18
European Affairs Committee
The Windsor Framework Sub-Committee
Corrected oral evidence: Veterinary medicines and the Windsor Framework
Wednesday 17 January 2024
3.10 pm
Members present: Lord Jay of Ewelme (The Chair); Lord Dodds of Duncairn; Lord Empey; Lord Godson; Baroness Goudie; Lord Lexden; Baroness O’Loan; Baroness Ritchie of Downpatrick; Lord Thomas of Gresford.
Evidence Session No. 1 Heard in Public Questions 1 - 11
Witnesses
I: Donal Murphy, Head of International and Regulatory Affairs, National Office of Animal Health (NOAH); Edward Ferguson, Director of Regulatory and Quality, Zoetis UK Ltd; Bryan Lovegrove, Secretary-General, Animal Health Distributors Association.
Donal Murphy, Edward Ferguson and Bryan Lovegrove.
Q1 The Chair: Welcome. Today we are holding the first evidence session of our new, short inquiry into veterinary medicines and the Windsor Framework. We are joined by three representatives of industry: Donal Murphy, head of international and regulatory affairs at the National Office of Animal Health; Edward Ferguson, director of regulatory and quality at Zoetis UK; and Bryan Lovegrove, secretary-general of the Animal Health Distributors Association. I hope I got all that right. You are all very welcome, and we are very grateful to you for coming and giving evidence to us today. The first time you speak, perhaps you could say again, very briefly, what your role is.
Today’s meeting is being broadcast and a verbatim transcript will be taken and sent to you to check for accuracy at the end of the session. I refer to the list of Members’ interests, as published on the committee’s website. We have two panels of expert witnesses today, so we will aim to finish this first panel at 4.30 pm, which gives us an hour and a quarter to get through a longish list of quite important and technical questions. We will need to be as brief as we can in order to finish at 4.30 pm.
With that introduction, thank you very much indeed. I will start by asking the first question, which, in a way, is retrospective. How were veterinary medicines managed and regulated in Northern Ireland before the UK left the European Union? In your view, what immediate impact did Brexit have?
Donal Murphy: Thank you very much. I am head of international and regulatory affairs at NOAH, which is the trade association for the UK animal medicines industry. We represent almost 100% of the animal medicines industry here in the UK. Our geographic scope covers both Great Britain and Northern Ireland.
Prior to Brexit, veterinary medicines in NI were regulated—and they continue to be—by the UK’s Veterinary Medicines Regulations 2013, which are legislation that is overseen by the Veterinary Medicines Directorate, an executive agency of Defra. The Veterinary Medicines Regulations were heavily based on what was referred to as EU directive 2001/82, so, in essence, the UK veterinary regulations were aligned with European Union veterinary medicines legislation.
On the question of what immediate impact Brexit had, if any, in reality there was no immediate impact, because with regard to Northern Ireland there was a transition period where current arrangements could apply until the end of 2025. There was no immediate impact because of this transition period. The fears that our industry has about problems arising from the Northern Ireland protocol with regard to veterinary medicines are based essentially on what will happen after this transition period at the end of 2025. That is all on that question from me.
The Chair: That is extremely helpful. Thank you very much.
Bryan Lovegrove: I represent the Animal Health Distributors Association, which is largely made up of countryside retailers who are the pharma-facing individuals who supply and prescribe veterinary medicines.
Within the UK, there are three avenues for prescribing veterinary medicines for companion animals such as cats and dogs, equine and farm animals. The regulations permit veterinary surgeons, pharmacists and suitably qualified persons—SQPs—to prescribe non-diagnosis veterinary medicines. For example, Pets at Home have a locked cabinet containing veterinary medicines that are vet strength, and the individuals who prescribe them have to be trained to a certain level.
If Brexit had not happened, we would have been operating under the European veterinary regulations. Together with a number of other organisations, we managed to get a derogation from EU veterinary medicine regulations to allow the UK to have this type of three-channel distribution for veterinary medicines. We were the only country in the EU where medicines could go through a vet, a pharmacist or SQPs—suitably qualified persons.
In Northern Ireland, that system is the same. As Donal said, nothing has changed as yet, but we are very concerned about the future impacts of Brexit. Members of the association that I look after are the companies that employ the suitably qualified people and, as the main registration body, our members employ about 80% of those suitably qualified people to prescribe veterinary medicines.
The Chair: Thank you very much.
Edward Ferguson: Good afternoon. I am the regulatory and quality director for Zoetis. I am here today in my role as chairman of the technical and strategic affairs committee for NOAH, so although I can relate to specific company issues, I am representing the whole business, so I will by default need to be quite general and generic.
