American Pharmaceutical Group (APG) – Written evidence (LSI0110)

1. The American Pharmaceutical Group (APG) remain significant investors in the sector in the UK, investing around £1.2 billion annually. The Group works to promote a greater understanding of the value of our member companies to people’s health and the UK economy and wants to work with the Government to deliver a successful industrial strategy.

2. APG members play a vital role in the UK life sciences ecosystem, supporting over 14,000 jobs, of which over 3,000 are in R&D. We are the leaders in immuno-oncology, immunology and neurosciences, responsible for cutting edge innovations in areas of high unmet need such as Hepatitis C and are leaders in the next wave of scientific discovery in Alzheimer’s and HIV.

3. We exist to see patients benefit from the best possible treatments – be that through research, innovation, manufacturing or the delivery of healthcare. We are partners to many UK Universities, SMEs and the NHS, conducting more than 500 clinical trials in the UK and providing over 24,000 patients with the opportunity to benefit from innovative medicines[1].

4. Erik Nordkamp, Pfizer UK Managing Director, APG Chair, and sector lead on the Life Sciences, would be pleased to give oral evidence to provide views of global investors on the strategy and opportunities for the UK.

The opportunity of the Life Sciences Industrial Strategy and Sector Deal

5. The APG has been working closely with the Government, Sir John Bell and partners across the UK life sciences ecosystem on the development of the strategy. Two of the APG members – Janssen and MSD – sat on the Life Sciences Industrial Strategy Board. We believe the strategy and forthcoming Sector Deal provides a once in a generation opportunity to improve the life sciences operating environment in the UK, ultimately benefiting both patients and the economy.

6. The APG has welcomed the focus of the LSIS on the need for a holistic approach to life sciences policy, recognising the importance of improvements for UK patients by prioritising reforms to the access and uptake environment.

7. APG members believe that the final Sector Deal and Government response to the Life Sciences Industrial Strategy (LSIS) should be an ambitious deal including a holistic pricing, spending, access and adoption framework for the benefit of the life sciences sector, patients and the UK economy. The Government response must take into account the impact of the connection between access to medicines and downstream investment in life sciences. Closing the gap in patient access to treatment that the UK has in relation to internal comparator countries could see 4000 new jobs created by 2021 and £705 million in Gross Value Added (GVA) realised each year[2].

8. We believe that the LSIS provides a fantastic opportunity to develop a long-term approach to life sciences policy in the UK which will support sustained growth of the sector, and support the sector through the forthcoming Brexit negotiations. We have welcomed the Government’s focus on the industry through the introduction of the LSIS, and continued recognition of the importance of the life sciences sector to the UK economy.

9. However, in order to make fundamental improvements to UK life sciences policy proposals will need the full buy in and support of all stakeholders across the life sciences ecosystem, recognising the need for an ecosystem-wide approach to life sciences policy.

Executive summary – list of recommendations

Science and innovation

• The UK must develop a future migration system that prioritises the needs of the life sciences industry and retains unencumbered access to high quality talent.
• The Government must do more to promote life sciences as a career path for UK students.
• The UK Government must review how other markets have attracted life sciences investment and publicly report on the learnings for the UK.
• The UK should enshrine current EU IP incentives such as orphan designation, Supplementary Protection Certificates and paediatric extensions into UK law

Industrial Strategy

• Responsibility for implementation of the LSIS and Sector Deal must be held at the Cabinet level.
• The Government and the NHS, in partnership with the devolved nations, must review current barriers to greater uptake across the health system.
• The Government must ensure that the NHS is central to the implementation of the LSIS and Sector Deal, with clear deliverables for the NHS to be held to account on.
• The Government must recognise the link between access to medicines and downstream investment in life sciences as part of its response to the LSIS.
• The Government should direct NICE to reform its processes through the Sector Deal, including less reliance on a cost-per-QALY evaluation.
• A heads of agreement for the next PPRS negotiations must be signed as part of the Sector Deal.
• The Government must provide sufficient funding for the LSIS and Sector Deal to ensure that implementation of the strategy can be considered a success by the global life sciences industry.

