Given the recent referendum in the UK and its unexpected outcome of the UK leaving the EU, what does this mean for the pharmaceutical industry, particularly pricing and reimbursement?
For the next two years, there are unlikely to be any significant changes in the approval and pricing of pharmaceutical drugs, as there is a two year negotiation window from the initiation of Article 50 of the Treaty on European Union until the initiation of the withdrawal process. This means that pharmaceutical and biotech products can still gain UK marketing authorisation and pricing and reimbursement through the standard routes, such as EMA. But what for the future?
From a marketing authorisations standpoint, this will depend on the negotiations between the EU and UK. If Britain is able to stay in the European Economic Area (EEA), then theoretically, it should still have access to EMA processes and systems. If the UK is not part of the EEA, a new UK regulatory regimen would be required, which would probably be based on the current Medicines and Healthcare products Regulatory Agency (MHRA) system. If the UK is not part of EMA or the centralised procedure, the UK population is likely to encounter delayed market access for new products, as companies focus their efforts on the centralised procedure due to resource constraints.
From a pricing and market access perspective, there are unlikely to be any changes to the UK price approval (by the DoH) or HTA review processes (by NICE, SMC or AWMSG), as pricing and reimbursement is undertaken by individual member states and these procedures are not hugely influenced by EU regulations. This means once UK marketing authorisation is granted, the time to UK price approval and market access is unlikely to change in the next two years.
The more immediate impacts of the UK Brexit vote are on pricing strategy, international reference pricing (IRP) and cross border trade, which manufacturers should be actively considering. The ~10% devaluation of the pound will have significant impacts on 1) cross border trade and 2) IRP impacting prices in other markets. If the UK product price was towards the lower end of EU price strategies and corridors, it is likely that the UK could become a net exporter of product to other higher priced EU markets. It is also likely that low UK product prices will have a price impact on other markets via IRP calculations, particularly for markets which only have a small referencing baskets (e.g. the Netherlands). As such, manufacturers should monitor the likely volatility of the Pound sterling over the coming weeks and months, in order to predict and mitigate the impact of currency on other EU markets to prevent revenue loss.
If we consider the scenario that the UK will not be part of the EEA, cross border trade would be limited, as the UK would not be part of the free trade area. As a consequence parallel traders would not be able to operate. The impact on EU pricing strategies is harder to predict. It is likely that most EU countries would remove the UK from their international price referencing basket or use another EU country as a price reference.
The interesting and hypothetical scenario is what happens if Scotland has a second referendum and votes to leave the UK and remain in the EU. In this instance, Scotland could still be covered by the EMA marketing authorisation process. The challenge would be from a pricing perspective, which is currently set by the Department of Health in London. In this scenario, the assumption is that the Scottish parliament would take ownership of price setting. Whether it would delegate this to the SMC or the Scottish government retain control (similar to what England currently do), is a matter of speculation. Whether the SMC would continue to operate in its current form or be subject to a new mandate including price setting under an independent Scotland would need to be clarified.
To summarise, over the next two years changes to the marketing authorisation or pricing and reimbursement procedures in the UK are unlikely as a result of Brexit. However, the currency fluctuations will impact UK and EU product prices via IRP and potential cross border trade issues. Beyond two years, the impact very much depends on whether the UK is part of the EEA and whether Scotland seeks to leave the UK. Potentially, the UK would drop down the launch sequence priority if there is a different marketing authorisation procedure. This will potentially delay market access for new pharmaceuticals in the UK. In addition, the UK might be removed from reference baskets in other countries. Ultimately, UK patients are directly likely to feel the impact, by having delayed access to new medications.