I agree with everything that Donal and Bryan said. Other than the planning that went in—the Government made significant efforts to try to make sure that supply would not be interrupted—the impact that I have noticed most as part of a commercial company is the increase in administrative burden in relation to supplementary declarations. When you have your next session, the vets and merchants may tell you what a pain that can be. Other than that, I align with what has been said.
The Chair: Thank you. That has got us off to a good start.
Q2 Lord Dodds of Duncairn: Welcome to you all and thank you for your evidence. What are the main outstanding issues in relation to veterinary medicines in the context of the Windsor Framework? You mentioned the impacts after 2025. Are any particular impacts evidencing themselves now, in advance of 2025?
Donal Murphy: In my previous answer I referred to an old piece of European legislation, the veterinary medicines directive. Since Brexit took effect in January 2022, there has been a new piece of European legislation, the European veterinary medicines regulation. As part of the Northern Ireland protocol, products marketed in Northern Ireland are required to comply with this new European veterinary medicines regulation, notwithstanding the fact that we currently have a transition period, which means that it has not been applied in full to date. Two elements in the European veterinary medicines regulation will be difficult for GB-based companies to comply with in order to market products in Northern Ireland. They are as follows.
Whenever a batch of veterinary medicines is released from a factory, a process known as batch release testing is required to be undertaken before those products can enter the supply chain and be used by vets, SQPs, farmers and animal owners. Under the European veterinary medicines regulation, that batch testing is required to take place within the EU, on EU soil. Under the distribution model that NOAH member companies have traditionally used for the Northern Ireland market, the product is batch released, then warehoused in Great Britain and supplied to Northern Ireland on an ongoing basis. That would not be possible for full compliance with the European regulations after the transition period ends, because when the product moved from Great Britain to Northern Ireland it would be considered an import into the European Union and therefore the batch-release testing would need to be repeated.
In essence, to simplify what is quite a complex process, compliance with the European veterinary medicines regulation would mean that warehousing of product in GB would not be possible, and that is the supply route that has been used for many years by UK-based companies when supplying Northern Ireland. That is problem No. 1.
Problem No. 2 is that, again, to comply with the European veterinary medicines regulation, each veterinary medicine is required to have a registered address. Those registered addresses are required to be within the European Union, and that also impacts on product packaging. The vast majority of products used in Northern Ireland are registered to a Great Britain address—which, I reiterate, would no longer be compliant.
It may sound like a small thing, and you may ask why we are complaining about changing an address, but the reality is that our sector is highly regulated and to make those changes is not a simple process. It is an administrative burden, time-consuming and costly. Northern Ireland is a very small part of the UK animal health industry. For some of these products, the economic case to spend money on making these changes simply is not there. The animal health industry overall is very small; we are only about 2% to 3% of the size of the human medicines industry, so making these changes is simply not justifiable across the entire portfolio for the companies involved.
I add that the human medicines industry—I know we may have questions about that later—had very similar complaints about those issues of warehousing, batch release, the registered address and packaging of products. It is a common problem for both animal health and human health. Of course, the Windsor Framework has done something to address that for human medicines, but it has not addressed it for veterinary medicines to date.
Lord Dodds of Duncairn: Thank you very much. That is very helpful and clear. Do you want to add anything, Mr Ferguson?
Edward Ferguson: Sure. There are a couple of companies that will supply from Northern Ireland or are currently going via the Republic or some other European-compliant route, but for everyone else—the majority—this will require significant change. There is cost associated with this, and quite significant re-engineering of supply routes. However, companies will do it, but this is where economics will come into play. In fact, without being specific about any one company, if we proceed as things stand with the December 2025 deadline, Northern Ireland will see a fairly significant reduction in product lines—that is, the number of different presentations—but also in the number of products. That will include some niche products that have specialist transport that cannot be accommodated by the change, and it will potentially mean things coming off the market. There are potential consequences for some of the agricultural industries in Northern Ireland that rely on these niche products that cannot be supplied through a European route. That will have knock-on economic and welfare effects.
As an industry representative, for me it comes down to two choices. If we need to comply with the requirement of the December 2022 Commission Notice, which allows us to December 2025, that will mean re-engineering and resupplying with fewer products. Or, if the animal medicines industry can get a similar derogation to that of human health, we can continue with what I will call the status quo, with GB storage into Northern Ireland, with or without the change of licence holder. If we got only one thing, losing the need to retest and be seen as importing into Northern Ireland would be a huge step forward and would help in assuring supply to Northern Ireland of the existing portfolio.
Bryan Lovegrove: The biggest concern for us is the direct impact on animal health and welfare—of cats, dogs and horses, but primarily farm animals. With some internal research, we estimate that 1,700 products—that is, 51% of products—might not be available after 1 January 2026. A lot of the products used in farming for stock are used in rotation, because the active ingredient is changed to reduce the risk of resistance. Losing products will limit the number of products available for stock farmers to do the rotation.
