The United Kingdom has been a major part of the European Union (EU) since 1973, but its 33 year run may come to an end, depending on the results of a referendum to be held this week on June 23rd. Brexit, as the vote has been termed, has pitted the “Remain” camp against “Leave” proponents, dividing Britons on regional, economic, class, racial, and political lines. In this post, we’ll take a look at the two sides and their arguments, while also examining the concerns of and possible impact on pharma and the wider scientific community.
Prime Minister David Cameron made the negotiation for more favorable terms from the EU followed by an in-or-out referendum part of his 2015 campaign pledge. Cameron and the Conservatives specifically sought greater UK control over immigration and assurances that it would be able to continue to use the pound, as well as political independence from a potential European federal state. Cameron also wanted to seek a greater role for national parliaments in EU policy making, exemption from Eurozone regulations for the British financial sector, and a reduction in bureaucratic red tape and welfare payments for EU migrants. Although Cameron extracted significant EU concessions, many still favor independence. Until last week, most polls showed “Leave” with a high single-digit lead, but after the tragic assassination of Labour MP Jo Cox on Thursday, polls have shown momentum swinging back toward “Remain.” Still, many analysts on both sides expect a close vote.
LEAVE: The “Leave” campaign sees the EU as undemocratic and sclerotic, and believes the UK would be better served by the ability to set its own rules rather than those set by unelected officials in Brussels. They believe the UK can play a bigger role on the international stage on its own, and think Britain can do better by allocating funding and directing policy at home. Support for “Leave” is strongest in England (excluding metropolitan London), although around a third of Welsh and Scottish voters also want to leave. Small-business owners angry over EU regulation lean toward “Leave,” as do older and blue-collar voters, those concerned over immigration both within and outside the EU, and those receiving government benefits. The Conservative party is split over the issue, although most of the party’s elected officials strongly support “Leave,” as does the UK Independence Party (UKIP).
REMAIN: In contrast, the “Remain” campaign argues that the UK has a much stronger influence as part of the EU, and can also exert more influence inside the EU as well. “Remain” supporters trend younger, and have majorities in white-collar and college-educated voters. Regionally, Scotland and Northern Ireland are strongest for “Remain,” but London and Wales also add their numbers to the cause. Business executives and ethnic minorities see the EU single market (which allows for the free movement of people, services, goods, and capital) as economically and culturally beneficial. The Labour, Liberal Democratic, Green, and SNP parties all support “Remain.”
Pharma is a vital part of the UK economy at around 10% of Britain’s GDP, employing over 72,000 while generating a £3 billion trade surplus, so it has a large stake in this decision. Polls show that 83% of active researchers in the UK support “Remain.” The UK pharma industry also strongly supports “Remain,” not least because the European Medicines Association (EMA), which oversees the approval of all drugs in Europe, has its headquarters in London’s Canary Wharf.
Britain would not only lose the EMA but also the new, soon-to-be London-based pharmaceutical division of the Unified Patent Courts, which would make “EU-wide rulings on intellectual property disputes,” as well as its leading role in the EU’s Medicines Healthcare products Regulatory Agency (MHRA) and the National Institute for Health and Care Excellence (NICE).
The European Federation of Pharmaceutical Industries and Associations (EFPIA) trade group argues that “Britain’s departure from the EU would threaten scientific research and jeopardize the 28-nation bloc’s system of drug regulation.” This would not only damage British influence, which has had a positive influence on many scientific initiatives like the clinical trials directive, but wound both sides, as UK experts “led the review of more drug applications than any other domestic EU regulator in 2014.” The UK is a European leader in research and is the beneficiary of billions in EU funding, estimated at £1 billion per year. Losing this would be a major blow, but so too would access to data such as “EU-wide databases” on clinical trials.
From 2007-2013, the UK contributed over $6.1 billion to EU research programs, receiving over $9.9 billion in direct R&D funding in return, a 40% return for every British pound. Under the new Horizon 2020 program, the UK gains approval for projects more than any other EU member state. British universities including Cambridge and Oxford also receive funding at a higher rate than that of other EU countries, offsetting the fact that the UK spends less per capita on research than many other developed nations. Oxford and Cambridge get 1/5 of their funding from EU sources, and smaller institutions can receive up to 2/3. This dependency on EU research means a Brexit could put in jeopardy the UK’s place as 5th in the world for producing scientific and technical papers. Fields such as nanotechnology, biotechnology, cancer research, forestry, and evolutionary biology would be particularly vulnerable to losing EU funding. The OECD, UK Treasury, London School of Economics estimate a loss in foreign investment, as well as higher cost to access to the Single Market. British pharma would have to seek separate approval from the EU, as well as face the likelihood of waiting longer for new treatments to be deployed. The impact to the UK economy would far outweigh current contributions to the EU budget.
The OECD and UK Treasury estimate a 3-8% economic decline, and even the Euroskeptic think tank Open Europe admits only a possible 1.6% GDP benefit to leaving, and a possible 2.2% decline in GDP. While Britain contributes about £7 billion, or 0.3-0.4% GDP to the EU budget, economists estimate that £36 billion would be lost in taxes due to economic downturn after Brexit, more than negating any budgetary savings. OECD Secretary-General Angel Gurria notes, “What is striking about our estimates and those produced by most others is that all the numbers under a Brexit case are negative. The best outcome under Brexit is still worse than remaining an EU member, while the worst outcomes are very bad indeed.”
“Leave” supporters point to countries such as Norway, Israel, and Switzerland as evidence that the UK could still compete for EU funding and research grants. Switzerland can also be seen as a cautionary tale in light of the fact that the EU suspended Swiss access to scientific funding after the passage of a popular vote to limit mass migration. In order to maintain access to EU funding, the UK would likely lose the ability to restrict immigration as well, one of the major aims of the “Leave” campaign. The UK would also have to contribute to the EU budget at a level based on GDP and population, and may pay more to gain this access while losing the ability to make any decisions on policy or how research grants are to be distributed.
Ultimately, Brexit will be in the hands of British voters, who’ll cast their votes on Thursday. What will the outcome be? How will it affect the pharmaceutical industry (and the world economy)? Leave your thoughts below.