NHS procurement and collaboration

• The Government must implement the recommendations of the Accelerated Access Review in full, and review the appropriateness of current recommendations for the number of treatments to be selected for the Accelerated Access Pathway.
• The Government must direct NHS England and NICE to reverse the recent introduction of the Budget Impact Test.
• NHS England must do more to proactively work with industry to develop more flexible approaches to pricing and reimbursement.

Responsibility and accountability

• The Government must ensure that responsibility for implementation of the LSIS and Sector Deal is held at the Cabinet-level, and included in the business plans for BEIS and the DH.
• The Government response must be accompanied by a public announcement from a senior government figure.
• Partners from across the life sciences ecosystem must be included in the delivery of the strategy.

• Government must ensure that global investors are included as a central part of the delivery framework for the LSIS.
• Government must ensure that responsibility for the growth of the life sciences industry sits at the Cabinet table.

Brexit and life sciences

• In the short-term, the Government must ensure a smooth transition to deliver certainty for patients and workers. Relocation of the EMA headquarters must not impact the EMA’s ability to carry out its key functions and a smooth and timely transition must ensure the medicines supply chain will not be interrupted and critically, that patient safety is not put at risk.
• In the long-term, the UK should seek to develop close alignment and commonality between the MHRA and the EMA for the regulation of medicines, though a regulatory cooperation agreement or a mutual recognition agreement with the EMA.
• The UK must continue to be part of the EU clinical trials database to ensure that patients in the UK continue to access clinical trials programmes.

• The UK must continue to promote a future trading agreement with the EU which promotes tariff-free trade and unencumbered customs duties.
• The UK Government must ensure that it continues to promote global free trade and prioritise future trading relationships with the United States.

• The UK Government must continue to promote continued access to European research programmes following exit from the EU.

• The UK must develop a future migration system that prioritises the needs of the life sciences industry and retains unencumbered access to high quality talent.

APG consultation response

Science and innovation

1. How can investors be encouraged to invest in turning basic life sciences research into new innovations in treatment? Why has investment been lacking in this sector? Does the research base have the necessary infrastructure to be world-leading?
2. Why has the UK underperformed in turning basic life sciences research into intellectual property? What needs to be done to address this historic weakness in the UK and grow new companies to commercialise new research and related technologies in the life sciences sector?

2.1 We welcomed the recommendation in the LSIS for government to increase spending on R&D in line with other OECD nations, and members look forward to working with government to achieve this ambition and ensure that research is driven in areas of highest unmet need. The Government should introduce measures to increase investment in R&D as part of a holistic approach to building a strong life sciences ecosystem which enables swift identification, access and uptake of innovative new medicines.

2.2 The final Government response should also include measures to improve fiscal incentives for private sector investment in R&D, with the focus in the LSIS on incentives for manufacturing, tax and start-ups. This should be addressed alongside a long-term approach to future international research collaborations, building on the positive intentions within the recent Government Brexit position paper on science and research which noted the Government will seek to pursue continued involvement in Horizon 2020 and the Innovative Medicines Initiative (IMI).

2.3 As the UK exits the European Union the Government must ensure that the UK has a robust intellectual property (IP) system in place to support innovators to commercialise research. As a starting point the UK should enshrine current EU IP incentives such as orphan designation, Supplementary Protection Certificates and paediatric extensions into UK law.

3. What can be done to ensure the UK has the necessary skills and manpower to build a world class life sciences sector, both within the research base and the NHS?

3.1 Both the life sciences industry and the NHS are reliant on the availability of global talent, be that for frontline healthcare staff, or highly skilled researchers and scientists that support the UK to be a world leader in medical discovery. This should not be jeopardised post-Brexit and we support the LSIS recommendations in this area to build and promote a renewed migration system that allows the UK to recruit the best talent from across the globe.

3.2 Through the industrial strategy the Government should also do more to promote life sciences as a career path for UK students throughout the education process, given the sector’s recognised importance to the UK economy.

Recommendations

• The UK must develop a future migration system that prioritises the needs of the life sciences industry and retains unencumbered access to high quality talent.
• The Government must do more to promote life sciences as a career path for UK students.
• The UK should enshrine current EU IP incentives such as orphan designation, Supplementary Protection Certificates and paediatric extensions into UK law

4. How does the UK compare with other countries in the sector, for example Germany and the United States?

4.1 The market for life sciences investment is increasingly competitive and global in nature, with markets across the world recognising the potential of life sciences to support widespread improvements in national economies, and send a signal to international companies, both in life sciences and across different sectors, that their country is ‘open for business’. Whilst the APG has been encouraged by this Government’s intentions to be a world leader in free trade, we believe that more must be done to increase partnerships with the global life sciences industry to support this ambition.

