What's Brexit got to do with the price of drugs?

Brexit poses unique challenges to the UK's pharmaceutical industry and future free trade deals threaten to expose the NHS to market forces. Patrick Bailey explains the rocky road ahead for the sector.

On 31st December 2020, headlines heralded the announcement that the UK and EU had finally agreed on a Brexit trade deal, and just in the nick of time. Had they not come to common ground before the long-looming deadline, tariffs would have been imposed, raising the prices consumers would pay for drugs and health services on both sides of the channel.

Appearing before Parliament, and speaking of the zero-tariff, zero-quota agreement, Prime Minister Boris Johnson said Britain had taken back control of our laws and our destiny." However, not everyone was on board with his assessment.

A closer reading of the more than 1,200-page document revealed that although there would be no tariffs imposed, some goods could become more expensive and some services harder to come by.

In 2014, rehab treatment for misuse of opiates such as OxyContin and other drugs, including benzodiazepines such as Klonopin and Xanax, cost the NHS £500 million. Treatment for alcohol misuse was seven times higher.

Those in the healthcare field are especially concerned there may be higher drug prices and delayed access to medical care.

Since the EU operates as one market, goods, capital, and services can move between member countries as if no borders separate them. Also, as a customs union, member countries have all agreed to pay the same taxes on products coming into the union without additional tariffs.

Brexit, however, is all about leaving the union. Britain must now seek separate deals with EU countries in the bloc, as well as those outside. This means Britain must negotiate the prices of drugs with both the pharmaceutical companies and their countries of origin.This presents its own set of complications, especially where the United States is concerned.

An increase in the cost of NHS drugs

The UK is a relatively wealthy country with an aging population and a healthcare system financed by the NHS. This makes it an appealing situation for pharmaceutical companies, especially those in the US.

According to The King's Fund, an independent think tank devoted to healthcare in the UK, the NHS spent £17.4 billion on medicine in 2017, a 5% annual increase from the 2011 total of £13 billion, more than the NHS budget has grown. If this trend continues, it could restrict patient access to medication, whether primary provider-prescribed or dispensed by hospital pharmacies.

While Boris Johnson has said that the price the NHS pays for drugs will be "off the negotiating table," sources claim that drug pricing was addressed during the six preliminary UK/US negotiations. Also, the same sources say secret meetings on price caps have been held between representatives of UK civil servants and influential US drug companies.

Not only is there a strong possibility that NHS drug prices may soon soar but that they will be a benchmark for prices around the world. Therefore, no matter where the NHS turns, the cost will increase, which may reduce UK citizens' access to both prescription medicines and over-the-counter drugs.

Border Delays Can Disrupt the Medical Supply Chain

Although the UK left the EU on 31st January 2020, British citizens and businesses temporarily retained single-market and customs union benefits, such as freedom of movement across the borders of EU member countries. These benefits also apply to EU-origin goods imported into the UK. Among these goods are medicines and medical devices, 90% of which are imported, 45% from the EU.

Now, since the UK will no longer be following EU product standards regulations, these goods will be subject to more red tape and customs paperwork, which could lead to problems and extensive delays at entry ports such as Dover. The resulting shortages could cause delays in approving medicines and devices for hospitals, pharmacies, and physicians.

Brexit Could Lead to a Shortage of Drugs

The Healthcare Distribution Association warned members of Parliament that Brexit could cause a "jolt that would throw a lot of cogs out of a very complicated machine." One would involve exporting drugs. While the UK would be free to trade with the rest of the world, the old rules would no longer apply.

One consequence could be that the US might be motivated to buy the UK's supply of pharmaceuticals, which are 50% lower than in the US, causing shortages for the UK's citizens.

Only time will tell if these predictions come to pass. Meanwhile, there is no shortage of arguments on both sides of the issue as to whether the UK will benefit or not. And so we take it day by day.