Bidding war over lucrative Brexit spoil

Where Europe’s London-based medicines regulator ends up may be decided by June.

Where there are drugs, there’s money.

That makes the London-based European Medicines Agency one of the biggest spoils of Brexit. And nearly every other country in the EU is actively courting the EU’s drug regulator to move to their shores once the U.K. leaves the bloc.

Untangling the U.K. from the EU is expected to drag on for years, but the new host of the EMA could be declared as early as June. The Commission already has a draft set of criteria obtained by POLITICO that encompass everything from how smooth a transition would be — since Brussels wants to keep the regulator on its drug-approval schedule — to access to hotels, airports, schools, child care and high-quality health care.

Though the health of 500 million Europeans is at stake, the bidding war is likely to be anything but orderly or even focused on public health needs.

It’s expected to come down to political considerations, regional sensitivities and even the interplay of other topics that end up on the agenda of the European Council meeting where the decision will be made — like the burden of refugee flows, for example — according to officials from member countries, the EMA and the Commission interviewed for this article.

“In the end, it will turn into a souk,” said a senior Commission official with knowledge of the issue, invoking the image of bargaining at a bustling Middle Eastern bazaar.

Lobbying to win the agency is already at the highest diplomatic levels, with heads of governments, health ministers and diplomats in Brussels and in the capitals making their public and private cases. In recent weeks, Italian Prime Minister Paolo Gentiloni pitched Milan’s candidacy directly to European Council President Donald Tusk. Croatian Prime Minister Andrej Plenković wrote to Tusk and Commission President Jean-Claude Juncker to make the case for his country, according to the local media. Others, including the health ministers of Ireland and Hungary, have pressed Vytenis Andriukaitis, European commissioner for health and food safety, as well.

“These decisions are political, absolutely, they’re made in the European Council,” acknowledged Ireland’s Health Minister Simon Harris, speaking to reporters during a recent trip to Brussels to lobby for the EMA. “But it is important, I believe as a European health minister, that criteria is set down, because this is a very important agency, and if the agency was to be located in the wrong place, then its work would go backwards.”

There is also hope, however distant, to keep the agency in the U.K., too: No law explicitly states the agency can’t sit outside the union and London has a solid case. If the risk to public health through a mass exodus of EMA staff — causing severe delays in pipeline drug approvals and stalling major projects like building the anti-counterfeit tracing system — is so great, the concerns could sway EU leaders to keep the regulator right where it is.

For the U.K. to win the hearts and minds of EU leaders, many of whom have called for a deal that punishes Britain for giving up on the EU project, the U.K. will have to show some humility — and some cash.

“Politically it would be quite hard to do,” said Mike Galsworthy, research associate at University College London and co-founder of the campaign group Scientists for EU. “EU leaders will question, ‘Why should Britain benefit from Brexit when it’s giving up on the EU?’”

Big prize

The EMA is no small prize.

Its crucial role in assessing the safety and efficacy of new drugs puts it at the center of the European pharmaceutical market. In 2016, the agency gave the green light to 81 medicines for treating cancer, cardiovascular diseases and infections, among others. To do this, the EMA brings 40,000 people each year to its 6-floor, 23,500-square-meter headquarters in London’s Canary Wharf. It needs 350 hotel rooms per night, five days a week, the agency’s Executive Director Guido Rasi said last year. The EMA has a budget of €322 million for 2017.

So the list of volunteers to adopt this economic powerhouse keeps growing. More than a dozen cities, including Milan, Copenhagen, Dublin, Lille, Stockholm and Warsaw are in the race.

Officials in Brussels say that from a purely practical perspective, Sweden, Denmark, the Netherlands and Germany have the strongest cases. They have large enough facilities to hold 900 EMA employees, plus the necessary infrastructure for housing and transportation. They offer a high enough quality of life to woo those specialists, who may be reluctant to leave cosmopolitan London.

Some EU officials may want to avoid past mistakes of meting out EU agencies to cities that couldn’t support them. But with the imperative to evenly distribute institutions — and reward the EU’s most enthusiastic members amid resurgent skepticism — all the same temptations are still there.

Only considering convenience, however, puts the EU in a political bind.

Longstanding tensions among member states — East vs West, rich vs poor, isolated vs well-connected — will frame the debate about the EMA’s home.

The frontrunners

Among the 16 countries that have joined the race, Denmark, Ireland, Italy and Sweden have the most advanced candidacies. The four countries have launched their campaigns in Brussels with task forces, websites or even an appointed special envoy dedicated to snagging the agency. All have a recurring argument in their bid: They want to minimize the impact of staff relocation and the unavoidable loss of expertise that will come with it.

