• It is likely that the generic industry’s cost base could increase following a no-deal Brexit, senior industry figure confirms
  • Manufacturers are prioritising stockpiling critical medicines and those for which they are the sole supplier
  • Cost already incurred following need for quality testing labs in the EU

The price of generic drugs could be forced up in the case of a no-deal Brexit, HSJ understands from senior industry sources.

Warwick Smith, director of the British Generic Manufacturers Association, told HSJ it is “likely” in “certain scenarios the industry’s cost base would increase and with the thin margins we have this would filter through to a number of products”.

“The generics industry relies on high volumes and low complexity,” Mr Smith said. “Anything that increases that complexity starts to threaten that model.”

Another senior industry source also warned HSJ a no-deal Brexit will see an increase in generics prices.

The NHS spent an estimated £4.3bn on generics medicines in 2016-17, of which £3.5bn was spent in primary care.

Mr Smith warned that “unless things change dramatically in the next few months”, scientific activity around medicines testing could switch from the UK to the EU.

“It is costing companies to duplicate their facilities in the UK or to move them from the UK to the EU,” he said.

“At the moment there are a disproportionate number of qualified people and quality control labs based in the UK and a lot of medicine imported into the EU coming from the UK first on batch release,” Mr Smith said, “If we are accepting their batch release and they are not accepting ours, that will have to change.”

Last month, the government asked manufacturers to stockpile six weeks’ worth of medication in case of a no-deal Brexit. Mr Smith said that there are “rumblings” the government might help with the cost of warehousing.

“Under most scenarios you would expect an additional burden to be placed on manufacturers selling in the UK,” Mr Smith said.

He said that the majority of manufacturers are not stockpiling all medicines but are prioritising “critical products in terms of healthcare and health outcomes” and if they are the “sole supplier” of a drug.

“The decisions are not wholly being driven commercially but also clinically,” he said. “[Manufacturers are] taking into account patient need.”

Mr Smith added that “the most helpful thing” the Department of Health and Social Care has done is to talk to wholesalers and pre-wholesalers regarding capacity, “particularly looking at refrigeration”.

There was an unprecedented increase in the prices of certain generic medicines in 2017-18, which resulted in unforeseen costs for clinical commissioning groups.