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“No deal” Brexit and life sciences: What happens?

Published on 21/10/19 at 11:51am

Prime Minister Boris Johnson may have agreed a withdrawal agreement with the European Union at the 11th hour, but despite the best efforts of UK Parliament a "no deal" exit could still present a viable threat. It's still all to play for over the next week or so in Westminster, but in the event that the Prime Minister's deal does not gain the support of Parliament or if "no deal" emerges at a later date, where does this leave the UK’s life sciences? Tim Matthews, Partner at legal firm Barlow Robbins LLP, explains.

The UK Government's preferred Brexit arrangements for medicine regulation involves continued close cooperation with the EU, including to remain closely associated with the EMA.  In the scenario of “no deal” on 31 October 2019, the UK Government has proposed unilateral recognition of existing EU processes to minimise disruption.  In such a “no deal” scenario, companies need to be aware that the UK will immediately self-regulate medicines.  So, for example, a UK company with a pan-EU marketing authorisation (granted through the EU centralised procedure) will lose that EU authorisation.  This is unless action is taken to transfer key operations and activities to an EU Member State. Other rights, such as the EU support for small and medium enterprises and the qualification as an orphan medicinal product may also be lost. Similar issues may arise in relation to clinical trials and medical devices.

Given the fact that the UK now has a new Prime Minister, together with the UK’s past failure to make real progress, planning for the possibility of "no deal" is now a necessity for life science companies. 

Preparation

Life science companies should be able to map out:

(a)          Which and how many rights will be lost on 31 October 2019 if no action is taken?

(b)          If they have entities in both the UK and the EU/EEA, then which of these can take on the required responsibilities and activities (such as being the authorisation holder, batch release site or holder of the pharmacovigilance system master file)?

(c)           What actions must be taken within what timeframe to prevent losing their rights (such as arranging the necessary variations and physical relocation of certain business activities)?

Depending on the size of a life sciences business, the number of adjustments necessary to be fully prepared for Brexit may need a customised level of guidance from legal advisors.  However, a critical action is that a life science company should analyse what market authorisations they hold and if any amendments are necessary to maintain their status.

Marketing authorisations and general

EU law requires that marketing authorisation holders, qualified persons for pharmacovigilance and sponsors for orphan medicinal products are established in the EU or EEA. It may be that for some companies this is not currently the case and so these must be created prior to Brexit in order to maintain the marketing authorisations.  Assuming the UK will become a third country (non-EU/EEA) on 31 October 2019, the following activities, persons and registrations must be moved to a non-UK EU/EEA member state and be in place by such date:

  • The holder of a centrally authorised marketing authorisation
  • The qualified person responsible for pharmacovigilance
  • The Pharmacovigilance System Master File
  • The sponsor of an orphan medicinal product
  • Small and medium enterprises looking to keep their SME support

If a manufacturing site is currently located in the UK, an authorised importer and site of batch control must be created in the non-UK EU/EEA.  In relation to clinical data obtained in the UK, bioequivalence studies which take place in the UK can only be used if the marketing authorisation is granted before 31 October 2019. Additionally, data obtained in the UK for traditional and well-established use applications can only be used if the data is obtained (or relates to) the period before 31 October 2019.

Generally, there will be a bigger burden on life sciences companies in the case of “no deal”.  The burden will increase because regulatory requirements – for example, clinical trial authorisations, pharmacovigilance and good manufacturing, laboratory and clinical practices – will be under a separate UK legal and regulatory framework. 

Specific requirements

The following specific requirements will be needed:

(a)          GMP:  If the active substance is manufactured in the UK, a declaration from the UK competent authority is required stating that the standards used are equal to those in the EU/EEA

(b)          Resetting of “sunset clause”: If a pharmaceutical product is currently sold on the UK market only, the three-year term within which the product must be placed on the non-UK EU/EEA market will start running again on 31 October 2019 from the date prior to 31 October 2019 on which the product was last put onto the UK market. If the product is not brought onto the EU/EEA market within three years thereafter, the authorisation will no longer be valid

(c)           Orphan drugs:  A consequence of the UK leaving the EU/EEA is that applications after 31 October 2019 for orphan drugs can also no longer count UK users in calculating the prevalence of the disease

(d)          Clinical trials:  The new EU Clinical Trials Regulation (EU No 536/2014) (“CTR”) is not going to be in force in the UK prior to 31 October 2019. This may result in a divide between clinical trials legislation in the UK and the EU despite the UK Government's intention to align where possible.  Currently, the UK Government have stated publically their aim to fully implement CTR at some point subject to appropriate national legislation being passed by Parliament 

The way forward

General

If a life science company’s current marketing authorisation holder is situated in the UK (but there are multiple entities in the non-UK EU/EEA), a business should decide what entity would be best-suited to hold the marketing authorisation. Another possibility is that a life sciences company does not have any entities in the non-UK EU/EEA and must therefore incorporate a new entity.

Changing the group structure for marketing medicinal products may also have important tax implications, which need to be taken into account in deciding on the proper structure and the position of the relevant entities within the group. This may also require new intra-group licence agreements.

Filings with the EMA and the MHRA

The other important implication of Brexit with “no deal” is the requirement for companies to obtain appropriately timed approval for their variations and administrative amendments from the EMA and, where necessary, the UK MHRA. This includes obtaining approval for changing the market authorisation holder, or changing the qualified person for pharmacovigilance and batch release site.  It should be noted that the EU centralised market authorisation will be converted automatically to UK MAs in a "no deal" scenario.  The UK Government will allow those without a current UK established marketing authorisation until 31 December 2020 to put these in place.  However, the MHRA may still require certain arrangements to be made in the meantime; for example, necessary access to relevant safety data.

Company incorporations

Should a life science company not have entities both in the UK and the non-UK EU/EEA, it is likely that they will have to incorporate new entities to fully maintain relevant rights in the UK and the EU after Brexit. Much must be taken into account by life science companies in deciding where, how and to what extent to incorporate and move part of its business to another country.

As time is short, here is a drug regulation step plan for life science companies: 

Action

1. Analyse your marketing authorisation portfolio and establish what rights may be lost on 31 October 2019.

2. If you do not have a relevant presence in the future non-UK EU/EEA (or in the UK) then decide where to incorporate. For example, where in the future non-UK EU/EEA will the batch release site be placed if manufacturing takes place in the UK. 

3. Establish a new EU/EEA-entity for the purpose of transferring the required persons, activities and rights.

4. Use a future non-UK EU/EEA applicant to make requests for marketing authorisations and sponsors for orphan medicinal products if you have established a non-UK EU/EEA entity.

5. Transfer relevant rights, persons and activities to the new EU/EEA-entity (such as the qualified person responsible for pharmacovigilance).

6. File in good time the necessary variation(s) with EMA as it can take more than six months before such variations are finalised.

7. File your request with the UK MHRA to obtain a declaration that GMP standards are equivalent to those in the EU/EEA;

8. Consider the establishment of a UK entity/put in place the UK legal presence requirements for UK marketing authorisations.

9. File UK applications for existing European Union Trade Marks (EUTMs), Registered Community Designs (RCDs) and Community Plant Variety rights (CPVRs) (at least for most important rights).

10. Complete or have completed the transfer of any centralised marketing authorisation and other relevant rights, entities and persons from the UK-entity to an EU or EEA-entity. 

 

For further information contact:  TimMatthews@BarlowRobbins.com 

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