4.2 APG member headquarter survey analysis found that the UK has a globally competitive research base, supported by access to a high quality workforce and skills base. Recent research by PwC, commissioned by Pfizer[3], supported this analysis, but noted that after workforce, skills and leading edge science, access to medicines was the third most important factor when investment decisions are being made.

4.3 As a market for innovation, the UK Government’s own Life Sciences Competitiveness Indicators, published on an annual basis, have shown increasingly negative trend for the UK in terms of access and uptake when compared to other comparable markets. It has therefore been disappointing that the Government has been slow to respond to the recommendations of the AAR to show that it is committed to reducing this gap. To truly reassure global investors such as APG members of its intentions to solve this issue, the Government must ensure that access and uptake recommendations within the LSIS are prioritised as part of its response to the strategy.

4.4 Other markets, such as Belgium, Germany, Japan, Singapore and the United States have successfully worked with industry to improve opportunities across the life sciences ecosystem, leading to increased investment in their markets. In the case of Belgium, a long-term pact[4] was signed between the pharmaceutical industry and the Belgian Government in 2015 that commits both sides to a series of objectives, including accelerated access of innovative medicines and improved predictability on funding from government, and improved transparency from industry in its relationship with government.

4.5 The Belgian Government also introduced a R&D-driven approach to improve the number of early and late stage trials conducted in the country. Belgium now regularly punches above its weight in comparison to other countries, with the largest number of medicines in development in the world per capita, the European leader for the number of clinical trials in phase one and two per capita and one fifth of total R&D expenditure across EU states.

Recommendation

• The UK Government must review how other markets have attracted life sciences investment and publicly report on the learnings for the UK.

Industrial Strategy

10. What can be learnt from the impact of the 2011 UK Life Sciences Strategy? What evidence is there that a strategy will work for the life sciences sector? How can its success be measured against its stated objectives?

5.1 The APG has been encouraged that the Government has continued to prioritise the Life Sciences Sector through the development of a holistic, sector-wide strategy and Sector Deal. However, we believe that a key learning from previous strategies (Life Sciences Strategy 2011, Innovation, Health and Wealth and the Accelerated Access Review) is around implementation.

5.2 Where previous well-intentioned strategies have fallen down in the past have been through a lack of a clear implementation framework or accountability vehicle for the delivery of the strategy. To ensure this strategy is able to match the laudable aims set by the Government, implementation must be held at the Cabinet-level, with implementation included as a clear objective of the business plans for both the Department of Health and Department of Business, Energy and Industrial Strategy. There must also be greater continued scrutiny from both Houses of Parliament to ensure that UK patients are able to reap the rewards of scientific innovation.

Recommendation

• Responsibility for implementation of the LSIS and Sector Deal must be held at the Cabinet level.

11. Does the strategy contain the right recommendations? What should it contain/what is missing? How will the life sciences strategy interact with the wider life sciences strategy, including regional and devolved administration strategies? How will the strategies be co-ordinated so that they don’t operate in ‘silos’?

6.1 The APG believes that the strategy is an extremely well-intended document and has welcomed the truly ecosystem-wide approach taken by the Strategy. In particular, the LSIS proposes a welcoming recognition of the need for quicker and greater access and uptake of new medicines, and we fully support the ambition within the LSIS for the UK to be in the top quartile of comparator countries for access and uptake of new medicines.

6.2 In order to achieve this ambition, the Government must review as a priority current barriers to greater uptake of new treatments across the NHS, in partnership with the devolved nations. The ambition on uptake must also be more clearly defined in the Government’s response, including recognition and definition of which comparator countries will be used.

6.3 APG members recognise the need for positive engagement from NHSE leadership and the broader system for the Strategy to be a success, and deliver improvement in patient outcomes. We urge the Government to ensure that its final response to the LSIS has the full support of NHSE, with clear deliverables for the system.

