Much UK regulatory law originates from the EU. Most of it comes from EU Directives which the UK has implemented into our national law. Examples are Directive 2001/83/EC on the Community code relating to medicinal products for human use (as amended) and Directive 89/105/EEC, regulating the pricing of medicinal products for human use and their inclusion in national health insurance schemes. Some of it is derived from EU Regulations which are directly applicable in the UK, without the need for any implementing legislation here. An example is Regulation 726/2004 on the authorisation and supervision of medicinal products and establishing the European Medicines Agency.
This briefing considers some potential impacts of a vote to leave the EU (“Brexit”) on regulatory aspects of healthcare and life sciences.
What would happen immediately after a Brexit?
It is likely to be business as usual immediately after a vote to leave the EU.
The general consensus is that two years is the likely minimum period before the UK would actually leave the EU. The complex issues involved suggest that a longer period may be necessary. There is a mechanism in the EU treaty for a Member State to withdraw from the EU (Article 50 of the Treaty on European Union). Under this, the UK would give notice to leave followed by a period of negotiation to agree terms of withdrawal. Exit would take place at the earliest on signing the withdrawal agreement or two years after notice is given. David Cameron has stated that he would give notice to the EU the day after a vote to leave, though there is debate as to whether notice is served automatically in those circumstances.
Uncertainty therefore is likely to prevail for some years, with the status quo broadly expected to continue in the meantime.
What type of relationship might the UK have with the EU if it leaves?
Different model examples for a future UK/EU relationship are being touted.
One example is the Norway arrangement, in which the UK could leave the EU but have a relationship with it through remaining part of the European Economic Area (EEA). In those circumstances, the UK would remain bound to implement and apply much of EU law, including regulations such as REACH, but would have lost its ability to influence it. Reports suggest Norway adopts as much as three quarters of all EU legislation.
In other circumstances, the UK would not be bound by EU law unless it agreed otherwise, maybe as part of a deal to secure continued access to the European Single Market. Other models include the Swiss model with the UK re-joining the European Free Trade Association (EFTA) and entering into a bilateral trade agreement with the EU. A further model is the WTO (World Trade Organisation) alternative, in which the UK would leave the EU and (like China and the US) rely on its membership of the WTO as a basis for trade with the EU.
The bottom line is that no-one knows, and it seems likely that a bespoke arrangement would be negotiated to provide for the terms of the UK’s continuing relationship with the EU upon leaving.
How would UK regulatory law be affected by exit from the EU?
A comprehensive review of all law, including relating to healthcare and life sciences, will be needed to identify what is derived from the EU, and what should be repealed in whole or in part or changed. The UK’s scope for this will depend on the nature of the post-Brexit UK/EU relationship. This is likely to be a significant task.
Exit from the EU would not automatically undo UK laws which have been put in place to implement EU Directives. Those laws would remain in place until the UK decides otherwise, but without any opportunity to influence any changes at EU level going forward.
Careful consideration will be needed as to what the UK’s position should be in relation to the requirements under these Directives.
Because Regulations work directly at EU level, not UK national level, there would be a regulatory gap following exit. This might look like an appealing opportunity to be rid of some burdensome regulation. However, UK companies exporting to the EU and their EU customers would still have to ensure that their products comply with existing EU regimes.
Any gaps in UK legislation due to EU requirements no longer being applicable are likely to be “plugged” as soon as possible.
What about rulings of the CJEU (Court of Justice of the European Union)?
Pre exit CJEU case law will remain part of UK law post exit, unless Parliament legislates otherwise. Post exit CJEU decisions will remain persuasive where decided on equivalent law. Any material difference between the interpretation of EU based laws by UK courts from interpretations of similar laws in EU jurisdictions could present challenges. This will be particularly relevant to businesses operating on a pan-European basis.
Some potential impacts of a Brexit on healthcare and life sciences
- If the UK leaves the EU, businesses operating across the EU will not be able to include the UK in any centralised procedure for obtaining EU-wide marketing authorisation from the European Medicines Agency. A separate national authorisation for the UK would be needed. Any UK business supplying medicines into the EU will still need to be mindful of the EU regulatory framework to ensure compliant supplies into the EU.
- Any marketing authorisation already obtained through the centralised procedure from the European Medicines Agency will need to be reviewed and separate national authorisation obtained. However, a sensible transitional arrangement to minimise disruption and safeguard patient safety is likely to be put in place by UK regulators, working with industry.
- A different regulatory approach in the UK from the EU could present challenges, for example for companies wishing to carry out clinical trials in both the UK and EU. A Brexit would come at a time when the EU is looking to simplify the application process for the conduct of trials in the EU and ensure greater harmonisation, through the imminent introduction of the EU Clinical Trials Regulation (536/2014). Separate procedures for the UK would be likely to increase the administrative burden.
- Maintaining quality assurance of medicinal products in line with EU principles of good manufacturing practice would in any event be a pre-condition for sales into the EU market. From a practical perspective, any reduction in standards could seriously affect the competitiveness of UK products, given the global drive to higher standards.
- There are concerns that the UK will have access to less data than previously. Currently the EU pharmacovigilence system is coordinated by the European Medical Agency, which ensures effective analysis, risk evaluation and information sharing.
- For UK manufacturers of medical devices, Brexit will mean that there will be additional hurdles to overcome in relation to the conformity assessment and CE Marking process. As a non-Member State, UK businesses will need to appoint a European authorised representative to enable the devices to be sold in Europe. Industry has raised concerns about whether representatives have the immediate resources to service all UK companies. The appointment of a representative will also trigger labelling changes. Both management time and capital expenditure will be required to deal with the administrative changes that will follow.
One impact of a Brexit would be significant legal uncertainty, resulting from lack of precedent and the complexity of the UK and EU’s intertwined legal regimes. A Brexit would not result in change overnight. The negotiation of the UK’s relationship outside the EU would commence and could last for years. In the meantime, the UK may come under pressure to abide by EU regulation in return for ongoing access to the European Single Market.
We are committed to giving clear, straightforward and objective advice on what the EU referendum and, in the event the UK votes to leave, any exit may mean for your business. The issues are not the same for every business and we will ensure that our advice is tailored to your needs.