Written evidence submitted by the Association of the British Pharmaceutical Industry (ABPI) (FRE0102)

About the ABPI

The ABPI exists to make the UK the best place in the world to research, develop and use new medicines. We represent companies of all sizes who invest in discovering the medicines of the future.

Our members supply cutting edge treatments that improve and save the lives of millions of people. We work in partnership with Government and the NHS so patients can get new treatments faster and the NHS can plan how much it spends on medicines.

Every day, we partner with organisations in the life sciences community and beyond to transform lives across the UK.

1.      Executive Summary

1.1  The EU remains the UK’s closest and largest trading partner for pharmaceutical products. In 2019, 40.3% of UK’s pharmaceutical exports went to the EU at a value of £9.37Bn and 80.9% of the UK’s pharmaceutical imports were from the EU.

1.2  The ABPI recognises the challenge in securing an ambitious and comprehensive trade agreement in the very limited time left before the end of the Transition Period, but urges both sides to conclude a deal that covers the essential areas of: medicine supply; patient safety; science, research, and people; and customs.

1.3  Should a holistic agreement not be possible in the remaining time, we call upon both sides to reach an agreement that will ensure uninterrupted supply of medicines to patients in the UK and the EU. Specifically, this will be achieved by:

• Agreeing a Mutual Recognition Agreement (MRA) on Good Manufacturing Practice, including batch testing
• Ensuring that companies from across the UK can provide a seamless supply of medicines to patients in Northern Ireland from the end of the Transition Period

1.4  Both the UK and the EU have world leading scientific institutions, working together through programmes (such as Horizon 2020) and research consortia (such as European Reference Networks), which have been key to our joint success in research and innovation. Continued collaboration is therefore essential in supporting both the UK and EU’s research and innovation agendas.

1.5  The ABPI strongly supports the UK Government’s commitment to consider participation in EU programmes such as Horizon Europe. However, the ABPI believes that the UK should not only look to secure continued participation, but also seek to secure influence in EU research programmes.

1.6  In addition, the ABPI believes that for the UK to retain its position as a global hub for life sciences the movement of high-skilled talented people is vital.

1.7  With global life science hubs competing for research funding, the European research landscape is stronger with the EU and UK research communities continuing to work together rather than trying to compete with each other, as well as with other life science power houses, including the USA, Japan and China.

1.8  Ultimately, the ABPI is calling for both sides to prioritise health and patients’ access to medicines in the UK-EU negotiations.

2.      Introduction

2.1   The ABPI exists to make the UK the best place in the world to research, develop and use new medicines. We represent companies of all sizes who invest in discovering the medicines of the future. Our members supply cutting edge treatments that improve and save the lives of millions of people. We work in partnership with Government and the NHS so patients can get new treatments faster and the NHS can plan how much it spends on medicines. Every day, we partner with organisations in the life sciences community and beyond to transform lives across the UK. Life sciences companies are critical for the health of our population, and the success of our economy. Operating across 860 sites in the UK, the pharmaceutical industry invests more than any other sector in R&D in the UK, to the value of £4.5 billion in 2018[1].

2.2   The sector employs 63,000 people across the UK, with 24,000 dedicated to R&D1, and is six times more productive than the UK average manufacturers, at £330,000 GVA[2].  It is a critical stabilising sector in a recession hit economy and remains central to any long-term economic recovery centred on innovation, productivity and high-skilled, quality jobs.

2.3   The EU remains the UK’s closest and largest trading partner for pharmaceutical products. In 2019, 40.3% of UK’s pharmaceutical exports went to the EU at a value of £9.37bn and 80.9% of the UK’s pharmaceutical imports were from the EU.[3]

2.4   The ABPI welcomes the opportunity to submit this evidence to the House of Commons Future Relationship with the EU Committee inquiry on the progress of the EU-UK negotiations. We have focused our response on the questions most relevant to the life science sector however, before doing this we would like to take the opportunity to highlight up front the industry’s priority issues for the negotiations with the EU, those that impact supply of medicines for patients in the EU and the UK. We would be pleased to follow-up with the Committee on any points raised in this paper.

