On 13 July the UK government put forward the European Union (Withdrawal) Bill by which the Government hopes to convert the entire body of EU law into British law. The intention is that when the UK leaves the EU, the law can continue to function as it does until Parliament wishes to amend it in the future.
For pharmaceuticals, it will be impossible to simply ‘copy and paste’ EU medicines law into UK law because EU law so heavily references the European Medicines Agency (EMA) and a pan-European framework of regulations, including the Centralised Procedure for product licences. The Withdrawal Bill, therefore, will need to create potentially sweeping powers to make secondary legislation to ‘enable corrections’ to the laws that would otherwise no longer operate properly after leaving the EU and to reflect the content of any negotiated Brexit deal. Otherwise, further primary legislation will be needed.
So, what are the potential options and outcomes in the negotiations?
Membership of the single market and EMA
It is possible that the UK will remain in the single market for medicines, retaining a seat at the EMA. This could be achieved through membership of the European Economic Area (EEA) or a sectoral agreement applying EEA arrangements to pharmaceuticals. European Commission decisions issued to grant marketing authorisations would be replicated (‘transposed’) in ‘corresponding decisions’ by the UK authorities. Remaining in the single market would be the least disruptive option and could be considered as a transitional arrangement until such time that the UK builds up its own regulatory regime and concludes agreements with the EU and others.
The UK could be an observer in the EMA, continuing to act as a Rapporteur on marketing authorisation applications. Given that the UK’s medicines agency, the Medicines and Healthcare products Regulatory Agency (MHRA), was Rapporteur or Co-rapporteur in 15.4% of Centralised Procedures and was Scientific Advice Co-ordinator in 21% of cases in 2016, this would avoid a capacity issue for the EMA and especially for the MHRA if it suddenly had to take on the entire workload of all pre- and post-marketing assessments and oversight.
It remains to be seen whether the Withdrawal Bill or powers therein could legislate now for providing the legal basis for implementing a future agreement of this kind, including the powers needed to transpose legally binding acts of the EU, from Commission decisions giving legal effect to EMA approvals all the way through to any revisions or replacements of Directives and Regulations.
Negotiated access through a trade agreement
Another option would be for the UK to pursue a preferential trade agreement as an alternative to single market membership, with close regulatory cooperation where possible.
As the EU does not apply tariffs on finished pharmaceutical products, the issues for the industry relate to non-tariff barriers. The UK Government would probably want to seek equivalence and mutual recognition agreements across as much of the regulatory landscape as possible based on identical or near-identical standards, for example, on certification of clinical trials, conformity with good manufacturing practices, manufacturing inspections and, in a most ambitious deal, on product licences. Switzerland and the EU agree to mutually recognise medical devices because the provisions of the EU medical devices legislation have been transposed into Swiss law. Mutual recognition of medicines, however, would be more challenging because of the way that a marketing authorisation evolves over time with variations, and can come with conditions to fulfil post-marketing safety or efficacy studies. UK legislation could provide a legal basis for all licences granted by the Commission up to the point of departing the EU, but the administrative apparatus for future applications and variations would need to be duplicated at the UK level unless agreements can be reached.
The more comprehensive and ambitious the deal, the less disintegrated the market would become. This would entail the UK accepting EU standards and vice versa and agreeing not to introduce new rules which might be considered diverging too far, possibly with an arbitration system for disputes. The complexity of managing the interface between so many different areas of sectoral and cross-cutting regulation, such as data protection, competition law, public procurement and labour mobility, could be immense. This raises numerous questions, including access to EU databases, access to skilled labour and access to science funding. Switzerland only regained full association to Horizon 2020 this year after not implementing EU migrant quotas voted for in a 2014 referendum. Outside the customs union, the UK would be free to conclude its own trade agreements with other countries, raising all the same questions about how to harmonise and enforce regulations without compromising national freedom of action.
No deal: going it alone
In a ‘no deal’ scenario, the UK would need to ensure it had a well-functioning, self-sufficient independent regulatory system. The UK would start by retaining the same regulatory requirements (product standards, labelling, reporting, etc), but the roles and responsibilities fulfilled by the EMA and its committees would have to be fulfilled by the MHRA alone. Bearing in mind that the EMA is a network which relies on the work of national medicines agencies involving a pool of over 4,500 experts all across Europe, this would require a significant increase in resourcing, met (mostly) by fees for assessing marketing authorisation applications and other services. There would be practical challenges in delivering such an increase in regulatory capacity within a short time frame. In due course, the UK could endeavour to reach equivalence and mutual recognition agreements which, as explained above, would be difficult for product authorisations without accepting a common regulator. Alternatively, bilateral agreements could be made to recognise approvals granted in other jurisdictions in the way that a Swiss marketing authorisation is automatically effective in Liechtenstein, thereby ceding regulatory control in exchange for simplicity.
Over time, the UK could alter its regulatory regime in ways to speed up approval pathways or increase incentives to try to retain and attract investment. Regulatory divergence, however, risks additional compliance costs on business. The scope for faster approvals would be limited by an interest on everyone’s part not to compromise the highest safety and quality standards. In any case, the research environment – as determined by access to scientific collaborations and ease of running multi-state clinical trials – and the business environment – as determined by medicines pricing, reimbursement, access and uptake – will weigh more heavily on industry’s investment thinking than a more efficient licensing regime. Faced with a separate approvals process, detached from the European networks of clinical trials and regulatory oversight, companies might delay filing for approvals in the UK.
The EMA and Commission have already issued a Q&A document on ‘certain legal consequences that need to be considered in a timely manner’. Companies must be established in the EU to hold an EU/EEA marketing authorisation, and exports from the UK would entail authorisations and quality control testing. Without a withdrawal agreement, the UK’s participation in the European Patent and the Unified Patent Court, whose division dealing with life science cases is due to be housed in London, would also be in jeopardy.
Ministerial signals
In an exchange of letters to the Financial Times in early July, industry chiefs and the UK Secretaries of State for Health and Business indicated their preference for ‘continuing the close working relationship with our European partners’ on medicines regulation.
It is not clear, however, whether they aim for an EEA-style arrangement or something looser, yet aligned, through a trade agreement.
Clearly, the pharmaceutical industry sees the benefits of an integrated internal market as greater than any possible advantages of a newly-designed UK regulatory framework. There appears to be a likelihood of additional complexity and costs, at least to some extent, in securing authorisations and supply of medicines post-Brexit. The Government and industry will need to work together on the complexities, challenges and choices ahead to minimise disruption and deliver ‘the best possible deal’ given the circumstances.