Sweden claims it has one of Europe’s top national medicines’ agencies, a great record on innovation and high quality of life. It also has experience hosting a European agency because Stockholm is home to the European Centre for Disease Prevention and Control.

“We see quite an important synergy by having both located geographically at the same place. They both deal with antimicrobial resistance and these are issues that will grow in importance with time,” said Christer Asp, a former Swedish ambassador who is now coordinating the Swedish health ministry task force on the EMA.

Denmark’s selling points are that its capital is “well-connected and easy to reach,” thanks to the Copenhagen airport, and, like Sweden, the Danes list their experience in hosting international organizations, including several United Nations bodies.

Ireland and Italy have slightly different pitches. The former argues that the country will suffer the most from Brexit, and getting the EMA would serve as a sort of compensation. During a recent visit to Brussels to promote the country’s candidacy, Ireland’s Harris also pointed to Dublin’s status as an anglophone city that’s physically and culturally close to London.

Italy, which already houses the European Food Safety Authority in Parma, came up with a new concept, saying cooperation between the two agencies would benefit patients and boost expertise.

“EFSA and EMA work already together for several issues and we believe in a ‘one-health approach’ which would mean a synergistic cooperation between the two agencies,” said Giovanni Pugliese, Italy’s ambassador for Coreper I.

However, some member states say an argument like that should be disqualifying. The EU leadership needs to show it is ready to move some of the bloc’s center of gravity towards the East if it is to remain united, according to one national diplomat in Brussels. “Countries which already host EU agencies should have not even gotten in the race,” the diplomat added.

By moving early, countries hope to shape the rules of the contest in their favor.

Deciding by June could be critical. Morale at the EMA has plummeted since Brexit and is getting “worse and worse,” according to its boss, Rasi. The agency has lost an unprecedented number of high-level staff, with six senior executives quitting since the June Brexit referendum, he said. That’s more than the number who left in the last decade.

The majority of EMA employees come from overseas; only 7 percent are U.K. citizens. However, the agency’s move is expected to upend their families’ lives and cause disruption, since many likely want to stay in London.

Making a decision fast about the new seat of the agency will help end the uncertainty for the EMA employees, according to Sweden’s Asp. Once that decision is made, he estimated the relocation would take up to two years to complete.

History repeating

An EU document from 2010 says that “the decision on the seat of an agency is currently a political one for which no detailed justification is provided.”

It goes on to explain that the EU heads of states and government decided in December 2003 to give priority to new EU member countries when distributing future agencies. The countries that don’t already host an EU office should go to the front of the line, according to the document.

That’s music to the ears of Eastern countries including Croatia, Hungary and even Bulgaria, who have also joined the race, some more formally than others.

“We don’t know that much about the decision-making process,” Sweden’s Asp said. “What we are pushing very hard for, now, is a list of very clear and comprehensive criteria that should be fulfilled by the host country, and the decision-making process will start by the member states agreeing on such criteria,” he said.

The Commission is writing a checklist of ideal qualities of the next EMA that will land on the desks of Michel Barnier’s Brexit task force and Tusk. Here’s what’s not in the draft copy obtained by POLITICO: the quality of the city’s existing community of local scientists, whether the EMA should go to a member country that does not already have an EU agency, or other issues likely to be part of the political debate. The criteria focus exclusively on infrastructure and quality of life.

In any case, this checklist is likely to be ignored, officials in member states and the Commission privately acknowledge. At the same time, the Commission has learned the hard way about the pitfalls of dropping agencies into unprepared cities.

“What is sure is that they will not want to repeat the mistake of [the European Food Safety Authority] in Parma, where [former Italian Prime Minister Silvio] Berlusconi managed to get the agency claiming the Finns had no clue about prosciutto crudo and Parmesan,” the senior Commission official said.

The local cuisine is tasty, but it’s difficult to connect with the rest of the world or bring in experts: There’s only one flight a week — to Sicily.

For the EMA, good connections to other EU cities and a top-quality airport will be among the priorities, the official added.

Another example of what not to do when allocating an EU agency is the European Union Agency for Network and Information Security (ENISA) which was set up in 2004, in Heraklion, Crete’s largest city. Because of its remote location, a second office had to be opened in Athens, turning it into one of the most expensive agencies in the EU.

“Experience shows that agencies located in very remote places face severe difficulties to attract and retain staff from the rest of Europe,” the 2010 EU document said.

Helen Collis contributed reporting.