3. What the EU and the UK must do now to secure medicines supply

3.1   Governments and pharmaceutical companies across Europe have rightly been focused on responding to COVID-19. This has been an especially challenging time for our members who have been working around the clock to ensure supply chains continue to be robust in the face of global disruption and unprecedented demands, under worldwide lockdown conditions.

3.2   Companies were already working at capacity and have done what they can to prepare for an unknown future UK-EU relationship and yet there remain a number of critical but unanswered questions hampering companies’ ability to plan for January 1st 2021.

3.3   With little over four months until the end of the Transition Period, the forecast border disruption and uncertainty of the arrangements that will be in place from January 2021, means that threats to medicines supply are again on the horizon.

3.4   This time, however, there are additional pressure due to COVID-19 and the added uncertainty about how the Northern Ireland Protocol will be interpreted and implemented, and what this will mean for our companies’ medicines supply chains.

3.5   We ask for both sides to agree and implement practical solutions as a matter of urgent priority, so our members can ensure continued, uninterrupted supply of their medicines to patients from 1 January 2021.

1.9  The ABPI recognises the challenge in securing an ambitious and comprehensive trade agreement in the very limited time left before the end of the Transition Period, but urges both sides to conclude a deal that covers the essential areas of: medicine supply; patient safety; science, research, and people; and customs.

1.10          Should a holistic agreement not be possible in the remaining time, we call upon both sides to reach an agreement that will ensure uninterrupted supply of medicines to patients in the UK and the EU. Specifically, this will be achieved by:

• Agreeing a Mutual Recognition Agreement (MRA) on Good Manufacturing Practice, including batch testing
• Ensuring that companies from across the UK can provide a seamless supply of medicines to patients in Northern Ireland from the end of the Transition Period

The ABPI’s response to the questions set out by Hillary Benn MP in his 23rd July letter to ABPI Chief Executive Richard Torbett.

4. What are the key priorities of your members and your sector in general regarding science and research in the negotiations between the UK and the EU?

4.1   The Life Science sector is built on scientific collaboration and cooperation globally. The leadership of the UK scientific community for medical research is acknowledged worldwide, but it is dependent upon the ability for that community to advance their research with sufficient funding, dialogue and partnership with the international community and the ability to recruit and retain talented scientists at all stages of their development and career.

4.2   Scientific research collaborations: Europe is a global leader in Life Sciences R&D, with EU research and innovation framework programmes, such as Horizon Europe, helping to drive world-leading research and support international collaboration.

4.3   For the past 40 years, the UK has played a crucial role in shaping the EU research and innovation framework programmes, driving world-leading research, supporting international collaboration, and sharing technical expertise. Furthermore, with the largest therapeutic pipeline in Europe, the UK has been a significant contributor to Europe’s scientific output, conducting almost 20% of the total research work within EU health programmes between 2007 and 2016[4]. Ranked 1st out of 28 Member States on participation in Horizon 2020 (between 2014 and 2016)[5], the UK has also been a huge beneficiary from EU framework programmes.

4.4   Also, the EU research and innovation framework programmes (such as Horizon 2020) and various research consortia (such as European Reference Networks), have provided collaborative platforms, which have been key to the joint success of the UK and EU, in research and innovation – this has been one of the key non-financial benefits of participation in the EU research framework programmes. Continued collaboration is therefore essential in supporting both the UK and EU’s research and innovation agendas.

4.5   The ABPI strongly supports the UK Government’s commitment to consider participation in EU programmes such as Horizon Europe. However, the ABPI believes that the UK should not only look to secure continued participation but also seek to secure influence in EU research programmes.

4.6   Securing an agreement that facilitates the ease of movement for highly skilled talent in life sciences: the ABPI believes that for the UK to retain its position as a global hub for life sciences the movement of high-skilled talented people is vital. We recognise and welcome that the UK Government and EU have made it clear that they will protect the rights of citizens working in each territory. The UK’s intent to develop a new immigration system to allow for the best and brightest scientists from the EU and the rest of the world to travel to, and work in, the UK is welcomed.

