The aftermath of Brexit
Notice under Article 50 was given at the end of March 2017, triggering the start of the two-year period during which the UK’s withdrawal from the EU will be negotiated. Below we address the key concerns of pharmaceutical companies resulting from the Brexit process.
The referendum is the first step; it’s unlikely there will be any significant change in the UK’s status in the EU prior to the UK leaving the EU in 2019.
For a significant period of time, existing laws and regulations will continue in their current form.
The industry should start assessing what action it may need to take, but until discussions regarding withdrawal are underway, take no irreversible decisions.
What should the pharmaceutical industry do now?
At the moment, the full ramifications of Brexit are uncertain. The best policy is to be prepared by keeping up to date with developments. The pharmaceutical industry is one of the most globally harmonised industries in the world. Many of the standards of the industry have been set on the basis of global standards and therefore it is unlikely those standards will change with a departure of the UK from the EU. That said, we address some of the more pressing concerns below.
In the EU, clinical trials for medicinal products and medical devices are currently regulated pursuant to a number of EU Directives: (i) the Clinical Trials Directive (EU Directive 2001/20/EC), (ii) the Medical Devices Directive (EU Directive 93/42/EC), (iii) the Active Implantable Medical Devices Directive (EU Directive 90/385/EC) and (iv) the In Vitro Medical Devices Directive (EU Directive 98/79/EC). All of these directives have been implemented into UK law and as such the UK legislation is already harmonised with that of the rest of the EU. Unless amended, the laws currently in place implementing these directives will remain, notwithstanding an exit.
There is new legislation from the EU regarding clinical trials in the form of regulations which will, when adopted, become direct legislation in the member states without the requirement for separate implementing legislation by each member state. The Clinical Trials Regulation 536/2014, which will apply to clinical trials for medicinal products, was adopted on 16 June 2014 but has not yet been implemented. There are also two proposed new regulations for medical devices, however these are both at an earlier stage in the process. If these regulations come into force before the date of an exit, the UK will be bound by them prior to its departure. However, they will not automatically continue to apply to the UK following exit and will not automatically apply if they come into force after departure. It is likely that provisions adopting similar rules to these regulations will be included in any legislation which is adopted by the UK prior to exit.
The ICH Guidelines set out the standards for Good Clinical Practice which provides the basis for EU and US GCP. We would not expect this to change after Brexit.
With regard to clinical trial matters, including clinical trials conducted in EU member states and non-member states (such as Russia, Turkey and several of the Baltic states prior to their accession to the EU), a departure from the EU is unlikely to adversely affect the decision on where a clinical trial is conducted. UK sites are keen to participate in global studies and the UK will want to make sure the regulations that apply to them continue to be consistent with the rest of the EU so the ability to participate will not be jeopardised.
Under the current regime, a sponsor of a clinical trial needs to have a legal representative established in the EU. Many US companies have chosen to establish such companies in the UK and these companies will continue to be suitable for that purpose for the time being. Consideration will need to be given once there is some clarity as to how the UK’s status will be affected by a departure from the EU. There is precedent for a legal representative to be based in a country outside the EU, ie a subsidiary in Switzerland is treated as a legal representative established in the EU for these purposes.
Recently we have seen sponsors based outside the EU considering setting up subsidiaries in Ireland.
Marketing Authorisations, pricing and reimbursement
Most Marketing Authorisations are applied for under the decentralised procedure or the centralised procedure, both of which are based on Directive 2001/83/EC. When the UK leaves, in the absence of any specific legislation adopted by the UK prior to exit, the UK will need to have a system for independent Marketing Authorisation approval, but the approval process for the remainder of the EU will remain unchanged.
Marketing Authorisations already granted by the UK will remain unaffected by Brexit. The UK will need to consider what happens to Marketing Authorisations that were granted under the Centralised Procedure; we expect Marketing Authorisations granted in the EU under the Centralised Procedure prior to the exit will be recognised by the UK.
Companies that have been granted EU Marketing Authorisations will need to consider how and where they are to be held when the UK leaves the EU. The current situation will be suitable for some time, but consideration will need to be given to this once there is clarity as to how the UK’s status will be affected by Brexit. It is possible that mutual recognition agreements will be put in place between the EU and the UK, and there is precedent for this. For example, medical devices tested in Switzerland can still be considered to conform with EU conformity requirements. Switzerland does not have a similar mutual recognition agreement in place for medicinal products, however, by virtue of a customs union between Switzerland and Liechtenstein (which is in the EEA). Swiss Marketing Authorisations are automatically recognised in Liechtenstein and for the purposes of Supplementary Protection Certificates are considered to be the first authorisation to place that medicinal product on the market in the EEA.
Similarly, orphan drug designations currently need to be held by an EU-based entity. If the UK ends up outside the EEA, it may, like other non-EEA countries, put in place reduced assessment processes for products categorised as orphan drugs by the European Medicines Agency (EMA) to expedite orphan drug designations in the UK.
Pricing of drugs and devices has been a matter within the competency of each member state to date. The UK already has an independent pricing system and it is highly unlikely this will change.
The EMA is currently based in London. In February 2017, the health secretary, Jeremy Hunt acknowledged the EMA would leave the UK as part of Brexit. Approximately 20 member states have expressed an interest in hosting the EMA post-Brexit.
It has been suggested that the UK might not continue as a member of the EMA post-Brexit. In this scenario, the MHRA or a new regulator would become responsible for approving all new drugs aimed at the UK market. There is concern that patients could face delays in accessing new medicines should the UK leave the EMA; the ABPI is lobbying the Department of Health to ensure the UK retains some form of EMA membership.
In November 2016, the UK Government announced it would proceed with plans to ratify the Unitary Patent and Unified Patent Court (UPC) regime, with the UPC likely to operate from December 2017. One of the three Central Divisions of the UPC, the Human Necessities, Chemistry and Metallurgy court, will be in London. Post-Brexit, it is unclear whether the UK will be able to participate in the UPC and whether unitary patents will continue to be enforceable in the UK.
The current European Patent system will be unaffected by Brexit because the European Patent Convention is not EU legislation. Upon entry into force of the Unitary Patent regime, applicants desiring pan-European patent protection encompassing the UK will have the choice between the existing (European Patent) and new (Unitary Patent) systems.
The current EU rules on data protection are already enacted in English law and so, unless amended, will continue to apply. It is likely any departure agreement between the UK and the EU will have terms providing for the continuation of the existing data protection regime as it applies to transfers of data between member states and the UK. If the UK continues to have data protection legislation which is equivalent to that in the EU, it is likely the European Commission will deem the UK to meet the necessary adequacy levels for the transfer of personal data.