Rent increase hits Europe’s drug regulator before Brexit move

Amsterdam’s red-hot property market might threaten the mission of Europe’s drug regulator. With less than a year to go before the European Medicines Agency (EMA) must leave its London headquarters because of Brexit, the agency is facing an unexpected rent increase that could cut into its budget for approving new medicines and overseeing clinical trials.

The multimillion-euro rent increase, which is spread over two decades, was revealed in EMA board-meeting minutes that were released this month – along with other problems hampering the agency’s move to Amsterdam.

The developments threaten to drain crucial resources, financial and otherwise, at a time when the agency’s operational capacity is uncertain owing to expected staff losses caused by the move, say agency officials and observers.

The EMA is engaging in frantic business planning to ensure the move takes place “with as little interruption as possible”, says deputy executive director Noël Wathion.

But the agency might soon cut some crucial functions for science, including advising on early-stage drug research and implementing a directive to ensure good practice in clinical trials, according to contingency plans drafted by the agency to prepare for the move.

Guido Rasi, director of the European Medicines Agency, points to a model of the new headquarters in Amsterdam

International upheaval

The EMA, whose roughly 900 staff members oversee the safety of European medicines and offer scientific advice, is scheduled to move from London to Amsterdam in March 2019. Its new location was chosen last November by the European Union, from bids submitted by several countries, including Italy, Sweden and Slovakia. The final vote between Amsterdam and Milan was a tie, so the result was determined with a coin toss. This has left the Italian side furious – Milan’s mayor has even threatened legal action.

The rent issue is adding fuel to this controversy, say agency observers. In February, according to the board-meeting notes, representatives of the Netherlands demanded a 34% increase in the rent for 2019, which had been pegged at €320 (US$390) per square metre of office floor space in the country’s initial bid. The increase results from extra costs of fitting out the building and from rising property values in Amsterdam’s fast-growing Zuidas neighbourhood, where the EMA’s new headquarters are under construction.

The EMA’s board rejected the proposal at a 28 February meeting, arguing that the original bid, on the basis of which Amsterdam was chosen, mentioned no such increases and included the costs of fitting out and furnishing the building.

“We have always said that the figures in the initial bid had to be adhered to,” says Wathion. “We had a very open and frank discussion with the Dutch colleagues and we reached an agreement.”

This final deal includes a clause under which the rent will go up by a fixed rate of 2% every year for the next 20 years, starting at the original price tag of €320 per square metre in 2019 and ending up at €466 per square metre in 2039, according to Wathion. As a result, the EMA’s annual rent will increase from an estimated €10 million a year when it moves in, to around €15 million 20 years later.

Pre-agreed rent increases are common in commercial properties, says Wathion, but the fixed increase raised eyebrows at the agency. The meeting minutes called the arrangement “unusual”. Rents are typically tied to inflation or the consumer price index. The EMA’s London rent, for example, fell by about 4.4% between 2016 and 2018.

But Dutch representatives argued that fixing the rent increase is fair, considering that the price tag, over 20 years, will be smaller than the rent on the EMA’s current premises in London’s expensive Docklands area. That rent stood at €14.5 million for 2018. The agency’s presence will boost property prices in Zuidas owing to an expected influx of professionals, said the Dutch representatives.

“The relocation of this agency will work like a magnet for all kinds of companies and professionals,” says Anton van Tuyl, a spokesperson for the Dutch Association of Innovative Medicines in The Hague. The Dutch government had not responded to queries from Nature, as this story went to press.

Knock-on effects

The impact of the move on the agency’s budget remains to be seen – the rent in Amsterdam might be cheaper, but Brexit means that the EU will lose the United Kingdom’s considerable financial contributions and might have to make budget cuts. The EMA is also expected to pay a penalty for ending its London lease early, although the final sum, which has not yet been disclosed, might be paid by the UK government.

The agency’s contingency plans, drawn up to prepare for the move to Amsterdam, foresee staff losses of 20% to 30%. This means, according to the plans, that some of its duties might cease until new experts can be recruited. Such duties might include providing scientific advice for paediatric medicines and elderly care, as well as implementing the EU clinical-trials regulation. This directive seeks to improve comparability between clinical trials by aligning national legislation to ensure that trials can happen in any EU countries with the same standards.

With less than a year remaining before the move, businesses and agency staff members are also concerned that disputes about the building might distract policymakers from planning a smooth transition when the EMA moves. Britain has undertaken up to 30% of the EMA’s assessment tasks, especially drug approvals, while the agency has been based in London.

On 11 April, the agency announced that it had reallocated the monitoring of more than 370 products, including new medicines, to regulators in other European countries. But one insider with knowledge of this deal, who asked not to be named because of his proximity to the negotiations, told Nature that many of these agencies lack the capacity and time to take these products on immediately, so a number of assessments have effectively been parked.

Steve Bates, chief executive of the UK Bioindustry Association in London, says that the EMA’s difficult move could be made even harder by strict timelines imposed by the European Commission, dictating when the agency must cut British scientists from its operations. “Removing key expertise and reallocating work to other agencies that are not yet able to increase capacity overnight is a reckless course of action,” he says.

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