4.7   The new Global Talent visa is a great example of the type of thinking needed to make that a reality. However, it must be recognised scientists of varying levels and experience contribute to the UK’s success in scientific research and development, and that British scientists can also benefit from working and studying abroad.

4.8   The ABPI calls for a transparent and mutually beneficial system for exchange of scientific talent. To that end, the UK Government should agree to maintaining current systems, which support knowledge exchange and access to talent, such as the Intracompany Transfer process.

4.9   To support a continuation of essential business operations, the ABPI also asks for Government to agree to maintain mutual recognition of professional qualifications. This means employees with relevant qualifications from the other jurisdiction will continue to be able to perform their job as they can today, based on their existing qualification.

5. Has the Covid-19 pandemic changed any of these priorities?

5.1   The COVID-19 pandemic has demonstrated the benefit of collaboration and partnership in science, research, and innovation, with academia, charity, industry, and Government working together at pace, nationally and internationally, to develop new medicines and vaccines for COVID-19.

5.2   In particular, delivery of multi-site and multi-country clinical trials and the sharing of data has been of critical importance to the global COVID-19 R&D effort. As clinical trials are a key part of the UK and EU research ecosystem, not just for COVID-19, the UK should continue participating in international clinical trials.

5.3   As countries look to recover from COVID-19 and rebuild research environments, especially for life-threatening diseases, such as cancer and rare diseases, the UK should build on existing partnerships. This will enable the UK to grow its collaborative and competitive research base, in order to conduct both COVID-19 and non-COVID-19 research.

5.4   COVID-19 has reinforced the need for the UK and EU to continue to collaborate across science and research and reinforced ABPI’s asks relating to science, research, and people.

6. What might be the consequences of a deal which does not meet these priorities? What would happen if agreement were not reached between the UK and the EU on science and research?

6.1   EU framework programmes support the collaborative environment from which the UK Life Sciences sector thrives. For example, the recent Horizon 2020 programme funded research in areas such as biotechnology, advanced manufacturing, rare disease and vaccines, and informatics and delivered 11,000 publications, 695 clinical trials and 408 patent applications, between 2014 and 2016[6].

6.2   As a Third Country the UK can continue to participate in EU programmes however, this will result in a diminished influence and reduction in the UK’s capacity to influence, shape and contribute to the EU research and innovation agenda.

6.3   With global life science hubs competing for research funding, the European research landscape is stronger with the UK and EU research communities continuing to work together, rather than trying to compete with each other, as well as with other life science power houses, including the USA, Japan and China.

7. Could you sketch out a possible compromise between the UK and the EU on science and research and how it might be achieved?

7.1   The UK and EU have been discussing Union Programmes as part of their negotiations and it is encouraging that both sides have committed to the principle of UK participation.

7.2   Involvement of a non-member state in the EU’s strategic research agenda is not new. For example, Israel is an Associated Country participant in Horizon 2020 which means it can influence and contribute to the strategic research agenda, through joint committees which evaluate and review implementation of Israel’s association agreement and the implementation activities of Horizon 2020[7]. Although we would like the UK to have greater involvement in programmes such as Horizon 2020, the relationship with Israel does set a precedent for establishing a similar arrangement for the UK.

7.3   Earlier this year, the Wellcome Trust published a post-Brexit agreement for research and innovation7, which proposes how an agreement between the UK and EU might be achieved:

• UK association to Horizon Europe as a core part of a research and innovation agreement
• A shift away from the historical GDP-based financial formula for the UK to agree terms
• Precedent to provide the UK with an appropriate degree of influence over the Horizon Europe programme
• The exchange of research workers and their direct families as an essential part of any research and innovation agreement
• An agreed backstop mechanism for the sharing of personal data

7.4   The ABPI welcomed this agreement and since has signed a letter from the Life Sciences sector[8], stating that Horizon Europe association should be a core part of the future relationship between the EU and the UK for research, underpinning valuable scientific partnerships that have been built up over many years.