6.4 It is important that the Government’s final response to the strategy recognises the need for a holistic, ecosystem-wide approach to life sciences policy, recognising the full value of innovative medicines, from new investment in early stage research through to adoption. The Government’s response must recognise that access to innovation and investment in the life sciences ecosystem are intrinsically linked.

6.5 The Government’s final response to the LSIS must also recognise the need for a reformed NICE health technology assessment (HTA) process as key to improving access for UK patients. NICE’s appraisal process has not been significantly reformed since it was established since 1999 and is widely recognised as not having kept pace with advances in medical science, particularly in oncology. The Government must signpost NICE to reform its processes and deliver a reformed HTA process based around a broader consideration of value. Reliance of a cost-per-QALY evaluation should be limited with clinical and patient voice at the heart of all decisions made by NICE.

6.6 APG members support the intentions in the LSIS to simplify access routes for new medicines and urge the Government to prioritise this in response to the strategy, to ensure the system is able to keep pace with innovation and support greater patient access to treatments.

6.7 The APG also believes that a heads of agreement for a future voluntary industry-government pricing scheme must be agreed as part of the Sector Deal, to reassure global investors about the direction of the future negotiations. This is particularly important in light of changes made to the payment mechanism of the scheme last year, which caused concern amongst our global leadership.

6.8 The opportunity for the Government, NHS and patients in closing the ‘access gap’ was identified in research conducted by PwC, on behalf of Pfizer, that estimated that bringing the UK in line with comparable nations on uptake will generate 4,000 new jobs by 2021 and an additional £705 million in Gross Value Added (GVA) per year.[5] The APG wants to work with Government to realise these opportunities and calls on the Government to work closely with the global life sciences industry to support implementation of the final strategy.

Recommendation

• The Government must ensure that the NHS is central to the implementation of the LSIS and Sector Deal, with clear deliverables for the NHS to be held to account on.
• The Government and the NHS, in partnership with the devolved nations, must review current barriers to greater uptake across the health system.
• The Government must recognise the link between access to medicines and downstream investment in life sciences as part of its response to the LSIS.
• The Government should direct NICE to reform its processes through the Sector Deal, including less reliance on a cost-per-QALY evaluation.
• A heads of agreement for the next PPRS negotiations must be signed as part of the Sector Deal.

12. What opportunities for small and medium sized enterprises (SMEs) are there/should there be in the strategy? How can they be involved in its development and implementation?

7.1 SMEs are an integral part of the UK life sciences ecosystem, and the strategy includes some helpful recommendations to support their future development. However, in responding to the strategy the Government should ensure that it takes full account of the role of large international life sciences investors in supporting SMEs to deliver cutting edge science and research, and the contribution that this makes to the UK economy and UK patients.

7.2 The Government should also ensure that the UK science base continues to attract investment from cross-border research collaborations as the UK leaves the European Union (EU). More detail on this can be found in the Brexit section of this response.

13. Where should the funding come from to support the implementation of the strategy?

8.1 As it responds to the LSIS, the Government should ensure that sufficient funding is set aside to meet the ambitions within the strategy for the long-term, as part of the forthcoming Sector Deal. This will provide reassurance to the global life sciences industry about the long-term policy direction of the UK and in time could lead to increased investment from the global pharmaceutical industry.

Recommendation

• The Government must provide sufficient funding for the LSIS and Sector Deal to ensure that implementation of the strategy can be considered a success by the global life sciences industry.
   

14. How do the devolved administrations and city regions fit into the strategy? Scotland has its own Life Sciences Strategy, how will the two interact?

Please see ABPI response.

NHS procurement and collaboration

15. How can public procurement, in particular by the NHS, be an effective stimulus for innovation in the Life Sciences Sector? Can it help support emerging businesses in the Life Sciences Sector?

10.1 The pharmaceutical industry in the UK has continued to work closely with the Government and the NHS to support the long-term sustainability of the healthcare service. This was recognised as part of the current Pharmaceutical Price Regulation Scheme (PPRS) through which industry underwrites growth of the branded medicines bill beyond an agreed limit each year, thus reducing the NHS’ exposure to increased spending.