Also, as has already been explained, the pack sizes may not be available in the broad spectrum they are in now. Farming in Northern Ireland is not quite as intensive as in other parts of the UK, so a lot of farmers have smaller amounts of stock. If the smaller pack sizes were not available, they would be limited in their choices and may end up buying a pack size that would last them two or three years. Under the regulations, you are supposed to be prescribed the amount that you need to test those animals on that day. There is concern about the overall impact. It risks the viability of some small farming businesses in Northern Ireland.
The animal medicines regulation is not touched on at all in the current Windsor Framework, as we would like it to be. Human medicines and seed potatoes are. A huge range of products and services are included in the Windsor Framework, but veterinary medicines are not currently there. It is a concern, and it is growing. The cliff edge of the end of December 2025 may seem a long way off, but we would like to act sooner rather than later.
We are very pleased to be here today, because it is on the agenda. As we know, at the moment there is a lot on the political agenda for everybody, so to be here today talking about this important sector is really good news for us. Human health is obviously vital, but coming from the animal health and welfare sector, we believe that animal health and welfare is fundamentally important. Northern Ireland has the challenge of being in the unfortunate position of having one foot in Europe and one in the UK. Disease does not respect boundaries and, although Northern Ireland is still part of the UK, we feel that it is fundamentally important that Northern Ireland has access to the same number of veterinary medicines as the rest of the UK does.
Lord Dodds of Duncairn: That is very clear. Your point about the deadline seeming a long way away is why we are so apprised of the need to get this on the agenda now. This can trundle on without solutions, and we need solutions earlier rather than later.
Baroness O’Loan: I would like a clarification, please, Mr Lovegrove. You said that about 50% of 1,700 products might not be available.
Bryan Lovegrove: Yes.
Baroness O’Loan: You then said that smaller pack sizes may not be available. Did your 1,700 include smaller pack sizes?
Bryan Lovegrove: Yes, it is an overall estimate of how many products may not be viable for the veterinary medicine manufacturers to repackage, given the small size of the market in Northern Ireland.
Baroness O’Loan: Thank you.
Q3 Baroness Goudie: Good afternoon, gentlemen. It is very nice of you to come to see us. In the absence of any alternative agreed solution, what will be the impact on the supply of veterinary medicines from Great Britain to Northern Ireland if the current grace period ends on 31 December 2025? Further, which requirements in EU law, if fully implemented, would have the most impact on the supply of medicines to Northern Ireland?
Donal Murphy: In the absence of an agreed solution, our estimates are that between 40% and 50% of licensed products will be discontinued in the Northern Ireland market after the deadline of December 2025.
To add to the question on pack sizes, you may have a livestock wormer that comes in three different presentation sizes, for example. That can be very important for the economics of farming so that people can be prescribed the most appropriate pack size for them. You may have instances where companies will discontinue two presentations and continue with just one. They are trying to ensure that an option remains available, but it may not be the best option for that particular farm.
With regard to the EU law that would have the most impact on the supply of medicines to NI, as we mentioned earlier, there is a requirement to have a product registered to an EU address, which impacts on the product packaging, and to repeat batch test product that is warehoused in Great Britain.
Referring back to the issue of timescale, it is important to emphasise that in the world of regulatory affairs of medicines and veterinary medicines there are very long lead-in times for changes to supply chains and product licences, all of which must go through the regulatory authorities. Companies are making decisions—last month, this month and next month—about what products they will continue to market in NI and what will be discontinued. As Bryan said earlier, that is why we very much welcome the committee considering this matter. We need these issues to be resolved as soon as possible, because decisions are being made now.
The Chair: Could the long lead times that you mentioned be speeded up, or are they fixed in some way?
Donal Murphy: I will let Edward answer this.
Edward Ferguson: If you have, say, 100 products that you commit to supply to Northern Ireland, you need to make the necessary changes, and that involves the regulation that Donal has already mentioned. All animal medicine companies will be making the same change and there is only limited resource at the Veterinary Medicines Directorate, our regulators. You then have to batch generally around 10 variations per licence holder per month. That is 100 in 10 months. For most companies, it is more than 100. I have already planned what we need to do for products that we need to change for supply to Northern Ireland. I am up to June 2025, and that is if I started last month.
The Chair: I think that makes the point. I interrupted Baroness Goudie.
Baroness Goudie: No. I asked the full question.
The Chair: Has everyone answered?
Bryan Lovegrove: To reiterate some of the important previous comments for me, if another member state had left the EU, we would probably be saying the same thing. The EU has to nail down its policies. At the moment, they are black and white, and every time we have approached the EU Commissioners we have hit a stone wall in their responses. It does not look like they will back down at all. We are desperately trying to find acceptable solutions to the EU.