7.5   The sector calls on both sides to continue these negotiations with fresh energy, a spirit of compromise, and a focus on what is needed for the success of the programme. To that end, there are a number of solutions to some of the sticking points in Horizon Europe discussions:

• Demonstrating commitment to the programme
• Ensuring a fair financial contribution through a ‘two-way’ correction mechanism
• Accepting EU oversight of the use of programme funds
• Agreeing to introduce reciprocal mobility arrangements to support the programme
• Clarifying that the results of research can be exploited beyond the EU

8. Which EU agencies and programmes relevant to science and innovation are open to third country participation? What is the legal basis for this co-operation? What is the level of involvement in decision-making for third countries in these EU agencies and programmes? Could you set out the role of the Court of Justice of the EU for any agencies you have highlighted? Which of these agencies and programmes do you understand are being discussed in the negotiations between the UK and the EU? Which of these do you wish the UK to prioritise?

8.1   Currently the UK is a significant beneficiary of EU funding and is highly influential in both the design and delivery of EU R&D programmes. The following outlines the importance of UK participation and mechanisms for influence. ABPI cannot comment on the role of the Court of Justice or the status of negotiations and prioritisation.

8.2   There are a number of EU programmes relating to research and innovation, Horizon Europe; Health Programme; Cohesion Fund; European Regional Development Fund; Structural Reform Support Programme; European Structural and Investment Funds; Environment and climate action.

8.3   England and Scotland receive substantial EU funding through competitive Horizon 2020 programmes. In contrast, Wales receives little Horizon 2020 funding, instead benefiting from relatively high levels of funding from the European Structural and Investment Funds (ESIF)[9].

8.4   The UK Venture Capital ecosystem is also reliant on EU funds from the European Investment Bank (EIB) and European Investment Fund (EIF).

8.5   The UK would need to negotiate its involvement in each programme we were interested in. The ABPI cannot comment on which programmes are open to third country participation, as our understanding is that this is variable country by country and subject to negotiations.

9. Does an agreement need to be reached on the EU’s Multi-annual Financial Framework before any detailed discussions can take place about how much the UK would need to contribute to EU programmes or agencies?

9.1   In regard to whether an agreement needs to be reached on the EU’s Multi-annual Financial Framework (MFF) before any detailed discussions can take place, the EU Commission stated that “starting negotiations with third countries would require a prior agreement on the MFF”[10].

9.2   The European Council agreed on 21 July on the MFF for the period 2021-2027, therefore timely agreement on UK participation is now needed. This is needed to provide clarity and assurance to UK-based commercial and non-commercial researchers who participate in EU research initiatives and receive EU funding, before the end of the Transition Period and ahead of the start of Horizon Europe on 1st January 2021.

10. How is a third country’s contribution to an EU agency or programme in the field of science and innovation calculated?

10.1           The total UK contributions to and receipts from the EU budget are variable, difficult to calculate, and subject to interpretation, with the exact UK contribution to the EU for research funding programmes depending on negotiations, including negotiations around free movement of people.

10.2           However, as stated in the House of Lords European Union Committee Report on Brexit and the EU Budget (2017)[11], the UK’s gross contribution to the budget in 2014 (after the rebate) was £14.4 billion (approximately €17.3 billion). Horizon 2020 expenditure that year was €6.5 billion, 4.7% of the total EU budget of €139 billion. A very rough estimate of the current ‘fee’ paid by the UK for Horizon 2020 participation could therefore be around €809 million”.

11. Are any third countries currently receiving more in funding than they contribute?

11.1           The ABPI cannot comment on whether any third countries currently receiving more in funding than they contribute.

12. Are there any non-financial benefits for third countries that would appear to justify their status as net payers into the EU’s science and research programmes?

