Brexit is highly fluid; accordingly the legal situation and advice within this article is subject to change. This article assumes a no-deal Brexit (Hard Brexit) and highlights the key UK Government, MHRA and EMA guidance, proposed legal changes and practical consequences of a Hard Brexit on medicines, medical devices, clinical trials, manufacturing and supply. For a more in depth analysis, download DLA Piper’s free interactive Brexit guide for companies in the life sciences sector - available here.
The current political back-drop
Following Prime Minister Theresa May's resignation announcement and the overwhelming support for the new Brexit Party in the European Parliamentary Elections, the likelihood of a Hard Brexit continues to increase. The House of Commons remains deadlocked and, at the time of writing, there is still no prospect of the Withdrawal Agreement being agreed when it comes before the House at the beginning of June, for the following reasons:
- the break down in cross-party Brexit talks earlier in May;
- the number of Brexiteers in the Conservative Party leadership race who support a Hard Brexit; and
- the significant wins of the Brexit Party, and conversely the losses suffered by both the Conservatives and Labour during the European Parliamentary elections.
On 10 April 2019, the EU agreed to delay Brexit to 31 October 2019 provided the UK ratifies the Withdrawal Agreement and, if not ratified by 22 May 2019, the UK holds European Parliament elections. These have now been held.
However, a Hard Brexit is still possible if the Withdrawal Agreement is not ratified between now and, at the latest, 31 October 2019 (Exit Date), although a further extension has not been ruled out. If the Withdrawal Agreement is ratified before Exit Date the UK will leave the EU on the first day of the following month. If the UK fails to ratify the Withdrawal Agreement by Exit Date, the fate of Brexit is in the hands of the EU: by law, one Member State can veto a further extension, although in practice, a number of Member States will have to oppose an extension.
Set against a backdrop of both the UK and EU's patience wearing thin over the inability of the Government and Parliament to reach agreement on any way forward, continued uncertainty and stockpiles of medicines sitting unused to date interfering with cash flow and profits, it would not be surprising if the life sciences sector felt disheartened or cautious about investment in the UK.
Is it all doom and gloom?
The prevailing message from recent conferences is that any challenges for the sector, from Brexit or otherwise, is: “science prevails”. Companies are still highly committed to collaborations across borders and investment in the UK's flagship life sciences sector to advance science and improve healthcare. For example, Astrazeneca and GSK are still committing to the UK, with the former in the midst of developing its GBP500+ million global headquarters and R&D hub in Cambridge. Other UK Government industry partners such as GW Pharmaceuticals, Roche, Celgen, IQVIA Ltd and Oxford Biomedica have committed over GBP200 million of new investment.
Businesses should also be encouraged by:
- the Life Sciences Sector Deals;
- the UK government's pledge to increase public investment to GBP12.5 billion for 2012/22 and increase investment in R&D to 2.4% of GDP by 2027;
- GBP79 million commitment by the UK Government to the new "Accelerating detection of disease" challenge;
- The Wellcome Trust commitment of GBP250 million to their Leap Fund for high risk, high reward pioneering sciences; and
- the detailed Brexit guidance issued by the UK Government, MHRA and EMA, and the steps the UK Government has progressively taken to prepare for Brexit, including the Contingency Legislation.
British Patent Attorneys contribute over GBP1 billion to the UK economy so it is good news that Brexit does not appear to be having an impact so far on the number of European patent applications filed by British patent attorneys. This will be largely down to:
- neither the UK Intellectual Property Office nor the European Patent Office are EU institutions and will therefore continue to assess patent applications in the same way as before Brexit;
- granted EU patents will remain effective in the UK post-Brexit; and
- the UK will continue to be a contracting state to the European Patent Convention and remain a member of the Paris Convention, both of which are critical for the protection of patents in Europe and beyond.