Northern Ireland is in an unfortunate situation where it has one foot in the EU and one foot in the UK, and that is very difficult to negotiate. The challenge is that products are warehoused in GB, batch tested and available for prescribing in GB. They all have a shelf life and run out of time. They then go over to Northern Ireland and will have to be re-warehoused and re-batch tested for a country that is still in the UK. That is difficult to comprehend, particularly with the estimated losses that we would face. So it is a real challenge to which we are desperately trying to find solutions. At the moment, there does not seem to be the political will, particularly on the part of the EU, to negotiate at all with anything that is being put forward by us as an industry.
Edward Ferguson: Given that I am from a commercial company selling products, all this costs money. The companies are absorbing all of this. It may well go into the cost of goods, the supply chain, et cetera. I do not know that there will be any change in price to consumers. However, all the funding going into the systems re‑engineering, packaging changes and the regulatory work to do the preparation is basically being diverted from research and development and bringing new products into the market, and I am not sure that is very good for anyone, if it can be avoided.
Baroness Goudie: That is a very important point.
Q4 Lord Dodds of Duncairn: Mr Lovegrove referred to the EU’s stonewall approach; it is not prepared to negotiate. Why do you think that, when it came to human medicines, solutions were found? The Prime Minister said that, effectively, in the Windsor Framework solutions and workarounds had been found for various specific issues. Yet there was nothing on veterinary medicines. Why are veterinary medicines so difficult for the EU to compromise on?
Bryan Lovegrove: I am not sure. Are they teaching us a lesson? Maybe. When the European veterinary medicine regulations were being drawn together, we managed to find space to get a derogation for the UK prescribing system. If we can find an industry‑wide solution or solutions and put that forward together, we would like to think that we could find a solution. The human health example gives us hope that it could be the same for veterinary medicines. We would like to think that that might be a door we could push on a little more.
Donal Murphy: We have had limited dialogue with the European Commission through our European association, AnimalhealthEurope. In my opinion, there has been this seeming unwillingness to change the Northern Ireland protocol for veterinary medicines, as opposed to human medicines, because veterinary medicines used in food-producing animals impact on the food chain. There is a single market for food from treated animals, and Northern Ireland will be part of that single market.
As I understand it, from the perspective of the European Commission the UK has left the European Union and is no longer applying the European veterinary medicines regulations. In real life, the products on the shelves are the same, but from its point of view there is a risk of divergence. In the years ahead of us, from its point of view it anticipates potentially further divergence. For that reason, its perspective on this is that we will have veterinary medicines that no longer align with the EU veterinary medicines regulations entering Northern Ireland and being used in food-producing animals and that food can then move around the single market. That is the first reason.
The second reason, as I understand it, is that many of the products used in human medicines are purchased through the National Health Service, which has commercial and public health implications, whereas for veterinary medicines it is an entirely private industry. The products that companies produce are prescribed by vets and SQPs; they enter farms and pet owners, and there is no bulk purchase by a national service. Those are the two distinctions that I took away from the limited dialogue I had as the reasons why there was not the same willingness to change for veterinary medicines.
Q5 Lord Thomas of Gresford: What will be the wider consequences for Northern Ireland and the rest of the UK if the supply of veterinary medicines is disrupted at the end of the grace period? What I have in mind is that we had evidence in relation to human medicines that they were manufactured in Great Britain and taken to Germany for batch testing, and then taken back to be stored in Great Britain before being imported into Northern Ireland. That was a considerable disruption and was cured in relation to human medicines by the Windsor Framework. What are the wider consequences?
Edward Ferguson: I am sorry to confirm that, although my company does not manufacture in GB, we have contract manufacturing companies. Those products are made and shipped to our European logistics centre. They are tested in Europe and released in the way Donal has already mentioned. They are then shipped back to GB for distribution. When we do a single release in Europe, we can supply GB but also the rest of the European Union. It seems daft for us as the UK and GB, but I am afraid that does happen.
As for the wider consequences, I go back to what I said previously. If we have to comply with the Commission requirements on 31 December 2025, I can see only a negative impact because of the reduction in the product range and number of products, which in turn could be harmful to animal and human welfare.
It will also mean that because of these changes there will be a permanent lens on the supply of product to Northern Ireland because of economic viability. I am sorry to be selfish, but GB itself will be fine. We are a big enough market and will continue to get products without any problem, but if we have to resort to a separate grouping, to which Donal alluded, or a non‑GB‑type product line, there is something in the business called minimum order quantity. That is the amount a company can make that is economically viable. If that minimum order quantity drops, that will make it impossible to supply to Northern Ireland, unless there is some further re‑engineering within companies. I think this will mean the loss of veterinary medicines. We have already mentioned specialty products, and I mentioned the poultry business in particular.
