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Merck’s Brexit contingency plan? Stockpile medicines

As UK's Brexit plans remain in disarray, big pharma is making contingency plans

Brexit

US pharma group MSD (Merck & Co in the US) has a dramatic back-up plan if Brexit goes awry – it is stockpiling supplies of its products and could re-route its supply chain if trade barriers disrupt its business, reports Bloomberg.

The plans, communicated to the newswire by an unnamed person familiar with the situation, but reportedly detailed in an internal report published last month, anticipates that delays in shipments of up to two days could occur between the UK and EU because of the need for document checks. To counteract that, the company is considering setting up a six-month supply cache and asking customers to take extra stock in advance.

MSD has stressed these are plans only and may not be implemented, but its priority is to ensure patients continue to get access to its medicines.

According to the Europe's pharma association EFPIA, 45m patient packs go to the EU from the UK every month, and 37m packs go from the EU to the UK, while products are developed “in complex supply chains from across Europe.”

The news comes as UK Prime Minister Theresa May was supposed to deliver the government’s blueprint for a temporary customs arrangement that would avoid a hard Irish border, but is facing a yet another revolt.

This time, rather than from disgruntled Brexiteers, the resistance is coming from David Davis, the UK’s chief Brexit negotiator, who says he won’t agree to the proposals, and according to the BBC may resign if they are published without changes.

The stopping point for Davis is that the so-called ‘backstop’ proposals that will come into effect if no Brexit deal is reached don’t have an end date. This means it’s not clear who would be able to terminate the deal - in other words the UK could be tied to the arrangement indefinitely.

The proposal is thought to suggest that the UK will temporarily remain part of the EU customs union and match EU tariffs after December 2020, when the post-Brexit transition period comes to an end, but without a specific end-date has been likened to ‘Hotel California’ – where you can check out any time you like but can never leave.

It’s also been suggested that the proposals will also mean the UK still has to defer to the European Court of Justice when it comes to law-making – another element that would be intolerable to Brexiteers without a specific cut-off.

Regardless of the details, the Brexit process remains shambolic and it’s inevitable that big companies like MSD are preparing alternative arrangements to ensure their businesses are disrupted as little as possible when the transition period comes to an end in December 2020.

GlaxoSmithKline chief executive Emma Walmsley said earlier this year that a transition deal needed to be agreed by April in order to give business two years to prepare for the impact of Brexit, but two months on the prospects of an agreement still look dim. GSK and fellow UK-headquartered drugmaker AstraZeneca have already started contingency planning by looking at setting up new facilities to test drugs within the EU to allow for the timely release of medicines.

AZ is part of the European Round Table of Industrialists (ERT) which met with Theresa May last month and warned that “the uninterrupted flow of goods is essential to both the EU and UK economies. This must be frictionless as with a customs union. We need clarity and certainty, because time is running out. Uncertainty causes less investment.

Article by
Phil Taylor

7th June 2018

From: Regulatory

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