• Matt Hancock said government has issued a tender today to buy more storage facilties or convert non-mediical facilities
  • Health secretary said other financial support to pharma is available on a “company by company basis” but government will not be “gamed”
  • HSJ understands government may also reimburse pharma companies for their own storage costs

Ministers have launched a tender worth “tens of millions” of pounds to provide extra storage capacity in the event of the UK crashing out of the EU without a deal.

Speaking to the health committee today, secretary of state Matt Hancock, said the Department of Health and Social Care was tendering for more warehouse storage facilities to stockpile the extra six weeks’ of medicine the government requested the pharma industry stockpile.

Mr Hancock said: “We have issued today an invitation to tender for additional storage capacity. We are looking for additional storage that is ready for the Brexit demand, or space that can be converted to medical storage, or for new facilities [such as cold storage]. We are confident that [storage] can be delivered by March next year.”

He added DHSC expected the tender to cost in the “tens of millions” but it doesn’t have “exact costs as it is buying from the market.”

Mike Thompson, chief executive of the Association of the British Pharmaceutical Industry, revealed earlier in the same committee session there is a “request into government to support the building of additional cold chain supply”. He said there was not enough cold chain warehouses in the UK to store the extra drug stockpiles the government had requested.

Mr Hancock also said financial support would be available to some pharmaceutical companies.

“We have that discussion on a company by company basis [so we are] very sure that this process isn’t gamed. That support is available if needed but we get into quite a level of detail [with these suppliers] and we expect a collaborative process. We are not going to simply write a cheque as we want value for money”.

Leslie Galloway, chairman of Ethical Medicines Industry Group whose members are mostly from small and medium sized pharma companies, said EMIG has written to Mr Hancock “to…call for financial support for companies to help them to stockpile the medicines that the government says they will need in the event of ‘no deal’.”

He added: “Without this support, many companies will simply not be able to meet the government’s request. We know that one in three of our members may not be able to stockpile six week’s additional stock at this notice. This poses a real risk to the secure supply of medicines in the event of a ‘no deal’ Brexit.”

Sources have also told HSJ the government will probably announce at the end of this month, either in or around the release of the budget, that it will reimburse pharma for the warehousing costs of stocking an extra six weeks’ of medicines. Given Mr Hancock’s announcement today, it is not clear if this offer will cover all pharma companies or just those that have asked for support.

One source told HSJ that DHSC had long intended to cover the cost of warehousing additional stock but in the summer the Treasury overruled the move at the eleventh hour. 

Another source told HSJ the cost of doing so would be approximately £80m to £100m. It is thought the money will come from the Treasury.

HSJ understands stockpiling concerns across the pharmaceutical sector include: serious cash flow and liquidity problems from holding six weeks’ additional stock; increased pressures on staff and workforce; and struggles to increase stock because of supply chain and manufacturing lead times.

The DHSC has been approached for comment.