Farzad Henareh, vice president business development EMEAA, Stericycle ExpertSolutions gives his take on the regulatory and recall challenges of Brexit.
Challenge
In the run up to the EU Referendum in June, one of the key debates focused on the challenges and opportunities afforded by single market regulation. But the die is now cast and we will leave the EU, which is prompting industries across Britain to consider the implications for the regulatory environment in which they operate. The other concern is what this change will mean for any product recalls.
The arguments between ‘For’ and ‘Against’ were lively, and none more so than the impact of EU regulations on British business. There were claims that EU regulations were costing our economy £600 million a week, and an open letter from small business leaders and entrepreneurs stated: “As entrepreneurs, we deal with the EU’s constant diet of unnecessary regulations which add to our cost base, reduce our bottom line and raise prices for our customers for no return.”
But leaders of major British business signed their own letter in support of remaining in the EU. This acknowledged the regulatory burden stemming from the EU, but it also stated that the prime minister was working to reduce the burden and that “Business needs unrestricted access to the European market of 500 million people in order to continue to grow, invest and create jobs.”
But what about the pharmaceutical industry? The economic impact was barely felt by the larger companies, indeed it is hard to affect the big pharmaceutical giants through sudden economic change simply because people continue to need life-saving medication. But in the area of life sciences and biotech Brexit will present challenges, mainly in relation to regulation.
It will mean that the UK loses much of the influence it has on EU legislative, policy and regulatory procedures. We have to hope that we will be able to remain part of the European Medicines Agency (EMA), which approves drugs on behalf of all EU member states. Mike Thompson, chief executive of the Association of the British Pharmaceutical Industry said: “If we were to split into a UK process and a European process of drugs regulation, then global companies would make the rational decision to prioritise patients in a market where they are getting access to 500 million rather than 60 million.” The other issue is that the prestige of the UK’s Medicines and Healthcare Products Regulatory Agency, which is a highly proactive part of the EMA, would also diminish.
In the face of this uncertainty, leaders in the pharma sector, as in all other industries, will likely be faced with three options. The first is to ratify strict regulations of our own, but this would put British companies at a severe disadvantage and would not suit Brexit supporters who argued for easing the regulatory burden on the UK. Another possibility is to develop more lenient standards in the hope of giving businesses the boost they need to ensure they remain buoyant post-Brexit. But given the importance of the EU to UK exports, lower standards would make it challenging to trade effectively. Finally, we could adopt regulations that are in line with the EU’s established standards, which of the three, seems the most sensible. This does not mean, however, that pharmaceutical companies won’t be at the mercy of a change in processes, so they need to remain wary, particularly in the face of product recalls.
In this vacuum of regulatory uncertainty, there is every reason to fear that harmful drugs will enter or remain on the market in a way that they haven’t been able to previously. For pharma businesses, this means there is more likelihood that recalls will need initiating and executing, adding another layer of complexity and straining internal resources. Recall costs could rise, but to what extent depends on the product type, scope, remedy and many other factors.
Until the dust settles on the Brexit vote, the uncertainty regarding regulations will continue. In the meantime, pharma companies should take steps to prepare for each scenario, and a useful resource is our new Recall Industry Spotlight for Q2 2016. From a regulatory perspective, this means analysing current customers and reviewing supply chains to determine who might be affected and how. Businesses are braced for a tumultuous environment, but those that prepare for every outcome will be best positioned to withstand the changes.