10.2 Pfizer/PwC analysis found that the NHS’ lack of access to new medicines means that the UK will increasingly become less attractive for clinical trials as the comparator standard of care might not be of a high enough standard to produce data that is valid for a global clinical trial. Persistently slow uptake is a continued barrier to patient access to innovation. UK patients are only prescribed up to 75% fewer new medicines (in the first year of launch) than patients in comparable countries.[6]

10.3 Our members continue to be concerned about the NHS’ priority for short-term cost containment as part of medicines spending, without consideration of the broader value of access to new treatments. We believe that there is a lack of alignment between reimbursement decisions to the strategic objectives of the NHS, compounded by the lack of mechanism to measure the impact of new medicines on patient outcomes. As currently constituted, the reimbursement system does not deliver consistent or sustainable access to the most innovative treatments, particularly in oncology and specialised medicines, and is increasingly out of step with more flexible systems in comparable countries such as Germany.

16. How can the recommendations of the Accelerated Access Review (AAR) be taken forward alongside the strategy? Will the recent changes to the NHS England approval process for drugs have a positive or negative effect on the availability of new and innovative treatments in the NHS? How can quick access to new treatments and the need to provide value for money be reconciled?

11.1 The APG was encouraged by the recognition in the LSIS of the importance of full implementation of the AAR recommendations to speed up access to the most innovative technologies. However, we believe that the limited nature of the recommendations within the AAR – restricted to only around 10 technologies per year receiving accelerated access – should be reviewed as part of the Government response to truly improve the UK’s ability to promote swift access and uptake of medicines recognised globally as truly innovative and game changing.

11.2 We urge the Government to ensure that this number is increased, and also to support the NHS to oversee a move towards agreeing more flexible pricing agreements with industry that allow for transformative medicines to be given faster access as close to marketing authorisation as possible. In particular, we believe that the NHS should do more to agree more flexible pricing deals with industry, which remain confidential. Particular consideration should be given to multiyear procurement options and ensuring the NHSE commercial team is appropriately resourced to utilise a full-range of pricing options including outcomes-based pricing, indication-based pricing, annuity-based pricing and volume agreements.

11.3 The AAR must also be supported by a clearly implementation plan which includes direct accountability for Ministers on delivering improved patient access to the technologies prioritised for the Accelerated Access Pathway. This accountability must be delivered through clear delivery metrics which hold the Government and NHSE to account on the original intentions of the AAR.

11.4 We believe that the recent introduction of the Budget Impact Test must be reversed as a priority, given the extremely damaging signal that this sends to both patients and global investors as to the NHS’ willingness to promote access to vital new treatments readily available in other countries. Whilst we recognise the need for the NHS to promote value for money across the service, reforms made in this area must form part of a holistic approach to medicines policy and recognise the long-term impact of access to innovative medicines, including the link between patient access and downstream investment in the UK life sciences ecosystem.

11.5 The APG endorses the data recommendations in the strategy and the recognition of the role of data in enhancing patient access to innovation. We believe that the collection of real world data, and use to support early access to the most innovative medicines, would support new medicines by demonstrating the true value of innovation. However, sufficient funds must be set aside in order for these recommendations to make a significant impact.

11.6 Industry can support the NHS to deliver on the opportunities set out in this response by creating the headroom in the system for innovation by co-creating new clinical pathways, agreeing financial models that allow the system to adapt to adopt, creating data platforms to bridge the knowledge gap between clinical trials and the impact of new treatments to the system. APG members stand ready to work with the NHS on this range of potential partnerships, and call on the Government and the NHS to do more to work with industry to realise these opportunities for patients.

Recommendations

• The Government must implement the recommendations of the Accelerated Access Review in full, and review the appropriateness of current recommendations for the number of treatments to be selected for the Accelerated Access Pathway.
• The Government must direct NHS England and NICE to reverse the recent introduction of the Budget Impact Test.
• NHS England must do more to proactively work with industry to develop more flexible approaches to pricing and reimbursement.

17. How can collaboration between researchers and the NHS be improved, particularly in light of increased fiscal pressure in the NHS? Will the NHS England research plan help in this regard? How can the ability of the NHS to contribute to the development of and adopting new technologies be improved?

Please refer to the questions above regarding the potential of the NHS to improve access and adoption of new technologies.

Responsibility and accountability

18. Who should take responsibility of implementation of the LSIS and to whom should they be accountable? What should the UK Government’s role be? What should the role of the academic, charitable and business sectors be?

