What can the life sciences sector expect from Brexit?
The UK has put life sciences front and centre in its Industrial Strategy, listing it as one of four sectors set to benefit from the first wave of sector deals.
Meanwhile negotiations for Brexit continue, with political posturing on both sides, leaving business leaders asking where we will be on 29 March 2019. Will an agreement on a future relationship have been reached, and will there be any kind of transitional arrangement in place? Pharmaceutical industry leaders have been vocal in pressing for early certainty and a substantial transition period. A group of eight leading industry bodies called on both negotiating parties to prioritise cooperation on access to medicines as part of a new relationship in an open letter in July.
In October, CEO Emma Walmsley highlighted the Brexit risks faced by pharma multinational GSK, with the need for frictionless trade, cross-border movement of talent and predictable science funding identified as critical issues. The UK needs to be able to “participate in the EU regulatory framework to the fullest extent possible” in Walmsley’s view. And in September Astra Zeneca chairman Leif Johansson called for a three-year transition period with early certainty on what years four, five and six would look like.
The life sciences industry is heavily regulated and those rules and procedures are constantly being updated. UK regulator the MHRA has emphasised the Government’s desire to retain a close working partnership with the EU on regulatory matters. But making this succeed will require agreement on detailed terms of collaboration and reciprocity.
We consider the main legal and regulatory issues facing the sector at this critical juncture and assess the signals for a future direction.
The EU Withdrawal Bill currently under debate in the UK Parliament will replicate the bulk of EU law in the UK. So the main regulatory framework will continue to have effect in the UK unless a positive decision is taken to amend it. This means that the requirements to obtain regulatory approval will, at least in the short term, be broadly aligned. However, several problems remain.
The current system offers three main routes to obtaining a marketing authorisation applicable in one or more EU countries. The centralised procedure is mandatory for the most cutting edge therapies and for specified classes of indications like auto-immune diseases. Alongside this sit the decentralised and mutual recognition procedures. Even if the UK continues to apply broadly the same regime as the EU, the mutuality of the current system cannot continue to operate without an ongoing agreement between the UK and the EU 27. UK organisations will still be able to apply for EU approvals but will need to make use of EU-based subsidiaries or partners to hold marketing approvals and carry out pharmacovigilance activities. Medicines manufactured in the UK will be treated as imports and subject to batch control checks, for example. And UK-granted authorisations will not have the same status as a basis for mutual recognition. Both the EMA (the EU Medicines Agency) and the CMDh, responsible for coordination of the nationally-based procedures, have given detailed guidance on the changes that will be needed for ongoing validity of authorisations involving UK businesses.
A survey of members carried out by industry body, EFPIA, highlights the urgent need for cooperation to ensure that medicines remain available to patients from the departure date. Calling for a comprehensive agreement to ensure maximum alignment between the EU and UK systems, EFPIA warns that falling back on WTO rules would result in trade delays and problems for patients in accessing the medicines they need.
The EMA is set to leave its London location before Brexit, with Amsterdam now selected to provide a new home for the agency. While UK-based organisations will still be able to obtain marketing authorisations for their products in the EU, without a detailed agreement they will be required to do this as third country applicants, and will need to comply with the extra requirements imposed on any other non-EU business.
Pharmaceutical companies should be planning now to transfer to an EU-based entity those regulated activities that must take place within an EU establishment. This may involve setting up a new office or subsidiary, or appointing an agent to carry out these activities on their behalf.
The EU’s approach to tackling the problem of falsified medicines entering the market calls on member states to apply controls across four main areas: safety features, supply chain and good distribution practice, active substances and excipients, and internet sales.
New rules introducing strengthened safety features (a unique identifier in the form of a 2D barcode and an anti-tampering device, as required by the FMD Delegated Regulation) are planned to take effect from February 2019. These will help wholesale distributors and pharmacists to verify the authenticity of medicines and to determine whether the outer packaging has been tampered with. On the current timetable, the cut-off date for Brexit will fall after the implementation date. So we can expect that these rules will become part of UK law.
The UK is an important participant in EU clinical research, with some 1,500 ongoing EU clinical trials in multiple EU member states with a UK sponsor. Of these around half will be ongoing in March 2019.
