After General Election chaos what now for pharma?

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Wheat from the chaff

Where does the General Election leave the pharmaceutical industry?

As we all know, the result of the General Election means that no single party has an absolute majority. What initially seemed a sure thing for Theresa May unravelled into an epic political miscalculation that has left her leadership position in ruins and her Brexit negotiating hand seriously weakened.

At the time of writing, it is uncertain as to how long she will be able to fend off her critics and retain her position. Meanwhile, the nature of her working relationship with the Democratic Unionist Party (DUP) of Northern Ireland has the potential to be very disruptive.

 

Scrutiny in Parliament

After striking a workable arrangement with the DUP, which seems likely at this time, her ability to pass new legislation in the form she had outlined in the Conservative manifesto has been greatly diminished. Her Government will face intensified scrutiny at every stage, always with the risk that her detractors both inside and outside her own party will unseat her through a vote of no confidence.

With an increased number of seats, Labour will have more power to undermine government plans and an increased ability to scrutinise the Prime Minister, including through an emboldened Corbyn and a greater representation of Labour MPs on Select Committees.

The House of Lords will gain an expanded role in questioning Government legislation. Under the Salisbury Convention, the upper chamber does not oppose policies outlined in a governing party’s election manifesto. Without a majority government in place, the House of Lords faces no such restrictions and will feel it has a greater role to play in holding the legislative agenda to account.

A weaker government may also mean that civil servants, including Simon Stevens, and city mayors, will wield more influence over legislation and the policy agenda. These new factors will have major implications on May’s ability to progress politically controversial policies, including her ‘hard Brexit’ plans.

Meanwhile, the DUP will be handed a degree of political power in Westminster that they could never have foreseen, and it is likely that they will attempt to capitalise on this during the future passing of legislation. This will almost certainly include stipulations on an increase to public monies flowing to Northern Ireland and commitments to retain a ‘frictionless’ border with the Republic of Ireland post-Brexit.

Make no mistake, a change of Prime Minister in the near-term is not out of the question, nor is the prospect of another election within the coming year.

 

The NHS & the Life Science Industrial Strategy

With a minority government and only a loose arrangement with the DUP, the Conservatives face difficulties progressing their political agenda, particularly with regards to Brexit and other contentious issues. In terms of NHS funding and the Life Sciences Industrial Strategy, all parties align on the need to address funding pressures, but are divergent on levels of required finances, methods for raising revenue and solutions to long-term challenges like social care.

In general, the DUP are seeking increased funding for Northern Ireland, particularly around infrastructure, skills and education, as well as their health service. In the run up to the election, Labour committed to injecting the most money into the NHS, with £30bn over five years and an additional £8bn to social care.

The Lib Dems committed to allocate £6bn per year to the NHS and social care services combined, while the Conservatives pledged to increase current NHS spending by a minimum of £8bn over the next five years, while also proposing ways to increase social care funding. A settlement for the NHS, including social care, will be a divisive issue for the new government to tackle. Expect front page headlines and potential rebellions within the Conservative party.

There is likely to be less of a challenge in the life science sector. Both the Conservatives and Labour committed to investing 3% of GDP into UK R&D. Similarly, the Lib Dems pledged to protect the science budget, with an aim to double innovation and research spending across the economy.

In addition, both Labour and the Lib Dems want the UK to continue having access to EU-funded projects, such as Horizon 2020, post-Brexit. The Conservatives have committed to implement the recommendations of the Accelerated Access Review, making sure patients get new treatments faster.

Similarly, during the Election, Labour committed to ensure all NHS patients get “fast access to the most effective new drugs and treatments”. Regardless, Brexit will consume the majority of focus and political resource.

  

Brexit means…

Theresa May has indicated that her Brexit plans will continue unchanged, including timelines for the start of negotiations, although overall progress might falter in the face of stronger opposition in the House of Commons.

With a minority government, Theresa May will govern without a formal majority. This creates an almost impossible situation for her in relation to Brexit. Presuming May is able to successfully negotiate an exit from Europe and a positive deal with the rest of the European Union, she has committed to putting any final settlement before the House of Commons.

Without a majority vote, or even a consensus within her own party, the Prime Minister may find it highly challenging to secure the required number of votes to make this a reality. ‘Remain’ politicians, if they haven’t already, will leverage the Election results to maximum effect in order to frustrate the Brexit process at every stage,
if not attempt to reverse it completely.

It is clear that Theresa May’s intention is to rebuff potential leadership contenders within her party, and stay on for the duration of the Brexit negotiating process. Her position is only strengthened  because there is no clear successor that would be palatable either to the party or electorate.

Moreover, were someone to take over the role, they would arrive without any political mandate at all, bringing the threat of another General Election and even less negotiating time. There seems general acceptance among Tories, and even the general public, that this situation is not desirable.


Alex Ledger is Deputy Managing Director at Decideum – the views expressed here are entirely his own. Go to decideum.com