Key themes and changes
Below we have highlighted some key themes and changes arising particularly from a Hard Brexit:
- Loss of “one-stop” shop regime and cessation of participation in the EU regulatory network: e.g. for cross-border data processing and dual UK/EU oversight on data protection; separate market authorisations ("MA") will be required for the UK and EU; loss of coordination of clinical trials across the European medicines regulatory network;
- New requirement for presence of regulated individuals within organisations in the UK to market in the UK: e.g. the new role of the UK Responsible Person for the placing of devices on the UK market, and for medicines the requirement for the MA holder to be established in the UK (or have a UK contact person in the UK within 4 weeks of Exit Date until this is possible);
- To continue to market in the EU/EEA, the requirement to move marketing operations based in the UK to a country in the EEA: - the MA, Qualified Person for Pharmacovigilance (QPPV) (and Pharmacovigilance System Master File), Reference Member State (in respect of the Mutual Recognition Procedure or Decentralised Procedure: after Brexit the UK cannot act as such) need to be in the EEA, and conversely the foregoing must be based in the UK by 31 December 2020 to continue to market in the UK; - each batch of finished product must be certified by a Qualified Person of the manufacturer and/or importer within the EEA (and noted in the MA) and the batch release site must be established in the EEA or a country which has a Mutual Recognition Agreement (MRA) with the UK;
- Extra administrative burden to comply with UK & EU/EEA regulatory changes: For the EU market, e.g.: - introducing an EEA importation site for finished medicinal products manufactured in the UK to market in the EU/EEA; - re-authorisation of UK approved CE marks by an EU notified body to place devices on EU/EEA market; - changing UK-based applicants to non-UK based applicants for on-going MA applications; - ensuring clinical trial sponsors are based in the EEA for pan-European trials; For the UK market, e.g.: - filing of a complete set of regulatory data in the UK to obtain UK market authorisations to market generics or biosimilars; - ensuring clinical trial sponsors are either based: (i) in the UK; or (ii) in a country on an approved list, which will include EU/EEA countries; - Parallel Import Licence holders will need to be located in the UK within 21 months of Exit Date, and in any event should appoint a contact person in the UK within 4 weeks of Exit Date; - registration with the MHRA of medical devices, active implantable medical devices, IVDs and custom medical devices and their manufacturers (who must have a UK-registered place of business (or a UK Responsible Person registering on its behalf)); For both markets, e.g.: - for new devices, requirement for authorisation by an EU notified body; - requirement to amend packaging and leaflets for medicinal products already on the UK market by the end of 2021 (e.g. to update the local representative mentioned in the product information);
- Recognition of EU rights in the UK but not fully reciprocated by the EU: e.g. - automatic "grandfathering" of MAs for existing Centrally Authorised Products (CAPs) to UK MAs; - for a limited unspecified period post-Brexit, continued recognition in the UK of CE marks approved by EU notified bodies for medical devices and parallel imports from EU to UK. However, batch testing for compliance may still be needed in the EU in respect of imports from the UK into the EU. - immediate restrictions on the transfer of personal data from the EU to the UK (but not vice versa); - continued acceptance in the UK of human medicines and Investigational Medicinal Products in the EEA or a country which has a MRA with the UK;
- New equivalent UK rights: creation of a UK SPC system under the UK Contingency Legislation akin to the current EU system, and equivalent provisions for Paediatric Extensions, and simplification of the process for Paediatric Investigation Plans; potential new UK falsified medicines regulatory framework;
- Potential medicine shortages and dangerously high increases in stockpiling: since January 2019 new statutory reporting requirements relating to medicines shortages and discontinuations have been in place and the Department of Health and Social Care requires MA holders to ensure resilience of supplies and strategies to address impending shortages;
- Access to European initiatives and collaborative projects, funding and workforce is in jeopardy: current benefits include European funding (such as Horizon 2020), European collaboration (such as the Innovative Medicines Initiative), access to skilled EU workers and mutual cooperation between EU institutions (e.g. in respect of conducting clinical trials and automatic sharing of pharmacovigilance and post-market safety data); and
- The MHRA, the UK's stand-alone medicines and medical devices regulator, subsuming specific EMA functions.
Brexit planning: Better late than never
As the likelihood of a Hard Brexit increases, companies should urgently commence (or continue) Brexit planning and use the extension wisely, for example taking the following steps:
- Understand the differing approaches of the UK and the EU to Brexit: the UK is being pragmatic and aiming to mitigate the impact of Brexit by continuing to recognise the validity of many goods and services imported from the EU. Conversely, the EU will treat the UK as a “third country” (i.e. outside the Single Market and the Customs Union), for the purposes of importing goods and services into the EU. Therefore, there will be no preferential treatment for UK goods and services.
- Grasp an understanding of the mitigating measures put in place by the UK Government and the relevant third country rules which will apply to your business: e.g. as detailed in this article, but more detailed guidance relating to medicinal products for human and veterinary use within the framework of the centralised procedure is available here, more general guidance can be found here, guidance on trading goods with the EU can be found here, services here, and placing manufactured goods on the UK market (excepting medical devices) if there is a Hard Brexit can be found here);
- Analyse your business to understand the EU rights which the business relies upon and implement a mitigation strategy: e.g. consider re-structuring the business' supply chain to: (i) address the reversion to WTO terms which impose tariffs, clearance procedures and increase the risk of delays for products imported into the UK; and (ii) mitigate the consequential risk of degradation and loss of drugs with particular storage conditions and shelf lives;
- “Re-paper” existing contractual arrangements to incorporate the standard contractual clauses: in the event of a Hard Brexit immediate restrictions will be placed on EU-UK personal data transfers (but not vice versa);
- Establish regulatory persons in the UK: a MA holder and QPPV in the UK and transfer MAs to holders in the UK or EEA to continue to market in the UK or EEA respectively; and
- For EU/EEA markets: use EU-based notified bodies and establish trial sponsors in the EU/EEA.
Like many things in life, preparation is the key to success.