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Rapid Response:

Brexit and medicine shortages: evidence from trade data

As May van Schalkwyk and colleagues note in their sobering assessment of the potential impact of a no-deal Brexit, it is frustratingly difficult to find reliable information about steps taken to mitigate foreseeable problems, including on medicine supplies, which are much talked about. (1)

A perhaps overlooked source of information is Her Majesty's Revenue and Customs Service, which provides detail import and export data by commodity code, and source or destination of product. (https://www.uktradeinfo.com)

The latest data available are to the end of June 2019. I extracted data for monthly imports and exports of finished pharmaceutical products between the UK and other EU members, as well as the UK and non-EU trade partners, between January 2016 (six months before the referendum on EU membership) and June 2019. The commodity codes 3004 and 3002 cover, respectively:
3004: Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems) or in forms or packings for retail sale
3002: Human blood; animal blood prepared for therapeutic, prophylactic or diagnostic uses; antisera, other blood fractions and immunological products, whether or not modified or obtained by means of biotechnological processes; vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products).

Tales of medicine shortages have been circulating in the press for some months, (2,3) with some predicting that shortages would be exacerbated by distributors taking advantage of the arbitrage opportunities provided by a falling pound in the context of a single market which allows for parallel trade.

In fact, as the trade data show (see Figure), both imports and exports of medicines have remained remarkably steady in volume terms since the referendum.

[While it does not seem possible to upload Figures to a rapid response, Figures and all extracted data are available from https://doi.org/10.7910/DVN/X6IDWE ]

The trade data also reveal that in volume terms, imports far exceed exports. Since January 2016 the country has record net imports of close to 400 million tonnes of finished pharmaceutical products. Even in trade with EU partners the UK has been a net taker, to the tune of some 42 million tonnes. In short, there has been no apparent "drain" of medicines from the UK market. Further, imports from the EU account for only a minority of finished pharmaceutical products that the UK acquires from the rest of the world, (39.5% since the referendum), while 67.8% of medicines exported from the UK go to other EU countries.

Since the Brexit vote, over UK£ 76 billion has changed hands between the UK and other EU nations in buying and selling medicines. The benefit of the exports (valued at £34.7 billion) goes largely to manufacturers and, in the case of parallel trade, to distributors. If parallel trade evaporates, as it must in the case of a no-deal Brexit, distributors will feel some of the pain. The cost of imports to the UK, on the other hand, is born largely by the NHS. While the volume of imports is virtually unchanged in the year to the end of June 2019, compared with a year earlier (down just 0.43%), the value -- broadly speaking, the cost to the NHS -- has increased by 9.6%, in part because of the slide in the value of sterling. And the rise has been steepest in imports from outside of the EU (17.7%, vs. 6.8% for EU imports). This bodes badly if, as seems likely, the pound continues to slide, and the proportion of imports from non-EU sources grows even further.

The trade data certainly provide cause for concern, but they also suggest a less apocalyptic scenario in medicines than some had predicted. Overall trade volumes do not, of course, provide indications of the dynamics driving shortages in particular products, but it is nonetheless surprising that with volumes so steady, the reports of shortages should be so common. Is it possible that some of the shortages at the hospital and pharmacy level are caused by stockpiling by distributors, who may withhold product in the expectation of achieving windfall prices following a no-deal Brexit? Such an explanation is perhaps too cynical. But in the absence of clearer information about preparatory measures from government, the current climate favours such speculative responses.

1. Schalkwyk MCI van, Barlow P, Stuckler D, Rae M, Lang T, Hervey T, et al. Assessing the health effects of a “no deal” Brexit. BMJ. 2019 Aug 29;366:l5300.
2. Rimmer A, Iacobucci G, Mahase E. No-deal Brexit may worsen drug shortages, pharmacists warn. BMJ. 2019 Aug 20;366:l5226.
3. O’Carroll L. Brexit ‘already causing medicine shortages’ at pharmacies in England. The Guardian [Internet]. 2019 Apr 9 [cited 2019 Sep 4]; Available from: https://www.theguardian.com/politics/2019/apr/09/brexit-medicine-shortag...

Competing interests: No competing interests

04 September 2019
Elizabeth Pisani
Associate Professor
Erasmus School of Health Policy and Management
Rotterdam