If we are able to keep this on the table, as Bryan has said, to be considered as part of the Windsor Framework, the derogation that human health enjoys, if it can be applied at least in part to animal medicines, will solve this.
Donal Murphy: I would just repeat some of what Edward said. We anticipate a negative outcome for animal health and welfare and human health. There are several examples of disease problems where there may be only one product available—for example, salmonella vaccine for poultry. These prevent diseases that cause animal health and welfare problems but also human health problems, so loss of product of that nature has severe consequences. So, in answer to the question, the impact will be adverse animal health and welfare and potential risks to human health.
Lord Thomas of Gresford: Are you looking for an opt-out or derogation again in some way? Is that your aim?
Donal Murphy: I think the UK animal health industry is seeking a similar arrangement to that which was agreed for the human health industry. I say “similar” rather than “the same”, because, as I mentioned earlier, animal health is far smaller than human health; we are only 2% to 3% the size. So there are some slight differences that would be required to make things work for the animal health industry, but we are looking for something similar to the human medicines arrangement.
Lord Thomas of Gresford: You did say that there was a great distinction between the fact that human medicines are supplied to the NHS as opposed to the small customers that you have. Is that right?
Donal Murphy: Yes, that is correct.
Lord Thomas of Gresford: Mr Lovegrove, what is your view of the wider consequences?
Bryan Lovegrove: As for GB, the wider consequences would be more limited than in Northern Ireland. The farming industry across the UK is a very proud one. Sometimes it comes under the spotlight for the food that is produced. There are growing lobby groups that try to minimise factory farming and the use of antibiotics in food production, but the farming industry is very proud and works very closely with the UK Government on arrangements such as the pathway scheme to overcome diseases and problems with animal health and welfare. It is seen by the British consumer as being very professional, and they trust the food that comes from UK farmers. I would hate to see the day when there is negativity or a weakening in the public perception of farmed produce from Northern Ireland because of the lack of availability of veterinary medicines.
Donal has just mentioned the salmonella vaccine for egg production. I understand that, if laying hens do not receive that salmonella vaccine, egg producers will not be able to export from Northern Ireland to GB. So it starts to put extra questions in the minds of the British public about food production and the quality of food produced in Northern Ireland compared with Great Britain. To me, that would be a huge shame.
Lord Thomas of Gresford: I suppose the distinction between human and veterinary medicines is that the farming industry produces food; it is the food chain, as you mentioned in your earlier answer. That food chain may well move back into the EU in a way that, of course, human medicines would not. Do you see that as a factor?
Bryan Lovegrove: There would be some degree of that. Within food production and supply to the EU, I would like to think that the UK has a good history with EU member states. Having been part of the Common Market since 1976, it is not as if we are a new country looking to provide food products to EU member states for the first time. For veterinary medicines, there is always a withhold period where farms cannot sell stock until a certain amount of time has elapsed so that all the veterinary medicines that have been given to that animal have passed through its system. You would like to think there would be a way of finding a solution whereby, even though animals may have been treated in Northern Ireland, they would be fit for resale into the EU, but, as Donal said, it is a principal point of concern at the moment with EU Commissioners.
Q6 Baroness O’Loan: The first response I want to make to Mr Lovegrove is that, living in Northern Ireland and consuming Northern Ireland-produced products, we know how very good those products are and how proud we are of them. Therefore, the evidence you have given us is a cause of significant concern.
On the question about lack of political will, which Lord Dodds asked, when we went to Brussels in May we encountered an acknowledgement that the veterinary medicines issue is on the table. We did not receive satisfactory responses as to why nobody was grappling with the question, which is one of the things that led to this inquiry, but now I want you to provide me with solutions. Starting with Mr Lovegrove, the question is: what would solve the problems that you have articulated so clearly of supply of veterinary medicines to Northern Ireland? Can you give us some ideas of how you could move forward on that?
Bryan Lovegrove: That is a very good question. I would like to say I have an instant answer. It might come from different areas. There certainly needs to be the political will at all levels to find out who will be driving the move to find a solution. We are very pleased to be here this afternoon and would like to continue meeting anybody who will listen going forward, so that we do not reach the cliff edge at the end of December 2025.
It is about making sure that people are willing to listen and finding that political will at the highest possible level. Given that there is so much going on in the UK at the moment, that might be difficult, but it might come down to the wire and be a very senior meeting between the UK and EU Commissioners quite near to the end of the deadline where a solution might be found. If we could find a solution prior to that, it would be ideal. I know politicians always like industry to put forward potential solutions rather than government putting solutions to industry, so that is something we will take away with us, and have been discussing leading up to this meeting.
