Brexit withdrawal and transition terms (almost) agreed

On 29 March 2018, David Davis and Michel Barnier announced that, in principle, agreement has been reached between the UK and the remaining EU27 on a substantial number of the terms of the UK's withdrawal from the EU, together with the terms of transition for that withdrawal (the 'Draft Agreement') that will apply until the end of the transition period on 31 December 2020.

What does the Draft Agreement say?

It is first important to note that not all areas in the published draft have been agreed, although most have. It has been agreed that unless otherwise provided in the Draft Agreement, EU law will continue to apply to the United Kingdom during the transition period. However, it is also important to note that there is very little detail included in the agreement and it is to be assumed that other agreements will be needed in particular areas if cooperation is to be continued (as it currently does or in some amended form). This is particularly so when it comes to applications for marketing authorisations for pharmaceutical products. Despite Theresa May's suggestion of an "Associate Membership" of the EMA last month in her Mansion House speech, the MHRA must transfer material relating to any ongoing applications (Article 40) and is prohibited from acting as the lead authority for marketing authorisation applications and clinical trials during transition, apparently meaning that the UK will not be able to act as a reference member state for authorisations during this period.

The other key provisions to patents and pharmaceutical regulation that have been agreed are as follows:

  • Article 37: any good (including pharmaceuticals and medical devices) that were lawfully placed on the market of the EU27 or the UK before the end of the transition period may continue to circulate in and between those territories until it reaches its end user. The 'economic operator' seeking to rely on Article 37 in relation to a specific good, bears the burden of demonstrating that it was placed on the market before the end of the transition period (Article 38)); in other words, Article 37 allows parallel trading of goods beyond Brexit for those goods placed on the market before the end of the transition period;
  • Article 39(1) and (2): UK and EU market surveillance bodies must exchange any information between them and the Commission (and with the notified body that conducted the conformity assessment before the end of the transition period, in respect of medical devices) information concerning serious risks relating to the above goods;
  • Article 40: the UK must transfer to the competent authority of a designated Member State all relevant files or documents relating to procedures, which include marketing authorisation applications under Directive 2001 /83 (the 'Medicinal Products Directive'), that are ongoing on the day before the entry into force of the Draft Agreement;
  • Article 41(1) and (2): upon a 'reasoned request' from a competent authority of a Member State or the EMA, the MHRA must transfer the marketing authorisation dossiers for products authorised before the end of the transition period, where they are necessary for the assessment of an abridged applications under the Medicinal Products Directive. This obligation applies vice versa to reasoned requests made by the MHRA;
  • Article 57: patent (and other intellectual property) rights in articles that were exhausted in the UK and the EU27 before the end of the transition period will remain exhausted in those territories;
  • Article 62: the EU law applicable to the law in contractual and non-contractual matters will continue to apply to contracts concluded before the end of the transition period and to events giving rise to damage before the end of the transition period.

The following matters have not yet been agreed and are currently set out in the Draft Agreement in the terms put forward for negotiation by the Commission:

  • Article 42: exchange of information held by notified bodies established in the UK and the EU27;
  • Article 56: application of Union law to supplementary protection certificate applications that are in progress at the date of transition;
  • Article 63: the application of EU rules governing jurisdiction, recognition and the enforcement of judicial decisions (including the 'Brussels I Regulation (recast) Regulation 1215 / 2012);
  • Article 82: provisions concerning the status of pending referrals made to the CJEU before the end of the transition period.

The Draft Agreement follows less than a month after Prime Minister Theresa May confirmed in her Mansion House speech that the UK still wants to be part of the EMA. However, that subject remains to be negotiated as part of the future relationship that will exist between the UK and the EU27 after the transition period ends. As mentioned above, this draft agreement puts the onus on the UK to agree such a relationship going forward because it is not preserved in this draft and so it is clear that another agreement will be needed.

As regards pharmaceuticals and medical devices, the focus of attention will now move to the issue of continuing partnership between the MHRA and the EMA and the possibility of mutual recognition of authorisations and conformity assessments, and associated issues of surveillance and quality control, made by bodies in the UK and the EU27.

The current Article 123(6) would seem to take a backward step from mutual recognition, but it should be remembered that the terms of the Draft Agreement are conditional on heads of terms on the future relationship being entered into in the Autumn of 2018. The Draft Agreement should therefore be viewed as a holding position on this issue until later in the year, albeit that the holding position is a long way away from where the UK would wish to be.

Download the Draft Agreement (PDF)