Brexit: State of play for Life Sciences companies

With the UK preparing to leave the European Union (EU) on 30 March 2019, life sciences companies are planning ahead for changes to the business and regulatory environment. Discussions at the EU Summit on 19 October 2017 primarily focused on what are regarded as key Brexit ‘gateway’ issues, namely:

(i) how to guarantee the rights of EU citizens in the UK (and vice versa);

(ii) how to resolve the issue of border controls between Northern Ireland and Ireland/EU without compromising the integrity of the single market; security or the Good Friday Agreement; and

(iii) settlement of the UK’s financial obligations to the EU budget.

While no agreement was reached on those issues, the EU has agreed to start internal preparatory discussions in relation to the framework for the future relationship and transitional arrangements.

There remains a level of frustration amongst businesses over the lack of real agreement over a basic framework for a transitional period post-UK withdrawal, meaning further delay over detailed negotiations on sector-specific issues, including regulation of, and trade in, medicinal products and medical devices. In the midst of this uncertainty, companies and their trade associations are actively engaged in trying to put into place contingency plans to protect public health, business and the sizeable investments at stake.

What is the UK Government doing?

Over the summer, the UK Government issued a public statement indicating its commitment in principle to close cooperation over a post-Brexit regulatory system for medicines and devices. In a speech at the MHRA/BIA Conference on 14 July in London, Lord O’Shaughnessy emphasised the key principles that would need to underpin any future relationship the UK would have with the EU, namely: patient health and safety; the UK’s leading role in promoting and ensuring public health in Europe and globally; and ensuring that industry can get innovative products into the UK market as quickly as possible.

Since then, on 21 September, the Commons Select Committee for Health launched an inquiry into regulatory arrangements needed to guarantee the safe and effective supply of medicines, medical devices and medical products post-Brexit. Its remit is to consider the issues arising for companies, healthcare services and regulatory bodies and to weigh up the risks and opportunities which Brexit presents for the sector. Amongst the issues which are being considered as part of this consultation are:

• What alternative regulatory arrangements should be put in place?
• How much time is required for a smooth transition system?
• How will the withdrawal from the EU affect the UK’s ability to influence international standards in life sciences?
• What are the implications for medical research and development?

Trade associations, including the Association of British Healthcare Industries (ABHI) (representing the medical technology industry) have already responded. Industry submissions favour options that avoid major regulatory divergence which might impede trade, disrupt supply chains or result in significantly higher costs (whether directly through the imposition of tariffs or indirect costs of additional regulatory requirements).

Cross-border trade in medicines and medical devices is not the only issue at stake for UK life sciences companies. The sector also employs many talented and skilled workers from the EEA whose jobs are also at risk. The industry is currently engaging with an inquiry launched by the Migration Advisory Committee established by the Government to look into the implications of Brexit on employment, recruitment and skills and training. The ABHI has recently published their responses to the call for evidence.

What will happen to the European Medicines Agency?

The European Medicines Agency (EMA), currently based in London is responsible, in collaboration with national competent authorities, for administering the centralised procedure by which certain types of medicinal products may be granted marketing authorisations (MA) to be licensed for sale within the EU. The EU has begun a competitive process for relocating the EMA. Bids from 19 Member States to host the EMA in the future are currently being assessed, with the European Council due to vote on a decision on 20 November 2017.

In the meantime, the EMA has announced that it is ‘business-as-usual’ and has introduced a business continuity plan in order to ensure that its priority tasks of assessing medicines and coordinating inspections continue. The official position is that it will only scale back on lower priority support activities. However, in practice, as Brexit approaches the EMA’s workload is likely to increase with companies registering variations designed to deal with changes, while its capacity is likely to decrease as it faces staff losses pending relocation. This could impact on timescales for applications for authorisation and variations.

The EMA is establishing a dedicated web portal which it will update regularly with practical information to assist companies in preparing for Brexit. The Coordination Group for Mutual Recognition and Decentralised Procedures (CMDh) has published information for holders of MAs [1] and a similar dedicated website has been established to assist holders of marketing authorisations for products for veterinarian use.[2]

What will Brexit mean for UK marketing authorisation holders?

The EU regulatory framework for medicinal products requires that an EEA MA holder must be established in the EEA. The EU (Withdrawal) Bill if it passes would transpose EU law into UK law so existing EU MAs issued through the centralised procedure will in all likelihood still be recognised in the UK. It is not clear though whether the EEA would recognise these if held by a UK-established company. In any event, a system would need to be established to facilitate future EU-UK mutual recognition in relation to new authorisations.

The EMA and the Commission are advising UK MA holders to start actively reviewing their portfolio of MAs and to start considering if any changes are required (e.g. transferring MAs to a company established within the EEA) in order to maintain the necessary authorisations. Any necessary transfers or variation requests will need to take into account the procedural timescales involved.

Implications for manufacturing of medicinal products

EU law requires that certain activities have to be performed in the EU or EEA (e.g. batch release). Post-Brexit, where a UK manufacturer exporting into the EEA has its batch release site in the UK there may have to be testing and batch release undertaken (again) at the point of first entry into the EEA by the importer. In such a case, the UK manufacturer could itself establish a site in the EEA to undertake this. However, this would entail acquiring a manufacturing authorisation in the relevant member state and it would also entail a variation to the MA. Similar issues could arise with imports into the UK.

Implications for the MedTech industry

At the moment, the EU regulatory legislation is being updated and the new EU Medical Devices Regulation is due to come into mandatory full application in 2020. The ABHI has put forward a number of suggested scenarios to the UK Government as part of the Commons Select Committee for Health consultation process, highlighting the challenges and potential solutions.

Before placing a medical device on the EEA market a manufacturer must draw up a declaration of conformity and CE mark the product. Once a device has been CE-marked it can be marketed throughout the EEA. Loss of the EEA-status for UK medical device manufacturers would leave them in the position of current ex-EEA manufacturers, such as US companies. They would have to appoint an EU Authorised Representative or else re-establish the CE marker entity in the EEA. At a time when EU Authorised Representatives are carefully considering whether to continue to offer these services in light of their very significantly increased liability exposure under the new legislation, this could mean smaller UK companies would need to establish own affiliates as Authorised Representatives in the EEA or license out or sell their products to larger, multi-national groups. Needless to say, EU Authorised Representatives currently based in the UK would have to restructure or relocate.

[1] http://www.hma.eu/535.html

[2] http://www.hma.eu/542.html