IP analysis: Julia Gillert and Els Janssens, senior associates at Baker McKenzie, explain what is happening to the European Medicines Agency (EMA) in the context of Brexit and why the competition to host the EU agency when it leaves its London base is proving to be so fierce.
What is the EMA, what work does it do, and why is it moving?
The European Medicines Agency (EMA) is the EU regulatory body responsible for the evaluation, supervision and monitoring of medicinal products across the EU, including their safety and quality, and its existence helps to pool expertise and avoid duplication among Member States.
Established in 1995, the EMA also issues scientific advice, supports innovation by collaborating with academia and hosts thousands of regulators and scientists each year. Brought to the UK by John Major’s government, the EMA has called London its home since its creation.
However, in the context of Brexit and the UK’s triggering of Article 50 of the Treaty on European Union (TEU), the 27 remaining Members States have emphasised that the EMA must relocate to another location within the EU’s territory (along with the European Banking Authority) post-Brexit.
Why does it matter where the agency is relocated to, and why is competition to host it so fierce?
While not the largest EU agency, the EMA is considered one of the jewels of the EU regulatory system. The competition to host EU agencies has historically been fierce, as agencies bring with them highly-remunerated staff and in many instances, the creation of new jobs.
We need only look at the benefits the EMA has provided to the UK over the past two decades to understand the intense competition to host the EMA. The EMA has been a key driving force in attracting businesses and building a large network of drug companies in the UK: subcontractors, research institutions and pharmaceuticals have established themselves in London to gain proximity to the regulatory process.
According to the Association of the British Pharmaceutical Industry, the EMA’s physical presence in London provides UK regulators with greater sway in decisions related to research and development.
EMA’s next host is not only expected to gain prestige but also approximately 900 new staff, seven scientific committees and advisory groups, growth of its pharmaceutical sector and better access to scientific researchers.
Pharmaceutical companies that originally relocated in London to be closer to the EMA may also follow the EMA’s move.
What are the criteria for evaluation of the bids?
The EU Commission and Council published its relocation criteria in a 23-page document on 22 June 2017. The criteria largely mirror the criteria for determining the seat of an EU agency, but reflects the fact that the EMA already exists.
Drafted by European Commission president, Jean-Claude Juncker, and European Council president, Donald Tusk, emphasis is placed on ensuring ‘business continuity’ after Brexit and on ‘a smooth transition to the new location’.
This means that there must be assurance from the new host that the EMA can effectively take up its functions when the UK leaves the EU, has the required logistics, facilities and infrastructure as well as the ability to maintain and attract talent.
Other criteria include the accessibility of the location (ie excellent flights connections, public transportation and accommodation options), existence of adequate education facilities for children of agency staff (multi-lingual, European-orientated schools), appropriate access to the labour market, social security and medical care for children and spouses and geographical spread (ie giving priority to new Member States).
Which countries have submitted bids?
As of 1 August 2017, 19 Member States have submitted their bids to host the EMA:
• The Netherlands (Amsterdam)
• Greece (Athens)
• Spain (Barcelona)
• Germany (Bonn)
• Slovakia (Bratislava)
• Belgium (Brussels)
• Romania (Bucharest)
• Denmark (Copenhagen)
• Ireland (Dublin)
• Finland (Helsinki)
• France (Lille)
• Malta (Smart City, Kalkara)
• Italy (Milan)
• Portugal (Porto)
• Bulgaria (Sofia)
• Sweden (Stockholm)
• Austria (Vienna)
• Poland (Warsaw)
• Croatia (Zagreb)
The offers have been published on the Council’s website.
What are the bidding Member States proposing?
While newer Member States play the card of geographical spread in their bids, older Member States, hosting the majority of existing EU agencies, put emphasis on business continuity.
Italy is one of the stronger contenders putting forward Milan with its excellent amenities and transport connections. In addition, it is the EU’s second largest manufacturer of medicinal products (although the existence of a pharmaceutical industry is not seen as an essential criterion).
Ireland, France, Belgium, the Netherlands and Slovakia have all offered bespoke infrastructure, most aiming to complete construction by March 2019, and in the case of the Netherlands, the provision of a transitional building option should construction be ongoing by then.
The Netherlands has also tried to gain appeal by emphasising similarities with both British lifestyle and culture, while Spain has highlighted Barcelona’s reputation in biomedicine and its transport links. As one of the continent’s top tourist spots, it also holds a substantial supply of hotel space and has even proposed ‘a dedicated service in order to ease the hotel booking process’ for EMA visitors.
However, for some Ireland appears to be the most attractive bid.
Even before the UK’s triggering of Article 50 TEU, the Irish Government was assembling a team to prepare for the country’s bid. Already home to multiple medical manufacturing sites, Dublin continues to see the expansion of its pharmaceutical industry. The Irish capital claims the benefit of English as an official language and proximity to the EMA’s existing headquarters.