On warehousing and batch testing, if it is acceptable for GB we could find a mechanism to make it acceptable for Northern Ireland as well, instead of having that re-warehousing and re-batch testing for Northern Ireland, which I still see as part of the UK. As a sub-note, I would hate to see the UK Government making decisions on policies that pushed Northern Ireland further and further away from the rest of Great Britain. Although it is a smaller issue, it is still an important one. A solution going forward would be recognition that GB batch testing and warehousing might be suitable for Northern Ireland, and manufacturers that have their address in GB are recognised also for Northern Ireland. That is where the starting point might be.
Donal Murphy: I echo some of what Bryan said, but those issues—batch release and marketing authorisation holder address and packaging—are matters similar to those that the human medicines industry had, so if we could get those two issues solved it would go a long way. It would basically resolve the majority of the problem.
I want to add one other point. In response to the question from Lord Dodds, in which I referred to the EU concerns about the integrity of the food chain and the impact of the food chain on the common market of food from treated animals, these are legitimate concerns from the European Union’s point of view. If I were in their shoes, it would be a point I would be making, because there will be potential for regulatory divergence. So a legitimate point is being made, but it is not an unresolvable point.
Our industry is very heavily regulated, and the supply chain of these products is very strictly controlled. For example, you could have an instance where, if a product or products were to diverge significantly from the EU, they could be limited to GB only. The point that has been made (by the EU) is a legitimate one, but I do not think it is unsolvable.
As for regulatory divergence, about 3,000 products are authorised in the UK. We are not talking about hundreds of products diverging year on year; you will have small numbers that would diverge significantly from the EU’s requirements. Their concerns are legitimate, and any solution needs to listen to those concerns, but there are ways in which the regulators in the UK and the EU could come up with solutions to these matters in such a regulated and controlled industry where products are not just flying off shelves. Things are controlled very strictly throughout the supply chain.
Edward Ferguson: To save time, I will align with Donal and Bryan. I would say the same thing.
Q7 Lord Lexden: What role could a UK-EU sanitary and phytosanitary agreement play in finding a solution to the issue of veterinary medicines? Coupled with that, what do you believe to be the prospects for such an agreement?
Donal Murphy: A UK sanitary and phytosanitary agreement that had a section on veterinary medicines could certainly address this. I will not repeat what I said in answer to the previous question, but in essence that is the point on which we are focused, and it is where a solution could be included.
I am not aware of any current ongoing talks that would suggest that any such agreement is imminent. It is probably worth mentioning to the sub-committee that in the European Commission notice from December 2022, which set out the three-year transition period that we are currently in, there were numerous actions for the UK regulator and for industry. The UK regulator was required to provide a list of products at risk of discontinuation to European Commission officials. In February 2023 and September 2023, there was information about what steps were being taken to mitigate against these products being discontinued. That is followed by a rolling three-monthly update from the UK regulators to European Commission officials about products at risk and what is being done to stop them disappearing from the Northern Ireland market.
There is that level of dialogue, but as to how likely that is to translate into an SPS agreement that covers veterinary medicines, I am not aware of anything currently, so I believe that the prospects are not looking good at present.
Bryan Lovegrove: My first answer is that I would turn over every stone if there was a potential solution or agreement that we could find. The current UK veterinary medicines regulations, as Donal mentioned earlier, are highly regulated. The solution may come from a small adaptation of what we already have in place at the moment without a major change, but if we cannot find a solution in the current regulations, I would certainly look at finding a solution wherever we could.
Edward Ferguson: I would very much echo what Bryan and Donal have said. We heard that seed potatoes are in scope for an SPS agreement. For goodness’ sake, surely we can get animal medicines in there too. That requires us to be discussing it, and that is not actually happening.
To add a bit to what Donal said about the list and Commission Notice of December 2022, in addition to products that are at risk, the Commission is asking for a plan to comply with the European acquis—the legislation—for continued supply after the deadline. It seems to me that the Commission is assuming that everything will survive. As we have already said, ladies and gentlemen, that will not necessarily be the case. I know that, because I filled in the submission for our company on a number of products where I had to say that we would be planning to discontinue this one in particular. That is a sad list.
Lord Dodds of Duncairn: Mr Ferguson, what was the title of that requirement to comply?
Edward Ferguson: It is the Commission notice of December 2022. Can we send that on, Donal?
Donal Murphy: Yes.
The Chair: If you could send it on to us, it would be very helpful to the committee.
Edward Ferguson: In essence, for a complete understanding, it was the extension of the deadline from December 2022 to December 2025, but it laid down conditions for people wishing to benefit from that derogation.