13.1 The APG believes that responsibility for the implementation of the LSIS and the Sector Deal must be held at the Cabinet-level, with clear delivery metrics and timelines, to support accountability of the Government’s response to the LSIS. Successful delivery of the LSIS recommendations must also be included in the departmental business plans for both the Department for Business, Energy and Industrial Strategy and the Department of Health.

13.2 The APG believes that the Government must provide a clear and public response to the strategy from the highest possible levels of government to signal to the global pharmaceutical industry that it is serious about improving the UK life sciences environment, in particular at a time of such uncertainty, post-Brexit. This could take the form of a statement from a Secretary of State in the House of Commons, or more ideally from the Prime Minister, or a public media statement in the form of a letter or article in a global media publication.

13.3 Delivery of the strategy must also be taken forwards by Government in conjunction with partners across the life sciences ecosystem, with a clear role for the global pharmaceutical industry, to provide an international perspective on what has worked in other markets, and what could be transferable to the UK. All parties involved in the delivery of the strategy must have clear deliverables and be fully ‘signed up’ to delivery, to ensure accountability across the life sciences ecosystem. Partners from the NHS, business, the third sector and research sector should also be included in delivery of the final recommendations.

Recommendations

• The Government must ensure that responsibility for implementation of the LSIS and Sector Deal is held at the Cabinet-level, and included in the business plans for BEIS and the DH.
• The Government response must be accompanied by a public announcement from a senior government figure.
• Partners from across the life sciences ecosystem must be included in the delivery of the strategy.

19. What is the role of companies within the sector, particularly the large pharmaceutical companies, in the implementation of the strategy? How are they accountable for its success?

14.1 As noted above, we believe that international investors must form a central part of the future implementation of the LSIS. It is vital that the sector plays a central role in delivery of the strategy given its overall contribution to the UK economy. In 2015 the UK life sciences industry directly employed over 140,000 in the UK and supported a further 342,000 jobs. UK Life Sciences contributed £30.4 billion to the UK economy and £8.6 billion in tax receipts to the Treasury, of which approximately 20% flows to the NHS[7]. In 2017 alone, the APG is conducting more than 500 clinical trials in the UK, providing over 24,000 patients with the opportunity to benefit from innovative medicine[8].

Whilst we have been encouraged that the Government has recently chosen to form a closer relationship with business to support policy making, we remain concerned that this has in many cases been limited to UK companies at the expense of global expertise. Whilst we understand the need for Government to secure confidence of homegrown business, we believe that the reach and global view of international investors will provide a different perspective on the UK’s approach to public policy, which can support the Government’s aims to be an outward looking champion of international trade and investment.

14.2 As a priority we believe that the Government must ensure that global investors are included as part of the future implementation framework for the LSIS and Sector Deal. The Government must also create a formalised feedback mechanism for the global life sciences industry to provide feedback on strategy implementation, to reassure global investors regarding the commitment of the Government to work with the industry on implementation of the strategy.

14.3 The APG is currently developing the Group’s proposals for a delivery mechanism for the strategy, and will contact the Committee with further information in due course.

Recommendation

• Government must ensure that global investors are included as a central part of the delivery framework for the LSIS.

20. Does the Government have the right structures in place to support the life sciences sector? Is the Office of Life Sciences effective? Should the Government appoint a dedicated Life Sciences Minister? If so, should that Minister have UK-wide or England-only responsibilities?

15.1 The APG believes that given the stated importance of the sector to the UK Government and the Prime Minister, we do believe that ownership for the growth of the industry must be held at the Cabinet-level, rather than by junior ministers. This individual must be supported by a dedicated minister responsible for growth of the sector, in turn supported by a well-resourced and expert Office for Life Sciences.

Recommendation

• Government must ensure that responsibility for the growth of the life sciences industry sits at the Cabinet table.

Brexit

21. We have chosen to answer the three questions on Brexit together, as the APG believes the three questions are inter-related.

