The implications of Brexit for the pharmaceutical and medical devices industry in the long run will only really become apparent when the final model governing the UK’s new relationship with the EU is determined. It is at this stage difficult to predict how the withdrawal will be managed, and whether the UK government will trigger the Article 50 process immediately. We are likely to witness lengthy negotiations between the UK and the EU on the shape of their future relationship and whether it will include membership of the EEA. This “Norway approach” is already embedded in the current regulatory system for medicines and medical devices in Europe and some voices keen to preserve the single market have called EEA membership the next best thing.
Below, we consider further some of the key areas looking at what we already know under the Norway model and other models with further reaching implications:
Marketing authorisations – The key question here is whether pharmaceutical companies will be able to continue to rely on the European Medicines Agency’s (“EMA”) “one-stop” centralised licensing procedure to obtain a centralised marketing authorisation valid in the UK. Centralised marketing authorisations, considered a significant achievement by many in the industry, would continue to cover UK sales if the UK followed the “Norway approach” and became a member of the EEA. The UK would, however, not have the right to vote on EMA scientific opinions and would be obliged to adopt EU decisions on marketing authorisations on which it will have no say: hardly an improvement considering that the UK population ostensibly voted to regain some powers from Brussels. If the UK opts not to follow the “Norway approach”, it would presumably have to fall back on its own authorisation and inspection regime, make extra resources available for the Medicines & Healthcare Products Regulatory Agency (“MHRA”) and consider a recognition and confidentiality agreement with the EU of the kind the EMA has in place with other regulatory authorities, such as the FDA and, more recently, Swissmedic. Based on its longstanding relationship and the needs on both sides, the UK would perhaps be able to secure a more privileged position than other countries, but this remains to be seen. As far as the existing centrally authorised products are concerned, questions arise about if, when and how they would be transferred into the UK system.
Location of the EMA – The EMA, currently headquartered in London and employing over 600 full-time staff in the UK, would almost certainly have to relocate within the EU’s new borders. Some have suggested Denmark or Sweden as possible venues, although the EU establishment may need to take account of the political mood in those countries in light of the UK decision.
Research and Development – The fact that UK researchers would no longer have the same access to EU funding for their research was raised repeatedly as an argument against Brexit. EU funding can, however, be accessed from outside the EU, provided certain EU principles are met. The case of Switzerland demonstrates how EU Horizon 2020 funding can be accessed by a third country, but also how quickly such access can be lost if certain EU rules (on free movement of persons) are not complied with. The pro-Brexit campaign pointed at the flaws of the current EU Clinical Trials Directive which, through added costs and administrative burden, has slowed down research in the UK. Complaints have also been made about the long time it took the EU to introduce the necessary reforms. Those reforms are, however, now around the corner with the new Clinical Trials Regulation providing for a single application for EU-wide clinical trials and a coordinated procedure for their assessment. If the UK does not enter the EEA, a separate application would, in principle, need to be filed for clinical trials conducted in the UK. Such extra procedural step may place UK trial sites at a disadvantage in international multi-centre clinical trials.
Pharmacovigilance – Over the years, many pharmaceutical companies, including American, Japanese and Swiss multinationals, have based their main European pharmacovigilance operations, including the Qualified Person for Pharmacovigilance (“QPPV”) in the UK, with the MHRA acting as supervisory authority. Good Vigilance Practices (“GVP”) guidance allows a QPPV to reside and work in the EEA and permits the master file to be located in an EEA Member State. A “Norway approach”, therefore, does not necessarily entail many changes. Any other approach, however, will presumably require pharmaceutical company executives to look at their pharmacovigilance operations and decide on what and where to relocate, taking into account the availability of talent and the choice of a new EU supervisory authority.
Medical devices – Will UK manufacturers, like other non-EU manufacturers, have to appoint an EU-based authorised representative to be able to market their devices in the EU? And where UK-notified bodies are currently used to perform the conformity assessment, which enables the CE mark to be affixed, would EU-based notified bodies have to be appointed instead? Presumably not if UK becomes a member of the EEA. However, it is not clear what would happen in the event that the UK decides not to join the EEA and this issue would depend on its negotiations about access to the single market.
European Unitary Patent (“UP”) and Unified Patent Court (“UPC”) – Brexit will have little immediate impact on the process for obtaining patents that cover the UK and European Patents designating the UK can still be obtained using the current framework of the European Patent Office. However, the proposed implementation of the Unitary Patent and pan-European Unified Patents Court, is now likely to be delayed past its former schedule of 2017 as the UK’s mandatory ratification of the UPC agreement passes to another Member State (the UK is one of three countries that must ratify the UPC agreement for it to enter into force). It is theoretically possible (but presumably politically very unlikely) that the UK could ratify the UPC Agreement during its two-year departure process but it could be the case that the long-awaited, EU-wide patent system would not be entirely derailed. The UPC agreement currently states that the Life Sciences section of the UPC Central Division is to be located in London and an amendment to the text would be required to move this branch elsewhere. Rumours have begun to circulate suggesting that the Life Sciences UPC Division may move to Italy or the Netherlands. Life sciences companies will also be impacted by changes in other areas of protection governed by EU law, in particular for SPCs, regulatory data exclusivity, paediatric and orphan drug extension and trademarks. However, the implementation of domestic UK laws to provide for these types of rights is, at this stage, unclear and will likely form part of the exit negotiation.
Industry bodies such as the ABPI, ABHI and BIA are already considering next steps to meet the challenges presented by the referendum outcome and our team is monitoring developments closely in the healthcare sector. Not only is it a key sector for the UK economy and an important job provider, but ensuring high-quality healthcare and access to treatments is also a key issue for any government and any society.