This relies on close regulatory alignment. But clinical trial regulation is undergoing substantial reform across the EU. The existing EU directive will be replaced by a new Clinical Trials Regulation (EU No 536/2014) some time in 2019. While member states will still retain responsibility for authorisation and oversight of clinical trials, the new system will include the establishment of a central portal and database for all EU clinical trials. Much of the material will be made public.
The new Regulation was settled in 2014, but has yet to come into effect due to technical difficulties with the portal. The time frame currently anticipated for launch is the second half of 2019 - after the UK leaves the EU.
The UK’s Withdrawal Bill will only domesticate EU law “so far as operative immediately before exit day”. Replacement of the existing system with the new Regulation is on hold until six months after the EU Commission has certified the functionality of the portal. So it seems inevitable that Brexit will come first. Without a separate arrangement, then, the UK will keep the existing system and the pending reforms will not be replicated in the UK.
Initial indications are that the UK will seek to track the reforms as they take effect. But Brexit may be seen as an opportunity to address some of the concerns raised by British industry and the NHS. For example, a more risk-based approach like that followed by UK regulator, the MHRA, and a less bureaucratic procedure, especially for smaller scale trials, might be attractive improvements to the system in a post-Brexit Britain.
Representatives of the medical devices industry have, like pharmaceutical trade bodies and leading companies, called for greater certainty on what the future holds. Highlighting the existing “consistent, pan European regulatory arrangements” medical technology organisations Association of British Healthcare Industries, British In Vitro Diagnostics Association and MedTech Europe raised concerns for the future in an open letter to both the UK and the EU27.
Medical devices are currently regulated under three EU Directives dealing with active implantable medical devices, in vitro medical devices and all other medical devices. A reform package in this area was agreed in April 2017, following a number of headline-grabbing health scandals arising from weaknesses in the current system. The reforms will not bite until 2020 (general medical devices) and 2022 (in vitro diagnostic devices). These deadlines fall considerably after the planned date for Brexit.
In their open letter the medical technology associations set out five objectives for negotiators of a Brexit settlement:
“The UK to remain an active part of the European regulatory framework (CE marking regime) for medical devices and in vitro diagnostic medical devices under a full implementation of the new Medical Devices and In Vitro Diagnostic Medical Devices Regulations;
- The UK Notified Bodies (NBs) to remain European designated NBs;
- Legal entities, such as Authorised Representatives or legal manufacturers located in the UK to be considered as “European-based” under the new regulations;
- MHRA to participate formally in the European Commission’s new Medical Devices Coordination Group (MDCG);
- The UK to continue having full access to – and reliance on – the newly set European Database for Medical Devices (Eudamed): EU-wide pre and post-market data, registration of economic operators, details of clinical investigations, and so forth.”
Achieving all of these objectives currently seems unlikely. It envisages a degree of closeness and reciprocity that seems inconsistent with the more distant relationship likely to be acceptable to the EU27 for a UK outside the EU single market.
MedTech Europe’s recent position paper reiterates the desire within industry to see the UK track EU reforms, as well as highlighting practical concerns around delays and increased costs on the movement of goods and raw materials, and the need to replace the capacity of UK Notified Bodies if they are no longer permitted to apply the CE-mark to medical technology products.
Access to skills is identified as critical to the success of the life sciences sector in the Life Sciences Industrial Strategy report. With 17% of STEM academic staff in UK universities being EU nationals, the report highlights the need for a migration system that allows rapid recruitment and retention of highly skilled workers from the EU and elsewhere, and does not impede intra-company transfers.
The ABPI likewise identifies the need to ease movement for skilled talent in the life sciences sector. Priorities are:
Ministers have repeatedly emphasised the need to ensure that talented people are attracted to work in the UK, and are welcomed under new immigration rules.
The Home Office’s Migration Advisory Committee is considering evidence on the patterns on EU migration and the role of migration in the economy collected in a consultation process completed in October. This is intended to inform decisions about post-Brexit immigration arrangements. We have yet to see the results of this process, and what recommendations the MAC will make.
With this background, the announcement in November’s budget of an intention to improve the immigration framework to encourage the ‘best and the brightest’ international scientific and research talent to work in the UK is certainly welcome. The plans include
We await the publishing of further details on the proposals, including in relation to transitional provisions and timescales. It is possible that some of these changes may be implemented in April 2018.
Support for research
At the research end of the spectrum, strong financial support and collaboration across the continent is also under threat. On its Research & Innovation participant portal, the EU Commission has expressly said that UK-based Horizon 2020 scheme participants may cease to receive funding or be required to leave funded projects once the UK leaves the EU (“News for British applicants to Horizon 2020 06/10/2017”.)
