Since the UK triggered Article 50 — the formal European Union exit clause — in March the pharma industry has been closely watching where the European Medicines Agency (EMA) is going to relocate.

This is though just one of the many questions the UK’s vote to quit the European Union throws up for the pharmaceutical sector.

Investors are keeping a close eye on changes to market authorisation, the pricing and reimbursement process, and on future research and development.

Market authorisation

Currently, it is unclear if the relocation of the EMA — which carries out scientific assessments and provides a centralised authorisation for new medicines to be promoted in the EU’s single market — will be followed by the UK giving up its membership.

If it does the UK may set up its own drug approval system.

A favourable and a likely scenario is that the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) will continue to assess and approve drug applications alongside the EMA, keeping the efficiency of the current system.

Alternatively, the MHRA could authorise products independently but under an agreement with the EU to minimise access delays, similar to Switzerland’s Swissmedic.

It is unlikely that MHRA is going to function under a completely independent approval system, but if it does, this will mean duplication and delay for manufacturers as the drugs would have to be separately authorised.

In any case, manufacturers should expect an increase in market authorisation hurdles.

Pricing and reimbursement

In the UK, the National Institute for Health and Care Excellence (NICE) carries out assessments to decide how companies will be paid for drugs.

NICE does this with its access to a European network which provides valuable information about pricing evaluation methodologies used across EU countries.

If the UK is no longer involved in this network collaboration, this could create disparities in assessments across countries, complicating pricing strategies for manufacturers.

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Deciding on pricing strategies and the order of market launches will also become more difficult if the UK separates from the EMA.

Manufacturers are likely to launch products in the EU first due to its size, making it impossible to use the UK’s pricing as the reference for setting pricing strategies for other countries (which is currently a common practice in the EU).

R&D

Following the UK’s exit from the EU, the country will no longer be eligible for grants from the European Research Council (ERC), of which the UK is currently one of the biggest recipients.

In addition, attracting and retaining talented researchers may become more difficult once the EMA relocates from the UK and R&D funding is reduced.