The Brexit ‘cliff edge’: How life sciences can survive
Characterised by a persistent lack of clarity and a political climate that has everyone guessing from week to week, Brexit appears as an impossible challenge for industry. Partners Charlotte Tillett and Gustaf Duhs and Senior Associate Paula Harris of law firm Stevens & Bolton review the trying situation and spell out the best tactics for pharma to survive what could be a messy exit, whenever it may happen.
At the time of writing this article, the Brexit date has been extended until 31 October 2019. However, the UK could leave earlier if the withdrawal agreement is ratified by Parliament. Things change almost daily and there is no certainty on the timing or form Brexit will take. However, there are some key points that pharmaceutical businesses should take stock of, which can be used as a helping hand in preparing for the unknown.
Deal or no-deal
A no-deal Brexit would mean that the UK will operate as a third country outside the EU’s regulatory and legal order. Running up to the previous deadline of 29 March, the government asked the industry to follow key recommendations and prepare for such an eventuality. The BioIndustry Association (BIA) confirmed on 18 March that they had been asked by the Department of Health to ensure that members “know they should continue to prepare for a no-deal Brexit… until that is legally ruled out”.
In recent months, the Government has issued guidance on both deal and no-deal scenarios:
November 2018: The Medicines and Healthcare products Regulatory Agency (MHRA) wrote to the industry about the automatic conversion of Centrally Authorised Products (CAPs) to UK Marketing Authorisations (MAs) (the “grandfathering” process) and the steps that Marketing Authorisation Holders (MAHs) need to take.
2 January 2019: The MHRA again wrote to the industry asking MAHs to check a list of CAPs and notify the MHRA of any errors or omissions, confirm any CAPs [not] to be converted into UK MAs and confirm the UK marketing status of the products.
9 February 2019: The government pushed through “Serious Shortage Protocol” legislative powers, enabling pharmacists to dispense medicines against the Protocol, rather than against a prescription. While medicine shortages are an ongoing issue for the industry, and not just because of Brexit, serious concerns have been voiced by healthcare providers. The High Court recently refused to grant permission for judicial review of the decision and that is expected to be appealed.
15 February 2019: The Department of Health and Social Care updated its guidance on the use of human organs, tissues and cells if the UK leaves the EU without a deal. It broadly confirmed that businesses will have six months to comply with the requirements to import tissues and cells from EU and EEA states and further detailed guidance can be sought from the Human Tissue Authority.
25 February 2019: The Minister of State for Health, Stephen Hammond, made a written statement to update Parliament on plans for the continuity of medicines and medical products. He provided details of stockpiling plans for medicines, blood and tissue products and vaccines, additional airfreight and ferry freight capacity, extra warehouse space, regulatory requirements and the Serious Shortage Protocol legislation.
February/March 2019: The Department for Business, Energy & Industrial Strategy published guidance addressing matters such as:
- The requirement for MAHs to be established in the EU/EEA if they wish to place a medicine on the EU market
- The requirement for the Qualified Person for Pharmacovigilance and the Pharmacovigilance System Master File to be based in the EU/EEA if they wish to place a medicine on the EU market
- Customs procedures and the temporary tariff regime
- Employment matters for EU citizens
Late March 2019: The MHRA published a wide ranging series of notes including guidance on:
- Medicines shipment by air freight and advice on Good Distribution Practice (GDP) requirements
- Registration of clinical trials and future EU alignment
- Handling of applications for CAPs still pending on exit day
No-deal preparations are continuing to some extent. On 8 April, the MHRA made some minor updates to its guidance and the emphasis remains very much on preparing for no-deal. Niall Dickson, Brexit Health Alliance co-chair and NHS Confederation Chief Executive, warned that “the system needs to assume we could crash out…” The Department of Health and Social Care also wrote to the industry indicating that “all no-deal measures (such as stockpiles, additional buffer stocks etc) should remain in place but on hold until further guidance is available”.
However, even when businesses were faced with a deadline in March, a no-deal scenario was always a huge challenge. The government asked for six weeks of extra buffer stock, which most businesses committed to, and purchased additional ferry and warehousing space to assist with importing medicines from the continent and stockpiling. We now need further Brexit plans and recommendations to be confirmed as soon as possible.
Medicines have a limited shelf life and there is no clarity on whether buffer stocks should be run down now, to be built up again later in the year, and how long companies should (or can) continue to shoulder this considerable burden indefinitely.
What can nevertheless be done?
Businesses should continue to follow government guidance to prepare for all eventualities. Advice should be sought on the enforceability of contracts and legal arrangements and the potential consequences of some EU laws falling away and other EU laws being adopted or retained.
Clarity on medicines regulation
European regulations currently govern the processes through which medicines are brought to market and the UK is a full member of the European Medicines Agency (EMA). When the UK leaves the EU, the MHRA will take on the EMA’s role.
Currently, many medicines come to market via the EMA’s centralised process (CAPs). On Brexit day, all CAP MAs will convert into UK MAs. MAHs can opt out; otherwise, the conversion process will be automatic.
After Brexit, applications for MAs will need to be submitted to the MHRA for national assessment. There will be a UK system for orphan medicines, largely based on the current EU criteria but with UK-specifics incorporated.
In terms of legal presence requirements, insofar as the UK market is concerned, MAHs should be established in the UK by the end of 2020. If the MAH is not established in the UK on exit day, companies will be expected to put in place a UK-based contact person within four weeks.
The Qualified Person for Pharmacovigilance should be established in the UK immediately after Brexit, although those without a current UK presence will have an exemption until the end of 2020 to arrange this.
For batch testing, the UK will continue to accept batch testing of human medicines carried out in countries named on a list set out by the MHRA. On exit day, this list would include EU countries, other EEA countries and those third countries with which the EU has a Mutual Recognition Agreement.
All medical devices placed on the UK market are currently subject to EU regulation. EU Regulation 2017/745 on medical devices and EU Regulation 2017/746 on [in vitro] diagnostic medical devices entered into force on 25 May 2017.
Regardless of Brexit, the UK intends to adopt these regulations in line with the EU timetable. The former will apply fully in EU Member States from 26 May 2020 and the latter from 26 May 2022. The MHRA will take on responsibility for monitoring devices placed on the UK market. There will be more stringent requirements for conformity assessment and CE marking, changes to traceability and transparency requirements and enhanced market surveillance.
There is also a question mark as to whether the EU will recognise the UK system as adequate post exit – the UK will most likely be treated as a third country.
Supply contingency measures
The UK life sciences sector relies on imports and exports of drugs for use in hospitals, clinical trials and research. Every month, 45 million packs of medicines move from the UK to the EU and 37 million move the other way.
The government previously advised that suppliers must maintain at least an additional six weeks of stock, over and above their usual buffer stock. Companies will likely be required to remain flexible and put further such measures in place. They should therefore monitor their manufacturing arrangements and relationships with suppliers so that contracts can be renegotiated and short-term capacity increased if necessary. The government will likely continue to assist with additional ferry routes away from the Dover short crossing and additional warehouse space.
It is not certain that the UK will leave the EU with a deal, when it will leave, or even if it will leave at all. The best advice is that, while the UK remains a member of the EU, all current rights and obligations should be observed. Further, ongoing government guidance should be adhered to insofar as possible and no-deal Brexit preparations continue. This may well be a large burden on budgets and project teams, and may not even be needed in the short term, or ever. However, this is the best approach businesses can take now to protect themselves, and ultimately to ensure the continued success of the UK life sciences sector.
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