It also boasts a strong research sector with highly trained personnel. The Irish government has also pledged to make a total contribution of €78m over a ten-year period towards the EMA’s new headquarters in the form of €15m in the first year (2019) for fit-out/rent and €7m annually thereafter (from 2020–2028) towards rent and maintenance.
What is the procedure for the decision-making process?
The Commission will now review and submit its assessment of each application by 30 September 2017 to the Secretary- General of the European Council, which will then be distributed to representatives of the 27 remaining Member States.
Representatives from each Member State will come together for a political discussion based on the Commission’s assessments and take the final decision at the General Affairs Council in November 2017. A voting system has been developed whereby each Member State’s minister will indicate their first, second and third choices from among the bidding cities. Countries may abstain or vote for themselves.
In the first round, each country has six points to allocate and must give three points for their preferred bid, two for their second-favourite and one for their third-favourite. Unless one bidding city receives overwhelming support in the first round (ie 14 first preference ballots representing the majority of Member States), the three most popular bids will be put forward to further voting until there is a winner.
In the second round, each Member State has one vote which they must give to one of the three highest voted bids from the first round. If no bid receives the majority of votes, voting moves to round three where each Member State votes for one of the two highest voting bids from the second round.
The bid with the most votes wins but in the instance of a tie, the presidency will draw lots. Despite their primary interest in the decision the EMA and its staff have no say in the decision.
When will we know the outcome?
The outcome will be announced upon the conclusion of the (successive) voting rounds beginning in November 2017. Depending on the vote count at each round, the outcome may be confirmed as early as the conclusion of the first round.
When will the relocation happen?
The relocation is expected to take place by March 2019 when the UK leaves the EU, at which point, the EMA should be expected to be up and running in its new location.
What will be the impact of the work carried out by the EMA, in particular with regards to the marketing authorisation procedure application?
At present, the UK’s national counterpart to the EMA, the Medicines and Healthcare products Regulatory Agency (MHRA), plays a fundamental role as the single largest contributor (approximately 20% of drug applications) to the EMA’s marketing authorisation procedure application.
As one of the larger Member State regulators, the MHRA also actively takes part in oversight activities such as pharmacovigilance. Once the UK withdraws from the EU, the EMA will need to redistribute the MHRA’s current workload.
However, the EMA is confident they can fill the void for assessments through multinational assessment teams, with commitments from key Member States to increase their shares of assessments. The EMA has established two working groups—one for human medicines and the other for veterinary medicines—with an aim to explore options of reallocating the MHRA’s work across its network.
The EMA has also published its business contingency plan for Brexit.
To prepare for the uncertainty in the period leading up to Brexit, the EMA has allocated its work into three categories of priority (with category 1 the highest priority), based on the impact to public health and the EMA’s functioning. In an effort to free up staff to focus on the EMA’s relocation, the EMA has started scaling back on activities falling under category 3, which include, among others, the development of the European Medicines Web Portal, its e-submission project and transparency roadmap as well as audits and some corporate governance measures.
Tasks allocated to category 2, such as publication of clinical data and promoting the availability of medicines, will continue for as long as possible, subject to workload and personnel restraints.
Activities of the highest priority under category 1, including those directly related to the assessment and monitoring of medicines or crucial to maintaining the regulatory systems infrastructure, will not be impacted.
What is the possible impact of the EMA’s relocation on the MHRA’s role and its work?
In the likely circumstance that the UK leaves the EMA, the MHRA will need to assume for the UK market the responsibilities undertaken by the EMA.
This transfer of authority creates challenges for the MHRA in terms of resources as the UK pharmaceutical industry’s taskforce and other lobbying groups have repeatedly emphasised that the industry does not want to bear the related costs if the MHRA becomes an independent authority.
As mentioned above, while the MHRA is the single largest contributor to the EMA’s central medicines approval procedure, it will need to take on the remaining 80% of work load currently dealt with by counterparts in other Member States. The same applies to products authorised through mutual recognition and decentralised procedures for which other Member States act as a reference Member State.
In its Business Plan 2017/18 published in April 2017, the MHRA announced that it still needs to determine its ‘future relationship and engagement with our European counterparts in a post-Brexit context, including the potential for ongoing co-operation in EU regulatory procedures’.
The historic close collaboration between the MHRA and the EMA, would allow for greater collaboration than with other regulators, such as the Food and Drug Administration (FDA) in the United States. However, to which extent collaboration will be possible and what form it would take as part of a wider Brexit deal remains uncertain for now.
Not being part of the EMA will also mean that the MHRA will need to negotiate its own reciprocal arrangements with regulators outside the EU in respect of which the EMA has existing collaboration agreements with, for instance, the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH), FDA, Health Canada and the Japanese Pharmaceuticals and Medical Devices Agency (PMDA).