The EU referendum is on 23rd June and the British public will be voting to leave or stay as a member of the European Union. There is much speculation on the impact of either of these outcomes as no one knows for sure, so Nelsons Director of Regulatory Affairs, Steve Mann, has looked at both options and added his two pennies on what it might mean for the health industry:
“The Brexit debate is highly complex, and there are many key areas that we hear being repeated by the media. Some of these could have a significant impact on industry, and include Regulation, Trade, Support, Influence....But what might it mean for SME’s?
Brexit (leave)
Pros
There’s the potential for greater flexibility within the health industry if Britain were able to escape the onerous EU regulation and bureaucracy which currently restricts innovation, lengthens product development timelines, increases costs and sets standards many companies are unable to meet. We could have the opportunity to simplify the layers of bureaucracy or even remove some of regulation which simply hasn’t functioned the way it was intended.
Europe is an incredibly diverse continent, with many different cultures, traditions, lifestyles and values. The “one solution fits all” approach, often adopted with EU regulation, simply doesn’t take adequate account of our differences and diversity. It’s unrealistic to expect the nutritional requirements of people living in Scandinavia, the UK, Portugal and Austria to be the same. It’s difficult to get enough Vitamin D when it’s dark for 6 months of the year near the Arctic Circle, but not such a problem if you live on the Med. But Brussels is seeking to establish maximum levels of nutrients in Food Supplements across the entire EU, regardless of local needs, nutritional requirements or the products traditionally made and sold in each market. Implementing such a regulation will therefore have numerous negative impacts on businesses and consumers across the EU.
We currently fund the EU with significant payments (reportedly up to £10 billion), which is money that would be available to us if we didn’t have the “EU membership fees”. This could be used in a number of ways, but promising to cut taxes and austerity measures will probably win most public votes!
We can negotiate our own trade deals without many of the restrictions imposed by the EU members. With the lifting of EU impositions, would we be able to progress further with the TTIP initiatives, and trade more easily and extensively with the US?
Cons
Reworking our own national legislation will be a significant undertaking. It will be both time consuming and costly. In all likelihood, the national rules we will end up with will probably still need to operate close to the EU expectations in order to facilitate trade and export to EU Member States. Otherwise, we could end up having to meet two sets of standards rather than just one.
The Mutual Recognition procedure was intended to allow medicines licensed in one Member State to be marketed across Europe – which has worked well for some categories of drugs and healthcare products, but for others, has failed almost completely. Especially in some of the more niche categories, which are often the products manufactured by SME’s. If the process has struggled when we are part of the EU, how much more difficult might it be if we are on the outside?
Regulatory divergence will result in increasing costs as companies implement new compliance measures, which will in turn affect profitability. Businesses will need new strategies to adapt to the new legislative framework, but ultimately, may take the easy route and pass the costs on to the consumer.
The process of leaving and untangling from the EU will take time to complete. There will definitely be considerable uncertainty about the business environment we will be left with, and what will happen in the interim years when both the UK and EU adjust to each other. Uncertainly is difficult for any business to deal with, so wherever it lurks, businesses tend to be less likely to make investment decisions which can slow the economy as a whole.
Britain will lose influence over EU regulations and trade policy without necessarily gaining much freedom to act on our own. We will potentially change our close relationship with the two of the largest and most powerful economies – Germany and France, who will then have more control and influence in Europe than we will.
The EU presidency moves from Member State to Member State, with all Members heading the table at some time. As the EU train rumbles past, you have to believe you’ll have a better chance of influencing its direction if you’re on board. It’s better to be on the train looking out, rather than running along the platform trying to look in.
It’s said that Europe is the most regulated (or over-regulated) part of the globe, but there are other regulatory systems around the world which pose significant challenges to all businesses. Meeting FDA (Food & Drug Administration) expectations should not be underestimated, especially for SME’s. But for anyone who has grappled with Prop 65 in California, they may perhaps be thankful for the EU regulations we already have in place. Increased trade and advancement of TTIP is a double edged sword, and will almost certainly favour the big corporations and multi-nationals rather than small businesses.
Remain (stay)
Pros
Being in a single market means that manufacturers and exporters are able to trade across Europe much more easily. Being able to trade easily and efficiently helps to keep industry costs down, and keep prices low for consumers. Being in Europe therefore helps creates a level playing field for us, so we can compete with other companies in and across the EU.
Beside free movement of trade, the Health Industry also benefits from European citizens being able to move freely into the UK, allowing us to recruit some of the most highly trained and qualified people the EU has to offer. The UK is also one of the largest recipients of research funding from the European Research Centre.
David Cameron’s newly negotiated ‘special status’ means we will be able to stay in the EU AND have greater ability to run our own affairs, following the meetings in Brussels this February.
The EU has recognised the need to reform, and is actively looking at ways it can improve the legislative environment and reduce bureaucracy, with initiatives such as “REFIT”.
Being part of the EU brings security and stability to a great many of our industries.
Cons
We are governed by tightly controlled regulations that can stifle innovation and tie up businesses in unnecessary bureaucracy, increase their costs and increasing the time to get new products to market. We also do not have full control of the legislation coming our way, so are not free to shape our own future.
Brussels creates so many rules and regulations that sometimes they even contradict each other. We have already seen a head on collision between the Health Claims and Traditional Herbal Directives. Two incompatible systems that resulted in 2000 botanical health claims being on hold for many years, and companies being left in an uncertain position as to whether their products can be legally marketed or not.
Does Nelsons want to leave or stay? That’s the $1,000,000 question. I think we should stay, but that the EU itself needs to undergo significant change. The EU wasn’t conceived to serve the requirements of 28 Member States, and has grown to a size where it can no longer function as effectively as it needs to. It should continue with reform initiatives, not only for the benefit of UK businesses, but also for businesses across Europe, and ultimately for all citizens of the EU.
