Life Sciences Brexit Update: Deal or No Deal?

We are now at the next stage of Brexit.

After nearly two-and-a-half years of negotiations, a ‘Brexit deal’ has been agreed. If this is ratified by the UK and EU parliaments, the UK will leave the EU on 29 March 2019 with an agreement in place. A transition period will then run from this date until the end of 2020 in order to ensure an orderly exit from the EU. If this ‘deal’ is voted down by UK parliament, the UK’s uncertain political situation will worsen, and it runs the risk of leaving the EU on 29 March 2019 with no deal in place: a ‘cliff edge Brexit’.

The life sciences sector has continuously advocated that such a ‘cliff edge Brexit’ is to be avoided at all costs. The UK BioIndustry Association (BIA) in particular has identified 4 key policy focal points in the UK’s relationship with the EU that it deems fundamental to preserve the sector: regulatory cooperation, frictionless trade, R&D/funding collaboration and movement of talent. It has also reiterated that public health and patient safety must not be negatively affected by Brexit and that business and economic certainty in the form of an agreement could help ensure this.  

What does the future look like if this ‘Brexit deal’ is ratified?

Initially, the government produced four guidance documents about the implementation period and what this meant for the life sciences sector. Setting out the government’s preferred approach, these documents suggested that market access would not change and “common rules would remain in place” during the implementation period. This was intended to provide certainty for businesses and citizens.

Now, following the publication of the withdrawal agreement, we can confirm that the government has followed through with this approach. This is particularly demonstrated in the following provisions:

• There will be mutual recognition of professional qualifications during the transition (p.16);
• Goods lawfully placed on the Union market or the UK market before the end of the transition period may continue to be available on both markets until the product reaches its end user (p.69);
• UK experts may, on invitation, attend agency meetings about regulation of medicines (p.76);
• The CJEU can continue to give preliminary rulings on requests from UK courts made before the end of the transition period (p.88);
• EU state aid rules, including the General Block Exemption Regulation that covers most R&D grants awarded to companies, will continue to apply during the transition period (p.156) – although an independent body will be established in the UK to oversee state aid provisions, in place of the European Commission.

Further, the Political Declaration, setting out the broad terms for the UK/EU future relationship, is positive for the life sciences sector as it reflects many of the issues that were raised with the government. These include the importance of a close trading relationship with the EU, the mutual recognition of trusted traders across customs and the cooperation of the UK with the EMA. The Political Declaration sets out for the first time the EU’s interpretation of medicine regulation post-Brexit, but it is worth noting that the detail and the final deal are unknown and yet to be worked out.

How can we prepare for a ‘cliff edge Brexit’?

The government has issued some, albeit limited, guidance for pharmaceutical companies in the event that the UK leaves the EU with no deal in place.

The Technical Notices

On 23 August 2018, the government published a selection of “technical notices” to help explain how various sectors can prepare in case the UK leaves the EU without an exit deal. Six of these notices relate to the life sciences sector and set out contingency plans that pharmaceutical companies ought to put in place to avoid potentially significant disruption.  

While the overarching emphasis is to “prepare for all eventualities”, some of the more specific points that will apply after 29 March 2019 include the following:

• All Centrally Authorised Product Marketing Authorisations will automatically convert into UK Marketing Authorisations. Marketing Authorisation Holders (MAHs) will be contacted by the UK Medicines and Healthcare products Regulatory Agency (MHRA), informing them of this conversion process and how they can opt out of receiving UK Marketing Authorisations. 
• The UK will no longer be part of the EU centralised procedure. Applications to market products in the UK will need to be submitted to the MHRA for national assessment. 
• Applications for EU and UK markets will need to be made separately, and new generic applications will need to be based on reference products that have been authorised in the UK.
• MAHs will need to be established in the UK. This will also apply to the Qualified Person for Pharmacovigilance, although those without a current UK presence will have until the end of 2020. 
• The UK will continue to accept batch testing of human medicine carried out in countries named on a list written by the MHRA. On 29 March 2019, this list will include all EU and EEA countries, as well as countries with which the EU has a Mutual Recognition Agreement.

The Open Letters

Alongside the technical notices, the government have also issued open letters to the NHS and life sciences sector, acknowledging that a no deal Brexit could cause medicinal supplies to be disrupted at borders. Access to drugs and medical products may be limited and, at best, delayed. To combat this issue, the government has established a Medicines Supply Contingency Planning Programme, which has asked that:

• Pharmaceutical companies supplying the NHS retain a minimum of six weeks’ additional supply before 29 March 2019;
• Pharmaceutical companies plan to air freight any short shelf-life products which cannot be stockpiled and which might otherwise be imported by sea, road or rail; and
• Hospitals, doctors, pharmacies and patients do not stockpile medicines themselves.

It is currently unclear how these measures will be funded and to what extent pharmaceutical companies and/or the UK taxpayer will be expected to foot the bill.

The EU Position

The UK government is proposing unilateral recognition of existing EU processes as much as possible in a no deal scenario. However, this is unlikely to be reciprocated by the EU27 and EU institutions who, by doing so, would open themselves up to criticism from other European countries for giving the UK special treatment.

Nonetheless, the European Medicines Agency (EMA) has released its own guidance to the EU27 after surveying companies with UK operations. To combat difficulties in the medicine supply chain, they have recommended the following:

• Companies which have centrally authorised products located in the UK should consider whether marketing authorisation changes are needed and make necessary applications as soon as possible. If these companies wish to continue supplying the EU from the UK, a transfer application will be required in a no deal scenario. 
• Companies should review whether they need to relocate their Qualified Person for Pharmacovigilance and their pharmacovigilance system master file to an EU or EEA member state. Batch release sites, quality control sites and importation sites will also need to be transferred to EU or EEA member states. 
• Companies should review whether changes are required in their manufacturing arrangements, particularly as capacity may need to increase in the short term.
• Companies should consider the logistics arrangements around transportation, as the UK government has done by advocating use of air freight. 
• Guidance from the EMA and MHRA must be monitored going forward and budgets may need to be set aside. 
• Companies should take into account that the EMA is relocating from London to Amsterdam and the impact this may have on regulatory processing times.

Summary

Companies should, to the extent that they have not done so already, be putting action plans in place for a no deal scenario, despite recent progress towards a Brexit deal.

In the UK, the BIA is encouraging members to engage actively with government recommendations in an acknowledgement that any transition may pose a “massive challenge” for entities in the sector doing business in or with the UK in any form. Not only might there be serious practical barriers relating to the movement of product across the UK border, but there may also be time consuming regulatory issues that arise, along with a “significant increase in duplication of bureaucratic red tape”. Even if the UK accepts unilateral recognition of the EU regulatory landscape in the UK post-Brexit, there is still significant potential for disruption.