Brexit Update – Continue to prepare for a Hard Brexit

Posted on 29 May 2018 by Nina O'Sullivan and Natasha Pearman

Brexit Update – Continue to prepare for a Hard Brexit

In the last edition of Inside Life Sciences, we reported on the draft EU withdrawal agreement that had been provisionally agreed between the UK and the EU27, including in relation to a proposed transition period following the UK's intended exit from the EU, until 31 December 2020. As is well known, 'nothing is agreed until everything is agreed' but it is hoped that final agreement on the withdrawal arrangements will be in place by October 2018 (subject to there being sufficient progress on the complex issue relating to the Irish border).

However, whilst the proposed transitional period removes the fear of a 'cliff edge' in March 2019, it remains too short, and too uncertain for the life sciences industry, with its need for long lead times. Accordingly, the industry is taking the heed of the European Medicines Agency which continues to reiterate that 'industry should not rely on the 'transition period'. Even if there is commitment to reaching an agreement on the UK's orderly withdrawal, this should not dispense from ensuring preparedness'.

The MHRA's approach meanwhile is that that it is possible for agreement to be reached which will allow an ongoing active regulatory relationship, as highlighted in its recently published five year corporate plan, as well as allowing the UK to explore 'interest in new global partnerships'.

The divergence between the approach of the EMA and MHRA was highlighted at the recent EU Pharmaceutical Law Forum where Managing Associate Natasha Pearman appeared on a panel, which included Jonathan Mogford of the MHRA. Sandra Vanlievendael from the EMA was also in attendance and responded directly to a number of questions from participants.  In particular, Mr Mogford expressed the hope that more pragmatic discussions will take place in phase 2 of the negotiations, and the belief that a specific deal for pharma can be achieved. It is clear that the welfare of patients across the EU (i.e., not just the UK) needs to take centre stage in the ongoing political discussions, and be at the forefront of the negotiators' minds, with associate membership being the preferred outcome.

Meanwhile, in a speech at Jodrell Bank on 21 May on the Industrial Strategy, the Prime Minster confirmed that the UK would wish to 'fully associate with the excellence-based European science and innovation programmes – including the successor to Horizon 2020' post Brexit, recognising that that this would involve an 'appropriate' financial contribution, but in the expectation of a 'suitable' level of influence.

Transition period and re-allocation of UK's centralised portfolio

In addition to the uncertainty and inadequate length of the proposed transition period, there is another aspect that is causing concern. Following publication of the draft withdrawal agreement, Dr Sarah Wollaston MP, Chair of the House of Commons Health and Social Care Committee, wrote to the Secretary of State seeking clarification of the UK/EMA relationship during the transition period. In particular, as the UK will be subject to EU rules and laws during the transition, but will no longer be able to participate in the EMA decision making process, she asked whether this would limit the UK to being a 'rule taker', rather than a rule maker during the transition period. Furthermore, the relationship during the proposed transition period would be more restrictive than the ambition of a future wider role of associate membership.  

This certainly appears to be the case, with the EMA confirming that, despite the transition period, the UK will no longer take part in decision making or have a role as a leading authority (i.e., as a rapporteur or reference Member State) after March 2019.  The EMA has begun the process of redistributing over 370 centrally authorised products, which were in the MHRA portfolio, to new rapporteurs and co-rapporteurs from 30 March 2019. This covers the post-authorisation stage of a medicine’s lifecycle. Generic medicines will be allocated to national competent authorities that have traditionally participated less in EMA evaluations but which want to increase their involvement.

Report published by BEIS Committee

Following the report by the Health and Social Care Committee in March, the Business, Energy and Industrial Strategy Committee has now published its report on the implications of Brexit for the industry. The report reiterates the industry's concern that a no deal would be disastrous for the sector, and risks a damaging effect on UK and EU patients. It notes that, despite seeking out 'any potential benefits to the UK pharmaceutical sector from Brexit', any 'small gains would be hugely outweighed by additional costs or the loss of access to existing, successful markets', there being 'no evidence of new trade routes from which the UK could benefit'.

The report reiterates many of the concerns that have been expressed for some time by the industry in relation to the transition period, supply chain issues, regulatory divergence, tariffs, non-tariff barriers, skills shortages, access to funding and the impact on clinical trials.

As for the EMA, the report highlights that the EU27 expect the UK to be responsible for the existing lease on its Canary Wharf premises (which runs until 2039).  It suggests that the EMA should retain a residual staff in the UK to support a continued relationship between the EMA and MHRA, but also to support those EMA staff who do not wish to leave the UK (it is understood that a minimum 20% of EMA employees do not wish to move to Amsterdam).

Government responds to Health and Social Care Committee Report

The Government has issued its response to the Health and Social Care Committee's report, discussed in our March 2018 edition.  As well as highlighting it is 'increasingly confident' that a no deal scenario in March 2019 is 'significantly less likely', and that the UK wishes to explore continued membership of EU agencies including the EMA, the response refers to the work being done within the Department of Health and Social Care (DHSC) to assess the impact of exiting the EU on the supply chain for all medicines and medical devices used in the NHS. This work is being conducted by Ernst & Young and the initial phase is expected to be concluded in late Spring 2018. The report will not be published but the Government will consider publication of an executive summary.

The Government's response also notes that it is in the process of commissioning economic analysis in relation to parallel imports, the different exhaustion regimes available (national, regional, international) and the potential impact on the NHS.

What will happen next?

Aside from the general ongoing discussions between the EU and UK negotiators, a number of updates impacting on the pharma industry will be published in forthcoming months including:

  • EMA survey on Brexit preparedness: the EMA issued a survey in January 2018 of preparedness levels of MA holders of centrally authorised medicines located in the UK, and those who have quality control, batch release and/or import manufacturing sites or a qualified person for pharmacovigilance in the UK, on their plans to submit transfers, notifications or variations to their marketing authorisations. This survey should report its results soon.
  • Having published its interim report, the Migration Advisory Committee will be reporting in September 2018 on the impact of Brexit on the UK labour market, i.e., in relation to EEA nationals working in the UK. The Government rejected a request by the Science and Technology Committee that the report be expedited in relation to science and innovation.  
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