A revolution occurred last week. Not by guns—by referendum. Like most revolutions, it caught a lot of people by surprise. The most laughable surprise comes from those who voted for the UK to leave the European Union as a kind of protest vote, but immediately became sorry they voted that way after learning that they had “won”, because they really didn’t mean it! It’s also laughable to hear the cries of the people who didn’t bother to vote because they felt confident that the referendum would go their way. Now they would like to go back in time so they can cast their vote. Whoops, too late.
What these people didn’t realize is that revolutions are serious business, whether executed with guns or with votes. One of the reasons democracies exist is to enable revolutions to occur without large-scale death whenever conditions warrant a major change. Even so, very few elections result in true revolution, so it’s easy to become complacent about voting. That’s why you get “protest voting”—a vote cast for something the voter may not really want, but is, in part, intended to “scare” the current leaders of their own movement. Be careful what you ask (vote) for…and for what others are asking (voting) for that you don’t think will reach critical mass, and thus decide not to bother speaking out (voting) against it.
Of course, in the current situation, the vast majority of the people who voted to leave intended to do so and that’s what they want to happen. Would it have gone this way if there had been no protest voting by those who now regret it? Or if those who didn’t bother to vote because they couldn’t imagine the “leave” side wining, had actually voted? Hard to say, but it doesn’t really matter, does it? That’s easy for an American like me to say. I suspect we here in the United States will be impacted by the UK leaving the EU, perhaps in surprising ways—maybe even in catastrophic ways if this turns out to be the first in a series of cascading steps toward the loss of the current “world order”, where we have nowhere to go but down (see also “new world disorder”). If that happens, we will likely regret the Brexit results more, despite not being invited to participate in the actual referendum (I’m sure it wouldn’t have made any difference in the outcome…our voter turnouts are smaller than just about any other democracy).
WHAT HAVE YOU WROUGHT?
The citizens of the UK will experience the biggest impacts of their split with the EU, and the citizens of the EU will experience the second biggest impact. It is not possible for someone like me to predict those experiences. However, I think I can take a stab at some things that are now likely to occur, and which will likely have some influence on whatever those citizens do end up experiencing.
The global pharma supply chain is made up of multi-national corporations, and by their nature, they have a way of making decisions that sometimes seem cold and self-interested. That’s because they are. The profit motive is perhaps the main tenet of Capitalism and it makes it fairly easy to predict what will happen when markets change rapidly. Markets normally change organically. That is to say, they change slowly over long stretches of time. So we don’t often see what happens when radical changes occur to markets over a short period of time. It seems to me that Brexit represents a huge change to UK and EU markets that will occur very quickly. Let’s look at that change from a pharmaceutical supply chain perspective.
Here is a graph that shows the largest pharmaceutical markets in the world in 2011. Notice that with, or without the UK, the EU is the second largest market for drugs after the United States. (Sorry, this data is a little old. I’ve just been too busy to compile the most recent data, but the biggest change since this data was captured would be in the growth of the market in China…something that doesn’t impact what we are thinking about in this essay.)
Once the UK separates from the EU, they will become a separate market for drugs with their own regulatory requirements. At that time, the pharmaceutical market size of the UK will be just ahead of Brazil and Canada. That will certainly effect some decisions made by all multi-national corporations, including many drug companies. Which markets will they target? Of course, larger companies will always include the UK, but what about smaller companies? Which markets will they target first? Again, the largest companies will probably target the EU and the UK at the same time, but companies that do not have the resources to seek approvals for drugs in multiple markets at the same time will almost certainly go for EU approval before they seek approval in the UK. Small companies with resources sufficient to seek approval in only two markets will most likely choose the US and the EU, leaving patients in the UK to cross the Channel to get those drugs.
The UK will need to grow the Medicines and Healthcare Regulatory Agency (MHRA) into a full-fledged regulatory body rather than the local interface agency to the European Medicines Agency (EMA). Zachary Brennan published a great article on the RAPS.org website late last week that discussed the implications of this, including what the loss of the MHRA, one of the largest, best funded and most capable local healthcare regulatory agencies in the EU, may mean to the EMA, which is currently located, ironically, in London (see “Brexit Conundrum: How Does MHRA Work With EMA Moving Forward”).
In that article, Mr. Brennan and his colleague, Nick Taylor, proposes that the post-Brexit MHRA could function like Swissmedic, the regulatory agency of Switzerland, or like those of Norway, Iceland and Liechtenstein, all of which are not member states of the EU but still work closely with EMA and follow many of their pharmaceutical regulatory requirements as members of the European Free Trade Association (EFTA). The EFTA is kind of a lighter weight “alternative” European Union for those countries located in or near Europe, but which want to keep a little distance–and all of their independence–yet still want to keep trade with the EU members states as easy as possible. If the UK loses Scotland and Northern Ireland to the EU through their own referenda (see “Calls for referendums in Scotland and Northern Ireland after Brexit vote”), perhaps the UK will feel a little more like the other small, nonconformist countries of the EFTA. Odds are, the UK will join the EFTA as soon as they exit the EU.
WHAT ABOUT THE FMD?
What about the EU Falsified Medicines Directive (FMD) and associated Delegated Regulation (EUDR)? Technically, they would be gone. The UK would be under no obligation to enforce those EU regulations. After all, breaking free of the massive amount of regulations churned out by the EU every year is one of the things Brexit was all about, right? (For an alternate argument, see “Brexit is not an escape from EU regulation” and “Westminster, not Brussels, is to blame for UK over-regulation”.) Well, I suspect the UK government, if not the citizens, will view the FMD and EUDR as one of the “good regulations”. They will likely participate as it is widely expected the other EFTA countries will. A slightly less likely option will be for MHRA to develop their own, comparable drug identifier authentication technology solution, and just not bother to connect it to the EU European Medicines Verification Organization (EMVO) hub. (No, the EMVO still doesn’t have its own website.)
In fact, that may actually raise a new barrier to the practice of pharma arbitrage, which can expose patients in the UK to potentially falsified medicines that have the appearance of parallel imports from EU member states that offer lower reimbursements for drugs. By not connecting to the EU EMVO hub, drugs diverted from those countries would fail to verify in the independent UK verification system. On the other hand, patients would no longer be able to reap the economic benefits of those same parallel imports (assuming those benefits are ever passed on to the consumer, which is unlikely). By not connecting with the EMVO, the MHRA would be free to develop their own solution to falsified medicines—one that avoids the flaws in the EU system (see “Insufficient Transitional Measures Doom The FMD-EUDA” and “More Concerns With The FMD/EUDR Big Bang Start”).
Will Europe recover quickly and gracefully from this divorce? Or will this turn out to be the first crack in the eventual breakup of the entire EU? (I think: prepare for the “domino effect“.) Either way, it is big news. You should pay attention to it. And for those readers in the United States, what lessons can we learn from the Brexit results and how might they apply to our own approaching Presidential election? (I think: prepare for walls.)