowledge that similarities would be encouraged, not avoided
    • Ensure both EU and UK courts uphold the highest standards
  • A level of access to EU markets that is open, fair and reciprocated by the UK
  • Partnership with the EU on certain areas of regulation, keeping aligned with policy
  • Promoting free trade and strong competition
  • Upholding workers’ rights to the same high standards
  • Resolve the key objectives including taking back control of trade, laws and avoiding a hard N.Ireland border

Following this, Theresa May said that these goals should underpinned by five ambitions:

  1. The agreement will need reciprocal binding agreements
  2. An independent arbitration mechanism is needed
  3. Ongoing dialogue with the EU, specifically within matters of regulation
    • “This will be essential for getting everything from new drugs to patients quickly, to maintaining financial stability.”[1]
  4. A data protection agreement
  5. Maintaining links between our people, keeping the interests of all citizens in mind, while monitoring immigration

In what could be an attempt to pre-empt calls of cherry-picking May pointed out that the EU has already taken tailored approaches in many cases (Ukraine and South Korea). It was argued that meeting these trade goals would be mutually beneficial for both parties.

Trade Goals

Next, specific and potentially ambitious trade goals were laid out. A frictionless border between the UK and EU was the apparent priority. This could be achieved by aiming for no new tariffs or quotas, as well as a single set of regulatory standards for UK and EU businesses, ensuring the highest standards were maintained.

Equal emphasis was put on the importance of joint partnership with agencies, such as the EMA. Such importance was bolstered by suggestions that the UK would willingly accept rulings and financial responsibilities of such agencies.

Speaking specifically now about the UK’s vital role in the EMA, May highlighted that UK membership in the EMA means:

  • An investment in new innovative medicines
    • Substantial existing infrastructure and talent in the UK
  • Medicines getting to patients faster
    • UK medicine to EU patients and vice-versa
  • Firms would prioritize larger markets when they start the lengthy process of seeking authorizations

How could we achieve these goals?

The PM put forward two options for customs alternatives:

  1. A customs partnership between EU and UK,
    • UK to mirror EU requirements for goods imports from the ROW
    • The UK would pay the right EU duties, removing the need for customs processes at the UK EU border
  2. A streamlined customs arrangement
    • Implementing measures to minimize frictions to trade together
    • Simplifying requirements for moving goods across borders
    • Waive the requirement for entry and exit declarations

Theresa May, did continue to discuss these points further and to speak on matters of security, education, community to say a few.

Implications for Comparator Sourcing

Collaboration

The PM leaned heavily on the pharma world when discussing the benefits of our EU partnership. Consequently, I find it comforting to know the Government recognises the importance of the EMA’s relationship with the UK’s MHRA.

When discussing her planned Economic Partnership it was repeatedly mentioned how crucial it would be for the UK to commit to areas of regulation. Specifically considering areas where it has previously worked closely together and worked well.

The pharmaceutical industry is a great example of this, when reading the ABPI’s Mike Thompson’s response to the PM’s speech we can see this message supported…

“It’s now critical that both sides prioritise patient safety in phase two of the negotiations. Delivering close cooperation on the regulation of medicines is only one part of the challenge. Making sure the supply of medicines is uninterrupted is essential to ensure patients in the UK and EU can get the medicines they need from day one of Brexit.”[2]

Theresa May’s willingness to accept the ruling of such bodies, as well as commit to financial contribution, was a very positive sign. Hopefully such an olive branch is readily accepted by the powers that be. It seems that this could allow UK regulatory bodies to work closely together with their European counterparts as they do currently.

Innovation

Other positive messages include the emphasis on Britain’s value in terms of contributions made in innovation and development. Theresa May stated “The UK regulator assesses more new medicines than any other member state and the EU would continue to access the expertise of the UK’s world leading universities”[3]. The UK currently houses some of the world’s greatest talent in all industries, but with companies moving European Headquarters and the EMA obviously needing to move as well, it is vital that important that something is done to continue to promote innovation and excellence in our universities.

Conversely, the seemingly steadfast position on controlling immigration may end up dampening any attempts at maintaining the hotbed of excellence UK’s education and training schemes encourage.

The Brass Tacks

Finally and possibly most crucial, the issue of trade and customs. Obviously, the UK wants to uphold high standards of quality, to have it’s regulatory excellence recognised and maintained and to be seen as the best place to work and study within the pharmaceutical industry in Europe. The same goes for any industry. It’s also clear that neither the EU, nor the agencies that the UK have worked with would want the UK’s standards to fall, or to sully all the good that has been achieved through hard work and cooperation.

Ambiguity begins to fall when we start to consider this cooperation financially. We begin to fall into the area where the UK’s preference is to have it’s cake and eat it. As for the PM’s ideal deal and the best possible trade agreement it seems fantastic.

  • No hard borders
  • No Tariffs or Quotas
  • Simplified importing and exporting
  • Harmonious regulations
  • Essentially…Business as usual

Cherry Picking?

From the perspective of a UK business, the speculative Brexit mapped out by Theresa May includes all the best parts of the European Union, without any of the snagging commitments. Something we should have sorted out a long time ago!

I appreciate that plenty of examples of tailored agreements were given, Canada, Norway, South Korea and Ukraine, but each one of these examples seem to drawbacks in addition to their benefits. It is this lack of drawbacks in these hypothetical deals that makes me skeptical. At this point in time I do not see our EU counterparts allowing to get away with all the benefits of being in the EU, without having to take on it’s baggage. To reach an agreement I envisage two things will need to change.

Either we will need to make more concessions to get our proverbial cake or we’ll or we’ll need drop this pursuit for cake and accept a truly hard Brexit.

What would we like to see?

As far as regulatory concerns, our preferred option would be that existing medicines will keep their EU status. In keeping EU numbers impact would be low in this respect. It would mean no need for QP release and reduce the likelihood of cross border issues. Of course, the EU could still impose tariffs.

However, if new medicines have to go through local registration, the MHRA will have to approve new licences for UK products. This would mean products would not share EU numbers. Instead UK products would require QP releases and be subject to export checks and tariffs. If this were to happen BAP would undoubtedly need to consider opening an EU warehouse to negate these issues.

Written by David Clarke, Project Manager at BAP Pharma

References

[1] Theresa May, Road to Brexit, 2nd March 2018

[2] Mike Thompson,  The pharmaceutical industry response to the Prime Minister’s ‘Road to Brexit’ speech, https://www.abpi.org.uk/media-centre/news/2018/march/the-pharmaceutical-industry-response-to-the-prime-minister-s-road-to-brexit-speech/

[3] Theresa May, Road to Brexit, 2nd March 2018

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