PHP331 - Brexit and Grexit: Implications for The Pharmaceutical Industry

Abstract

The prospects of Brexit (UK exit from the EU) and Grexit (Greek exit from the Eurozone) have significant implications for the European pharmaceutical industry. In recent years, exiting the EU has been actively debated in the UK. While not a member of the Eurozone, the UK is a key member of the EU trade bloc. The UK government plans to hold a referendum by 2017; recent polls indicate 35-45% of Brits support withdrawal. In contrast, Greek withdrawal from the Eurozone may occur if the government is unable to reach an agreement with their creditors on the repayment of Greek sovereign debt. Failure to meet a €1.6 billion payment to the IMF at the end of June 2015 may result in Eurozone withdrawal. As an EU member state, the UK forms a significant component of international reference pricing baskets for many other states; an arrangement which may or may not continue in the event of Brexit. Despite the independence of the British pound, Brexit may lead to further regional price disparity due to currency fluctuations. Both Brexit and Grexit are likely to have a significant impact on parallel trade amongst EU member states (parallel imports represent ~20% of UK drug sales, whereas exports for parallel trade account for ~12% of the Greek pharmaceutical market). Additionally, Grexit may impact the purchasing power of Greeks and their government’s ability to fund healthcare access to medicines. Navigant conducted qualitative interviews with payers and budget holders to understand expectations of the impact of Grexit and Brexit, anticipated strategies in response to these withdrawals, the level of disruption to pharmaceutical supply and potential drug shortages. Additional monitoring and appropriate planning is essential. The high level of uncertainty requires further consideration; Brexit and Grexit present significant implications to a broad array of stakeholders.