12.1           In addition to funding, the EU framework programmes provide practical vehicles to foster collaboration in R&D, establishing international research consortia which share data, access to talent, access to patients and access to research and clinical trial databases. Participants in Horizon 2020 came from over 130 countries, with nearly 350,000 researchers supported across global institutes and 1 in 5 publications based on academia-private sector collaborations[12].

13. Are there any lessons for the UK with regards to the EU-Switzerland relationship, and how this has affected Swiss participation in Horizon 2020?

13.1           According to evidence from the EU Commission[13], Switzerland has been associated to the EU Research framework programmes since 2004. However, due to the immigration referendum in 2014, Switzerland was only allowed partial association to Horizon 2020. This has since been resolved and Switzerland has had full association since 2017. Switzerland is by far the most active Associated Country both in terms of number of participations and size of EU budget contribution to Switzerland entities. Switzerland is yet to agree on participation in Erasmus.

13.2           The UK must consider how their agreement on immigration and free movement of workforce will impact its participation in EU Research Framework Programmes. There is evidence that biopharmaceutical companies are already finding it challenging to attract the right talent to the UK, particularly due to the uncertainty around the future UK-EU relationship. Any loss of highly skilled academics and researchers would diminish the UK’s research base.

13.3           The Wellcome Trust’s post-Brexit agreement for research and innovation[14] also highlighted that the exchange of research workers and their direct families, were an essential part of any research and innovation agreement.

14. Is it clear what your members and employers in your sector must do to prepare for the end of the Transition Period? How much progress have been made on preparations so far?

14.1           The sector and Government worked collaboratively to prepare for the potential of a no deal EU Exit in 2019, implementing a multi-layered approach, to achieve a high level of readiness for medicines and medical products. A similar collaborative approach is needed to prepare for a possible non-negotiated outcome, with several areas of guidance still required by industry.

14.2           Industry has received part of this guidance through a letter from Steve Oldfield, Chief Commercial Officer of the Department of Health and Social Care. The letter outlines DHSC plans for this multi-layered approach, confirming key aspects of Government and industry responsibilities for the end of the transition period. The letter confirms that the multi-layered model includes: the need for rerouting away from the ‘short straights’; a Government Secured Freight Capacity and Express freight service; DHSC engagement with companies to help prepare ‘trader readiness’ and encouragement for 6 week stockpiles on UK soil, not over normal business levels, where possible.

14.3           This guidance provides more certainty for companies in their preparations, however ABPI members require further guidance, as acknowledged in the letter. This guidance is particularly important in the areas of regulations on licencing, clinical trials and pharmacovigilance. Previous guidance was issued in advance of the March and October 2019 deadlines and similar guidance from the MHRA and DHSC is required.

14.4           ABPI members also require further information on how the Northern Ireland Protocol will operate in practice regarding medicines, including how medicines will be moved between countries in the UK, where medicines can be manufactured and how they can be packaged under the Protocol. The Government has stated more information on medicines would follow its Command Paper in May, and our members are awaiting this guidance.

15. To what extent is science and research co-operation isolated from the wider political context of the negotiations? To what extent are any discussions on science and research related to other areas of the negotiations, such as regulatory standards or labour mobility, or the unilateral data adequacy assessments? What implications could these other provisions of a future UK/EU agreement have on your members and your sector in general?

15.1           A positive trading relationship with the EU, underlined by an ambitious and comprehensive Free Trade Agreement (FTA), Mutual Recognition Agreement (MRA) and cooperation on research, is essential in the short-term, to avoid disruptions to medicine supply chains causing delays in access to medicines for both EU and UK patients and, in the long term, safe-guard the competitiveness of the EU and UK life science hubs vis-à-vis the US, Japan and China.

15.2           It is vital for the UK Government, the European Commission and the EU Member States, to recognise that the pharmaceutical industry is unique in the fact that it is not only an economic and innovative sector but it also has a vital public health role.

15.3           As such, we are calling for both sides to prioritise health and patients’ access to medicines in the EU-UK negotiations and not make them subject to larger political considerations. Both sides should focus on a deal that covers the essential areas of medicine supply; patient safety; science, research, and people; and customs. 

August 2020