22. With negotiations on Britain’s departure from the European Union (EU) now underway, the high-skilled, high-value and net-export life sciences sector must be supported to thrive post-Brexit. As a global industry, the uncertainty of Brexit will add to the pressure of our international competition, as companies decide on their future investment in the UK. The sector includes some of Britain’s most innovative companies, which together turn over £64 billion and are responsible for half of all Britain’s private sector research and development spending[9]. If not handled correctly, the UK’s departure from the European Union could also have a significant detrimental impact on patient access in comparison to other nations.

23. We are clear that not only will a ‘no-deal’ scenario for the life sciences sector have a major detrimental effect on the UK economy, but it will also threaten access to medicines and the position of the NHS as a world leading health service. If the Government is to meet its ambitions for the sector, it is essential that it takes Brexit considerations into account as Ministers develop their long-term policies.

24. In the short-term, it is essential that transitional arrangements are in place to avoid a 'cliff-edge' scenario where the UK leaves the EU before a final agreement is ratified. Such arrangements are necessary if we are to prevent interruption to the medicines supply chain and ensure patient safety and access to treatments are not put at risk. Recent position papers published by the Government over the summer, particularly on goods and science and research, provide a good platform to build on and serve to reassure international business regarding the future UK-EU relationship, reassuring global businesses that the UK Government is looking to limit the impact of Brexit on business.

25. The Brexit negotiations provide a strong opportunity for the UK to enhance its relationship with the US life sciences sector. In the US, pharmaceutical companies spend over $51 billion on R&D per year, an increase in spending of 237% since 1994[10]. Trade and investment ties between the U.S. and UK are deep and enduring, and investment is at the core of the US-UK relationship. The UK is the single largest foreign investor in the United States, with British companies investing more than $480 billion in the US. The US is also the largest investor in the UK; American firms have invested nearly $600 billion in the British market, nearly a quarter of their total investment in Europe[11].

26. It is imperative that as Brexit progresses no unnecessary barriers are put in place which have the potential to impact on this investment. Membership of the EU provides much of the scientific, regulatory and trade infrastructure for the life science sector in the UK. The APG is a willing partner to Government in working to ensure that life sciences are in as strong a position as possible as the UK establishes a new relationship with Europe and the rest of the world.

The need for regulatory co-operation: safeguarding patient access and supporting continuity for international investors

27. The MHRA’s (Medicines and Healthcare Regulatory Agency) current relationship with the European Medicines Agency (EMA) gives British industry access to a market of 500 million people and has made the MHRA a respected leader in regulation. For multinational pharmaceutical companies launching new medicines, their focus is on the largest markets, which currently include the EMA, alongside the US and Japan.

28. As the Health Secretary has acknowledged, alone the UK would risk falling to the back of the queue, to be seen as a ‘secondary market’, which not only heavily impacts the attractiveness of the UK market, but centrally, risks imposing longer delays on access to the most innovative treatments for patients. APG members were reassured by the recent letter from the Business Secretary Greg Clark and Health Secretary Jeremy Hunt, noting their priority to secure regulatory co-operation with the EMA, post-Brexit, and urge the Government to ensure this position is not compromised through the negotiations.

29. We were also encouraged by the recognition in the LSIS of the limitations of a differentiated regulatory approach for the UK, and that regulatory co-operation with the EMA is a priority for the industry. It is also vital that the UK retains its place in EU-wide programmes for systems to monitor pharmacovigilance, to ensure that UK patient safety is not put at risk.

30. The UK must continue to be part of the EU clinical trials database to ensure that patients in the UK continue to access clinical trials programmes, which in turn benefit the NHS through considerable investment and access to the newest medicines. This investment totalled £192 million in 2015 alone.

31. As noted previously, the UK must also enshrine current EU regulations governing IP protection, such as Supplementary Protection Certificates and paediatric extensions, into UK law.

Recommendations

• In the short-term, the Government must ensure a smooth transition to deliver certainty for patients and workers. Relocation of the EMA headquarters must not impact the EMA’s ability to carry out its key functions and a smooth and timely transition must ensure the medicines supply chain will not be interrupted and critically, that patient safety is not put at risk.
• In the long-term, the UK should seek to develop close alignment and commonality between the MHRA and the EMA for the regulation of medicines, though a regulatory cooperation agreement or a mutual recognition agreement with the EMA.
• The UK must continue to be part of the EU clinical trials database to ensure that patients in the UK continue to access clinical trials programmes.

