Brexit: the implications for life sciences

The life sciences sector will face several major issues as a result of Brexit, and those working within the sector need to be planning now in order to be ready to do business in a post-EU environment.

We describe some likely issues for the life sciences sector to consider.

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Regulation
  • The life sciences sector is highly regulated. Nearly all of this regulation, covering matters from clinical trial approval, pharmacoviligance, joint procurement of emergency measures (eg pandemic vaccines) to marketing authorisations and addressing the trade in falsified medicines, is harmonised at EU level. It is not clear to what extent these EU regulations will continue to apply to the UK after the UK leaves the EU, and in particular to what extent the UK will be able to remain a party to measures which currently require inter-EU Member State cooperation. These matters will all be up for negotiation as part of the future relationship.

Marketing authorisation
  • The UK Government has indicated its intention to continue to play a full role in European regulatory procedures and retain a close working partnership with the EU in medicines regulation post Brexit. The three principles which the Government says will underpin the development of a post-Brexit regulatory system for medicines and devices are: (a) patients should not be disadvantaged; (b) innovators should be able to access the UK market as quickly and simply as possible; and (c) the UK will continue to play a leading role in both Europe and the world in promoting public health.

    However, despite the Government’s position, some effects of Brexit are already being felt. The European regulator, the European Medicines Agency (EMA), will relocate to Amsterdam from London no later than 30 March 2019. The EMA is central to the functioning of the single market for medicines in the EU.

    Currently there are three routes for getting a marketing authorisation (MA) for a product in the UK: i) the "centralised procedure" by making one application to the EMA (which results in a single marketing authorisation or centrally authorised product (CAP)); ii) the "decentralised procedure" (DCP) by making multiple applications to each individual EU member state where marketing authorisation is sought (separate national authorisations are obtained); iii) the "mutual recognition procedure" (MRP), where a medicine is authorised in one EU member state and a later application is made for this authorisation to be recognised in other member states (separate national authorisations are obtained). After Brexit, the UK will no longer be a part of the centralised, mutual recognition and decentralised procedures. Existing products that received an MA for the UK via the mutual recognition or decentralised procedure routes prior to 29 March 2019 will be unaffected as they already hold a national UK MA.

    The EMA is proceeding on the basis that the UK will become a third country as of 30 March 2019. If so, the UK will no longer be able to engage as (co)-rapporteur for new marketing authorisation applications under the centralised procedure. In 2018, in preparation for Brexit, the EU27 and the EMA reallocated the UK’s portfolio of centrally authorised products to rapporteurs outside the UK.

    Most new medicines come to market via the centralised procedure. In the event of a no deal Brexit, under the legislation which will come into force on exit day, CAPs will be automatically converted without charge in the UK to UK MAs (a process known as grandfathering). MA holders will have a right to opt out of this process by giving notice to the UK regulator, the Medicines & Healthcare Products Regulatory Agency (MHRA).

    In the event of a no deal, centralised procedure applications which have not yet reached a decision on exit day will need to be resubmitted to the MHRA. The UK Government proposes that a transitional provision will be made for MRP and DCP procedures in progress immediately before exit day as these procedures already result in a national MA.

    The workload of the MHRA will increase post Brexit, as it inherits work from the EMA. After Brexit, to market a product in the UK, an initial MA application will need to be submitted to the MHRA and will go through a national assessment. The Government has given assurances that the MHRA will take a streamlined approach to approving UKMA applications that places no greater burden on industry and ensures that UK patients can access new medicines at the same time as EU patients.

Clinical Trials and R&D funding
  • Clinical trials are managed nationally – in the UK by the MHRA. The 2004 Regulations governing clinical trials will remain in force in the UK post Brexit, modified using powers under the EU (Withdrawal) Act (EUWA) to make sure they still work in the UK after exit.