Lord Dodds of Duncairn: That is very helpful. We look forward to receiving that.
Baroness O’Loan: I want to follow up on the lists to be produced in February and September 2023. Have you seen the lists? Are they satisfactory? Have they gone to the Commission?
Donal Murphy: I have not seen the lists, because there are commercial confidentiality issues around them. The way this information was gathered is that the regulator, the Veterinary Medicines Directorate, was in direct dialogue with the animal medicines companies about its own list of products at risk, but it was not publicly available. I have not seen the list, but I know the general picture. That is the first point.
On the second point, it certainly was sent by the UK regulator to the Commission, and both the February and September 2023 deadlines were achieved.
Edward Ferguson: To add to what Donal has said, companies that wished to benefit and continue to supply without complying with European law were required to submit that data to the competent authorities, in this case the Veterinary Medicines Directorate, and then up through Defra to the Commission.
Q8 Lord Empey: Thank you for coming to give evidence to us. To some extent Mr Ferguson touched on this. Are you aware of the efforts to date by the UK Government or the European Union to address the issues relating to veterinary medicines? Mr Ferguson, I think you have already hinted at it, so I will start with you.
Edward Ferguson: As a generic statement, I do not believe that any animal medicines companies want to reduce any medicines to Northern Ireland. We will be doing everything in our power as a company to comply, and I am sure other companies will do the same; Donal is nodding. If that means completing this spreadsheet and submitting it, we will continue to do that. We remain in hope that there will be some kind of Windsor Framework human health derogation, which, if you like, will make it all go away.
However, because of the timeframes I mentioned, we have to plan around the regulatory issues to make sure that the regulators and our colleagues in the manufacturing divisions of medicines companies can cope and we can get the supply chain, so that on 31 December 2025, if this proceeds unchallenged, we have compliant medicines available to go into Northern Ireland before or on that date so that there is no welfare issue.
Lord Empey: Obviously, that covers the private sector, but are you aware of whether the Governments of the EU are actually doing anything about this or are talking to each other about it?
Donal Murphy: To date there has been limited dialogue, but, as we have communicated throughout this session, so far it does not appear as if there is any movement on the points that are causing a problem for us. As I understand the position of the European Commission, the industry has been given more time to comply with the EU acquis—the EU legislation.
The first deadline for us was December 2022, and in the middle of December 2022 there was an announcement of the three-year extension to which I referred and will send to you afterwards. As I understand it, its position is that the industry has been given more time to comply with these requirements and further dialogue is not necessary. I am not aware of any current ongoing dialogue about this subject at present, but, as Edward has communicated and as I referred to earlier, some of these changes are simply uneconomic for companies to make for small-volume products, so more time will not be the answer for some products. Even if it was 10 years, time is not the answer; it is the regulatory system.
I would like to add one further point. As part of this whole framework, the Veterinary Medicines Directorate, the UK regulator, is meant to be acting as regulator in Northern Ireland but applying the EU regulation, but as part of this whole problem it currently does not have access to all the IT systems relating to veterinary medicines regulation that exist in the EU, and it does not have access to all the information it needs to act as regulator. That is another strand to this.
To answer your question, there was limited dialogue. It has not achieved what we want, and we are not aware of any current ongoing dialogue.
Lord Empey: Mr Lovegrove, are you on the same page?
Bryan Lovegrove: Very much so. Any dialogue we have had with EU Commissioners was an extension on the time limit to the end of 2025. The last line of the response was underlined and said, “Full compliance with EU regulations on veterinary medicine products is expected”—full stop. That was at the end of 2025. So it was a time limit extension and nothing else from the EU.
As far as the UK Government are concerned, Donal and I and others are working with the Veterinary Medicines Directorate; we have regular meetings with it. We are supplying it with information and it is doing what it can to influence both Defra and the UK Government. That is an ongoing process of dialogue.
Ultimately, we are doing everything we can. I reiterate that we are very pleased and privileged to be here this afternoon. We will speak to anybody at any time to explain the challenges that we think Northern Ireland will face with a lack of veterinary medicines because of the implications of the deadline for veterinary medicines.
Lord Empey: Chair, I think that to some extent my next question has been answered as well, so maybe this gives you an opportunity to call in Lord Godson with his question.
The Chair: Baroness O’Loan has a question first, and then we will move on to Lord Godson.
Q9 Baroness O’Loan: This question may be a bit off field. I was thinking about the UK veterinary pharmaceutical industry—the veterinary medicines industry. Northern Ireland uses medicines produced in GB, but is there no export of veterinary medicines produced in the UK currently to the European Union?
