After tense and lengthy negotiations in Brussels last week, U.K. Prime Minister David Cameron won a hard-fought deal from the EU which renegotiated the terms of U.K.'s membership in the European Union. After extracting several key concessions on welfare curbs and for London's financial industry, Cameron announced a public referendum will be held on June 23 to decide whether the U.K. should remain a part of the European Union.
The decision on a "Brexit" will be momentous. It will shape the future of both the E.U. and the U.K., and could threaten the foundations of the 28-country union. Its outcome is by no means certain. Although Cameron has staked his leadership to remaining in the E.U., six of his 29 senior ministers announced they would campaign for a "Brexit." Public opinion polls have shown the gap between the "Remain" and "Leave" groups has narrowed considerably.
Pharma giants wake as Brexit looms
Recognizing the increased risk of an exit, Europe's pharmaceutical industry has begun to make the case for Britain to remain a part of the E.U. High-level pharma executives along with major trade associations warn of the potentially huge disruption a Brexit would cause to cross-border research, trade, and the regulatory framework which underpins the E.U.
In a statement this week the European Federation of Pharmaceutical Industries and Associations (EFPIA) strongly stated its members’ case for the U.K. remaining a part of the E.U.
“The decision to leave or remain within the EU is a decision for UK citizens, however, EFPIA firmly believes that the UK’s continued membership of the EU is in the best interests of a strong life sciences sector in the UK and Europe,” EFPIA said.
The association, which includes most major pharmas, warned Brexit would threaten the status of the European Medicines Agency (EMA), and adversely affect European research collaboration. Furthermore, a vote to leave would strip U.K. pharmaceutical companies of the benefits of a harmonized E.U. marketplace, which is one of the largest drug markets in the world.
Other calls to remain
The trade group BioIndustry Association (BIA) also recently penned an editorial in The Financial Times advocating for the U.K. to remain. Signed by Pascal Soriot of AstraZeneca, and 54 other executives, the editorial advocates for “continued engagement with and reform of a more competitive EU.”
“Not only would an exit from the EU negatively impact on the life sciences sector, but changing the current arrangement would lead to disruption, expense, and significant regulatory burdens for a new authorisation system,” the executives write.
One of the most immediate and serious consequences of a U.K. vote to leave the E.U. would be the status of the EMA. Currently based in London, the EMA oversees drug regulation and approval for all EU countries.
At the very least, the EMA would have to relocate from London in the event of a Brexit. However, if the U.K. also left the EMA, a new regulatory apparatus and an inter-market framework would have to be constructed.
As The Financial Times points out, three countries currently are under the remit of the EMA but are not part of the greater E.U.—Norway, Iceland, and Liechtenstein. All three are part of the European Economic Area.
A Brexit would also threaten E.U. funding for UK science. In its editorial, BIA wrote “The UK is a net recipient of EU funding for its health research, accessing more funding per capita than any other country.” UK universities also receive substantial research funding from the E.U., as Nature notes.
Beyond these immediate legal effects, the overall market dislocation caused by the U.K. splitting from the E.U. would take years to straighten out. While membership bodies like the EEA would give access to the E.U. single market, its members still have to recognize all E.U. regulations and make payments to the E.U. This may not be palatable after a vote to leave.
Leave.eu, a site advocating for Brexit, claims leaving the E.U. would most likely lead to a free trade agreement between the E.U. and the U.K. But, as recent experience with trade agreements such as TPP and TTIP have shown, trade agreements are often long and arduous affairs.
It also argues Britain would save money to be used for other purposes if it no longer had to pay the 12 billion euros a year it pays as a net contributor of the E.U. A separate U.K. would be in charge of its own regulations, including those governing pharmaceuticals.
The pharma industry in Europe has so far come down strongly in favor of a “remain” vote, however. With four months left between now and a referendum, look for more pharmaceutical companies and executives to weigh in on Brexit’s ramifications.