    The new EU Clinical Trials Regulation 536/2014 (CTR) will introduce a single portal for submitting applications to begin clinical trials in the EU, along with a new EU-wide trials database and requirements for disclosure of trial data. The CTR will probably not be in force in the EU by the time the UK exits the EU and so will not be incorporated into UK law on exit. However, the UK Government has indicated that it will align where possible with the CTR when it does come into force in the EU, subject to the usual parliamentary approvals. It remains to be seen how clinical trials that have a UK-EU cross border dimension will be affected and whether the UK will become a less attractive location for clinical trials going forward.

    Furthermore, data protection issues will arise around the transfer of clinical trial data between the UK and the EU.

    The UK is a net recipient of EU funding for R&D programmes. In the event of a no deal scenario, the funding available to UK-based research companies from the EU will probably decrease although the UK Government is seeking to guarantee funding for successful bids made before the UK leaves the EU under the current EU funding programme, Horizon 2020. It remains to be seen what happens after 2020 as this will depend on what is agreed as part of the future relationship. The UK Government is also working in partnership with UK Research and Innovation to develop a new International Research and Innovation Strategy.  Their intention is to build on the UK’s long tradition of international collaborations in R&D.

    On Brexit, R&D collaboration agreements will likely fall within separately applied and potentially diverging competition regimes in the UK and the EU. Similar issues as those raised in relation to clinical trials with regards to transfer of data cross-border will also arise in relation to collaboration agreements.

Pharmacovigilance
  • Currently pharmacovigilance (the monitoring of the safety of medicines on the market) is co-ordinated at EU level. In the event of a no deal Brexit, the MHRA will have primary responsibility for the conduct and oversight of all pharmacovigilance activities in the UK. Post-Brexit, UK rules in this area may diverge from continuing EU legislation, giving rise to compliance issues for companies wishing to export to the EU from the UK.
Manufacturing & supply chain
  • Regulated industries, such as the pharmaceutical industry, are subject to guidelines to ensure that they make products that are safe, fit for use, and which meet strict quality standards throughout the entire process of production. In the event of a no deal scenario the UK Government has indicated that it will continue to use, until further notice, the EU Good Manufacturing Practice and Good Distribution Practice guidelines.

    There are no tariffs for drug products, API and many chemical intermediates between most developed countries. For other products, and for countries where there are tariffs on pharmaceutical products, it is not clear whether going forward the UK will obtain as favourable terms of trade as the EU has negotiated.

    One of the principal concerns in the event of a no deal Brexit is disruption to the supply of medicines. The UK Government has produced guidance for pharmaceutical companies on how to prepare for Brexit in a no deal scenario including contingency plans such as increasing stockpiled stocks by at least 6 weeks on top of their usual buffer stocks or making air freight plans for stocks that cannot be stockpiled to ensure continued supply.

Employees
  • Exiting the EU means that free movement of workers between the UK and the other EU member states will come to an end. This will undoubtedly impact the movement of scientists, life sciences companies’ staff and researchers across Europe. It also poses questions regarding the status of EU citizens currently employed in the UK in the life sciences sector.

Growing business
  • There is likely to be a change in the behaviour of investors in the life sciences sector. Many firms and investors invest in the UK because it offers unrestricted access to domestic and EU markets; however, this will no longer be the case once the UK leaves the EU. Investors may prefer to invest in companies based within the EU in order to access the other member states. Alternatively, the exit of the UK from the EU may instead have a destabilising effect on the EU markets and cause foreign investors to invest in markets outside of Europe.

    Leaving the EU may also have a destabilising effect on the London Stock Exchange (LSE). This could potentially make listing on the LSE less attractive; the LSE may no longer be a sought-after exchange to announce initial public offerings (IPOs).

    Further, when the UK leaves the EU, many mergers will become subject to two systems of merger control: vetting by both the UK Competition and Markets Authority (CMA) and the European Commission.Dual notification may increase costs and uncertainty for companies as there is a risk of conflicting decisions from the UK and EU bodies.

For further information, please refer to Brexit: the legal implications.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.