Future UK – international trading relationships

32. The success of UK life sciences has been built on a platform of European arrangements which allow industry to transport tens of thousands of live medical compounds across the Channel a day without customs checks. The EU is a major trading partner, taking 44% of UK life sciences exports in 2015[12].

33. Complex import/export declarations and inspections coupled with high customs and tariff fees, which could result from the UK’s departure from the EU, would dramatically affect the attractiveness of the UK trading environment.

34. It therefore essential that the UK maintains, as close as possible, the trading terms currently associated with EU membership to allow the frictionless free movement of medicines and pharmaceutical supplies across borders. If no deal or transitional arrangements are agreed, the restructuring costs resulting from the regulatory and trade hurdles will be extremely high.

35. The agreement should include access to those trade agreements already in place between third countries and the EU. However, the Government should also seek to maximise on the opportunity Brexit presents, through setting in place the legal framework to allow Britain to strike free trade agreements around the world. The global pharmaceutical market will reach $1.12 trillion in 2022[13], and it therefore essential that the UK looks beyond the EU to global markets.

36. The Trade Bill as announced in the Queen’s speech should set a framework which will work to encourage international free trade relationships, particularly with major life sciences markets such as the US. US investment in the UK life science sector must be prioritised as part of a swift trade deal, while the potential the US market offers for UK life science growth must be recognised. The US market alone sees $333 billion pharmaceutical sales per year, with a total healthcare expenditure of $1.49 trillion[14].

Recommendations

• The UK must continue to promote a future trading agreement with the EU which promotes tariff-free trade and unencumbered customs duties.
• The UK Government must ensure that it continues to promote global free trade and prioritise future trading relationships with the United States.

Ensuring the UK remains part of EU-wide research efforts

37. The UK should look to remain part of the European Research Area. The UK is a net-beneficiary from the EU for research funding, and to date has received £3 billion from Horizon 2020 alone. There are many benefits to be acknowledged from the Horizon 2020 scheme and the Innovative Medicines Initiative, which not only provide funding but also encourage cross-border integration of research initiatives, linking UK scientists with a network of research projects across Europe, as well as further afield.

38. The UK must be clear that it has a plan to replace EU funding and ensure stability for the industry. We were encouraged that the UK Government has secured Horizon 2020 funding up to 2020, but there is a need to reassure the research community on the long-term future of funding sources. The recent UK Government position paper on this issue was positive in this regard, however more detail is needed on how the Government will seek access to the European Research Area as a third country.

39. The final deal should seek to negotiate continued access to long-term European funding and collaboration programmes for science through maintaining access to Horizon 2020 and its successor. Several non-European countries such as Australia already participate in Horizon 2020, and the UK must seek to continue our involvement. The UK should also look to continue participation in the European Investment Bank and EIF, including shareholding, financial contributions and, as a result, a seat at the Board.

Recommendation

• The UK Government must continue to promote continued access to European research programmes following exit from the EU.

Recognising and supporting international talent in the UK

40. The final deal for the UK must enable the movement of highly-skilled talent in life sciences if the industry is to continue to thrive. Key to the ability to foster the growth of life sciences is the ability to bring people together with the vision and capabilities to turn nascent ideas into medicines that ultimately benefit patients. Without an arrangement in place, the potential impact on companies’ ability to recruit European scientists could stifle growth, putting at risk the investment of £792 million in research and development made annually by APG members. As noted above, we support the LSIS’ recommendations to government to develop a migration system that welcomes international talent, which will be vital to the future development of the sector.

41. Negotiations must recognise the contribution of highly skilled workers to the UK economy, and focus on delivering an immigration system that is needs-based and straightforward. This should be strengthened by the agreement of a reciprocal arrangement with the EU that allows rapid and simple movement for scientists, researchers and highly-skilled workers. The Government should prioritise the life sciences industry as part of its future immigration system as it develops a specific immigration policy. Without a route for international talent, the Government will struggle to meet its aim of becoming a global life sciences leader.

42. To give certainty to companies operating in the UK, the rights of scientists, researchers and highly-skilled EU citizens already in the UK should be guaranteed as a priority.

Recommendation

• The UK must develop a future migration system that prioritises the needs of the life sciences industry and retains unencumbered access to high quality talent.

22 September 2017