In its September paper “Collaboration on Science and Innovation” the UK Government called for “an ambitious science and innovation agreement with the EU”. And in a recent speech to the annual conference of the Higher Education Funding Council for England (Hefce), universities minister Jo Johnson sought to allay concerns by emphasising the Government’s plans to reach an ambitious agreement on science and innovation. But this of course is wrapped up in the wider negotiations and any agreement will have to meet the priorities of the EU27.
A recent review by the Parliamentary Science and Technology Committee heard evidence from representatives of the business and academic communities about the uncertainty caused by the Brexit process. A letter from the committee chair to UK Government called for greater clarity in the forthcoming Industrial Strategy White Paper, particularly around the Industrial Strategy Challenge Fund, the planned “sector deals”, and other support for research. The committee calls for the Government to commit to the UK’s full participation in Horizon 2020 throughout both the duration of current projects and the proposed Brexit implementation period. Many of these concerns are addressed in the White Paper, although clarity around the details is still needed, and the future for collaboration across Europe remains a part of the EU negotiation process. The Government’s commitment to increase total R&D spend to 2.4% of GDP by 2027 is certainly welcome.
Patents, trade marks and other IP rights
The impact of Brexit on intellectual property rights is likely to be substantial and remains very uncertain. We consider what the future shape of IP protection might look like here. A position paper on the future of IP published by negotiators for the EU27 focuses on the ongoing protection of rights existing before Brexit , rather than the details of any future relationship. The UK position on IP protection after Brexit is summarised by the Intellectual Property Office but offers little certainty. It is difficult given this degree of uncertainty to build a strategy to maximise ongoing protection. A business that holds particularly valuable registered rights, such as important trade marks, may wish to ensure that it has parallel EU and UK registrations in place before March 2019.
Neither the European Patent Convention nor Europe’s Unitary Patent project is part of the EU legal system. But there are points of connection for the Unitary Patent, such as a role for the European Court (the CJEU), which mean that the UK’s continued participation is in doubt (discussed further here). While the UK is still pushing towards ratification, a constitutional law challenge in Germany means that the project is currently suspended and the timetable unclear.
Planned reforms like the proposed changes to the supplementary certificate system, discussed here, are likely to come too late to track into UK law.
Where are we heading?
A common theme across the sector is a call for both certainty and continuing close alignment. The political indications, at least from the UK side, are for close alignment and a transition period to allow industry to adapt to a new set of arrangements. However, the EU27 will be unwilling to permit a relationship as close as exists currently with a Britain unwilling to comply with the requirements of the single market. And negotiations on the shape of a future relationship have barely begun. Business planning will remain challenging and we may see UK investment held back and a transfer of roles and responsibilities to EU-based group companies or agents until greater clarity begins to emerge.
In the following table we summarise some of the key pieces of legislation affecting medicines and medical devices, and what their status will be after Brexit.
Status after Brexit
Marketing authorisations for medicines
Harmonised by Directive 2001/83/EC and Regulation 726/2004
Absent a new EU/UK agreement, the UK will need to comply as a third country and ensure existing MAs remain compliant
Harmonised by Directive 2011/62/EU with stronger requirements to be introduced by Commission Delegated Regulation 2016/161
Implementation date of 9 February 2019 means that reforms will probably apply under the Withdrawal Bill
Harmonised by Directive 2001/20/EC
Reforms to be introduced in late 2019 will not apply to the UK
Harmonised by Directives 90/385/EEC, 93/42/EEC and 98/79/EC. Reforms under Regulations 2017/745 and 2017/746 are not due to take effect until 2020 and 2022.
Without further action, the reforms will not take effect in the UK.
The UK’s role in approving large numbers of devices for the EU market is in doubt.
UK Government’s Industrial Strategy White Paper
UK Government’s Industrial Strategy White Paper
EU legal framework for medicinal products
The EU’s Falsified Medicines regime
EFPIA member survey
Existing regime including Directive 2001/20/EC
New Clinical Trials Regulation (EU No 536/2014)
Parliamentary report on the regulation of clinical trials post-Brexit
EMA preparations for Brexit
Medical devices regulatory reform package
2017 Autumn budget
Science and Technology Committee inquiry on the Science budget and Industrial Strategy