Life Sciences Blog

Brexit impact on healthcare: A lot of cloud and no silver lining




IHS has adjusted its healthcare spending forecast for the United Kingdom following the vote to leave the European Union (popularly known as Brexit) in the 23 June referendum.

Pinpointing the exact impact of Brexit on healthcare spending and pharmaceutical spending remains a moving target at this stage as a lot of unknowns remain. For starters, it is not certain when the UK will trigger Article 50 of the Lisbon Treaty, setting itself on an irreversible course of withdrawal from the EU. The current forecast adjustment is based on the impact on healthcare spending triggered by the expected GDP growth slowdown, but additional factors may come into play over the coming weeks and months.

Forecast for UK healthcare spending cut to 3.0%

Specifically, the IHS healthcare spending growth forecast for 2016 has been adjusted downwards from 3.5% to 3.0%. Healthcare spending projections have also been adjusted downwards for key trading partners of the UK, although to a smaller degree than for the UK itself. Considering the expected decline in GDP growth, we have also adjusted forecasts for the UK’s healthcare spending growth for 2017 from 3.3% to 0.2%, with smaller growth declines forecast for 2018 and 2019.

Aside from the impact on GDP that will begin to impact healthcare spending, there are other issues to consider. Some of those I already examined in a previous blog written before the referendum, in terms of location of the European Medicines Agency and the Unified Patent Court, as well as the diminishing attractiveness of the UK as a first-tier launch market. 

There are, however, other impacts that would affect healthcare provision to UK residents both domestically and abroad that should also be considered.

Staffing challenges

The uncertainty about the future status of EU citizens in the UK may discourage foreign doctors, nurses and other medical staff from taking up employment in the UK. This could have significant implications for healthcare provision considering that 55,000 of the 1.3 million National Health Service (NHS) staff are EU nationals. The problems may be even more acute in the social care sectors, where an estimated 80,000 of the 1.3 million staff are EU citizens, according to a recent King’s Fund report. Meanwhile, the BBC reports that 10% of doctors and 5% of nurses are EU nationals and the uncertainty generated by the vote is already affecting recruitment. The BBC reported on 30 June – just days after the referendum – that “an EU recruitment drive in West Yorkshire had already run into difficulties.”

Access to healthcare abroad

Another impact of the Brexit vote – if and when the UK eventually leaves the EU – is that UK citizens may lose access to the European Health Insurance Card (EHIC) allowing them to access emergency healthcare during short visits to other European Economic Area (EEA) countries. The impact of that particular provision will affect British holiday makers visiting EU member states. However, the impact on British expats living in other EU member states will be even more profound: currently, EU citizens living in the UK, or UK citizens living in other EU countries, are entitled to the same access to healthcare as nationals of that country. And while the 3 million EU migrants currently residing in the UK tend to be younger and relatively healthy people, whose need for healthcare tends to be lower, terminating this policy may disproportionately affect the 1.2 million UK expats living elsewhere in the EU. A statslive.co.uk study from 2014 indicates, based on French statistical data, that a third of Brits living in France were over 60 years old. Spain is another popular destination for British retirees.

The King’s Fund report recommends that UK government should try to negotiate a reciprocal arrangement with other EU countries on healthcare provision. But how quickly can such arrangements be negotiated and, crucially, how willing are the other EU member states going to be to reach an agreement with the UK on this and other issues triggered by Brexit? Indications so far are that the UK faces difficult negotiations ahead as key EU players would seek to discourage other EU states from leaving the union.

And as to the promises made during the pre-referendum campaign that £350 million being sent to the EU weekly will be instead spent on the NHS, these have most definitely been abandoned: the net weekly contribution to the EU was in fact less, and key ‘Leave’ campaign figures have all distanced themselves from the claims that the entire savings could be spent on the NHS.

Milena Izmirlieva is the head of life sciences research at IHS
Posted 19 July 2016

About The Author

Milena Izmirlieva is head of the Life Sciences research team at IHS Markit. Her areas of expertise include market access, pricing and reimbursement, HTA, generics and biosimilars, corporate strategies, and pharma promotion and advertising.