Donal Murphy: There will be a certain degree of export. The majority of veterinary medicines used in the UK are produced overseas. There is some manufacturing in the UK and the product manufactured in the UK will be exported to the EU, as you describe, but when it is exported to the EU—this will be historical—the whole system for distribution and registration will comply with all the regulatory requirements. They will have been meeting the EU requirements for years and will have been adapting to EU requirements.
Baroness O’Loan: For example, even if you are shipping in components, if you are producing in the UK and exporting to the rest of the European Union, you would have been in compliance with all its requirements. What I am really interested in is the size of that market. What percentage of your exports went to Europe? Do you know that?
Donal Murphy: I am afraid I do not have that information. Edward, do you want to add to that?
Edward Ferguson: One significant NOAH member has a very significant manufacturing capacity in GB. If I go back a little, this relates to when Brexit was first coming into play. It had to change all the packaging from a GB licence holder and all the GB release for each of the batches to Germany, which Donal mentioned. It is still made by this company at the same location in GB, but it all has to go to Europe. The reason is because the UK manufacturer was supplying the whole of Europe, but in order to comply with what happened after EU exit it needed to be European based. I cannot speak for that company, but I imagine it may be faced with the same issue that I know my own company has of making it in GB and sending it to Europe for it to be shipped back to GB.
Baroness O’Loan: Could you not make it in GB, send it to Northern Ireland and then ship it back to GB?
Edward Ferguson: That is entirely possible; that is correct.
Q10 Lord Godson: Thank you again to the distinguished witnesses. Perhaps you would all reflect on this, but particularly in the first instance Mr Murphy. He talked about EU concerns, which I think he said were mediated by your European cognate as the representative trade body rather than by you. Although it is not a large number of products, there are concerns about the emergence of regulatory divergence, which over time might increase. As we stand now in early 2024, with grace periods coming to an end and political, policy and substantive business cycles, perhaps all of you could outline where, from the point of view of our national interest as the United Kingdom, we might wish to diverge from the EU in future, intrinsically for the sake of our own interests in this space.
Donal Murphy: If I understand your question correctly, you are asking where it would be—
Lord Godson: You said that the EU had concerns as it was represented to you by your cognates in Europe. Where might we want to diverge for our own reasons and interests, for the pure provision of greater prosperity and well-being for the veterinary sector?
Edward Ferguson: If we take Northern Ireland out of this completely, because it is part of Europe and must align with Europe, it is entirely possible that, if we can separate the joint product, the UK could give a licence sooner than Europe. We could be seeing a market advantage from exactly that. We would be slightly freer in terms of some of the things that are being asked to be put on packs, because if it was a GB‑only product we could comply with that without needing to worry about what Europe was looking for. That could be a commercial advantage to the UK. We need to be sure that the UK is suppliable as to minimum order quantity, but I have already said that I believe that would be the case because it is such a major market. There are possibilities for UK-only products, and Europe can follow behind commercially.
Bryan Lovegrove: I would entirely concur with that statement. As for freedom from the EU, we are still trying to untangle that bowl of spaghetti, but in the future, as has just been said, with developments in veterinary medicines and quality of farm produce in particular, we could be leading the way, and Europe would then follow.
Q11 Baroness Ritchie of Downpatrick: I apologise for being late. I was in the Chamber. I know that you have answered myriad questions this afternoon. Way back in September I tabled a Written Question of the then Minister, Lord Benyon, about what discussions had taken place between the UK and the EU regarding an SPS agreement. In your view, what are the discussions that have taken place? Are both sides serious about those discussions and achieving a solution in the best interests of farmers and the farming industry in Northern Ireland?
Donal Murphy: There has been limited dialogue to date. I am not aware of anything in recent weeks or months. The European Union’s view is that industry has been given more time to adapt to these changes and it believes that that time should be sufficient for these issues to be resolved. The general sentiment from the animal health industry is that more time alone is not the issue.
In the UK, the Veterinary Medicines Directorate, our regulatory authority, and Defra officials have listened very well to our concerns. I think they take these concerns seriously, but if there is one thing we would wish to achieve today, from the discussion when I was coming in here, it is anything that can be done to maintain this on the agenda. We are all aware that there are lots of complexities and politics generally with regard to the Northern Ireland protocol. In the grand scheme of things, we are conscious that it is a small industry, but it is very important. Anything that can be done to keep this on the agenda so it is not forgotten about is really what we would hope to see.
The Chair: Thank you very much indeed for the evidence you have given to us. All of you have stressed—it is something we all take very much to heart—that this subject matters a huge amount to Northern Ireland. It is complicated, and we are dealing with it precisely because it is complicated and matters an awful lot to Northern Ireland. We are very grateful to you for having come to give evidence to us today. On behalf of all of us, thank you very much indeed.