Mutual Recognition Agreements (MRAs) is an umbrella term for international agreements by which certain states agree to recognise each other’s regulatory conformity assessments and/or product regulations in order to facilitate trade.
MRAs are of crucial importance within the Life Sciences sector as they effectively reduce the regulatory burden on pharmaceutical companies to conformity with just one set of product assessment procedures in order to export pharmaceutical products to multiple jurisdictions. Life Sciences businesses operating in EU member states enjoy numerous benefits of mutual recognition, such as the ability to rely on each other’s Good Manufacturing Practice inspections, waive batch testing of products and share huge amounts of valuable information.
As such, if a MRA is not in place between the UK and the EU at the end of the transition period, Life Sciences businesses that trade in the UK and EU will have to conform to dual regulatory requirements. This will inevitably entail additional costs in an increasingly competitive market, which future regulatory divergence will only exacerbate.
Why hasn’t a MRA been agreed yet?
Whilst it would appear that a MRA for the Life Sciences sector would be mutually beneficial to businesses across the UK and EU, the UK’s negotiation of a MRA is currently tied to the ongoing talks focused upon reaching a wider Free Trade Agreement (FTA) with the EU, which would come into effect at the end of the transition period.
Therefore, various points of contention between the UK and EU in respect of the FTA, including those discussed in our Brexit Update, threaten to derail the prospects of a MRA being agreed. These include the following:
- The EU has stated that a FTA would need to be agreed by the end of October in order that it is ratified and implemented to come into force ready for the end of the transition period.
- The UK Government has stated on numerous occasions that it is comfortable with a “no deal” scenario.
- There remain fundamental differences between the UK and EU in relation to so-called “level playing field” commitments, particularly in relation to state aid and CJEU oversight.
- Recent developments and litigation in relation to the Internal Market Bill appear to further reduce the prospects of a FTA being agreed.
The Joint Letter
In response to this apparent deadlock in negotiations, stakeholders and industry bodies across the Life Sciences sector are lobbying the UK and EU representatives for a MRA.
Most prominently, Medicines for Europe, EFPIA, AESGP, EUCOPE, EuropaBio and Vaccines Europe have, in a joint letter, called for the UK and EU to split the negotiations for a MRA away from wider FTA negotiations in the hope that a MRA is agreed by the end of the transition period even if a FTA is not.
This situation is not without precedent, as both the UK and EU have successfully agreed Life Sciences MRAs with the USA, without having agreed wider FTAs. In addition, the EU has already agreed MRAs with countries that have (in some cases) vastly different regulatory regimes to the EU. These include Australia, Canada, Israel, Japan, New Zealand, Switzerland and the USA.
It remains to be seen whether a MRA (or indeed a wider FTA) will be agreed in time for the end of the transition period, and with 31 December 2020 fast-approaching, and the world still grappling with the COVID-19 pandemic, it is becoming increasingly possible that the UK will enter 2021 on “no deal” terms with the EU.
What is certain is that Life Sciences businesses trading in the UK and EU will be acutely affected by this so-called “second cliff-edge”, and must be aware of the numerous commercial/legal risks to their business and conduct a risk assessment of their supply chains.
Our multi-disciplinary Life Sciences team would be delighted to assist with any queries you have on this topic.