On 29 March 2017, the UK Government issued notice to the European Council invoking Article 50 of the Lisbon Treaty, formally commencing the process of the UK’s withdrawal from the European Union. What follows is a round up of some of the latest key Brexit impacts on the healthcare industry.
- European Medicines Agency (“EMA”) set to relocate
- EMA is currently based in London and since has received 21 expressions of interest from new Member States to host the Agency since July 2016 according to Reuters.
- EMA has not made many public statements regarding Brexit. However, minutes of the EMA Board meetings held since the UK Referendum, record discussion of the high volume of Member States seeking to host the Agency and concern over “some higher than normal loss of staff” and “good candidates withdrawing their applications”, a statement repeated by EMA’s Executive Director, Guido Rasi, in a meeting of the European Parliament’ ENVI committee in November 2016 and a Financial Times interview published in January 2017. Mr Rasi has also noted that the EMA’s workload is likely to be affected by the cessation of input to its workstream by the UK regulator, the MHRA, which currently approves around 20% of all medicines in the EU.
- EMA has a 2017 annual budget of €322.1 million, employs approximately 900 highly skilled workers, and hosts 36,000 experts a year at its meetings. Its Executive Director warned that according to a survey amongst staff, around half could leave if the Agency was relocated to an undesirable place and indicated that Brexit and the uncertainty it has created are affecting the morale of staff.
- Furthermore, Mr Rasi stressed the need for the “longest possible” transition period in order to be able to manage the logistics involved and in order to mitigate impact on core operations.
- Next steps? Article 50 triggered, Member States are now formalising their bids for hosting EMA. EMA itself will not have input on the final decision, which will be made by the European Council requiring a unanimous vote of the remaining 27 Member States, which could prove difficult. In promoting the Netherlands bid to host EMA, Dutch foreign minister Bert Koenders noted that “It goes without saying that EMA needs clarity about its future as soon as possible. Its work is too important to everyone in Europe to postpone the matter until after the Brexit negotiations.” Hopefully, EMA will obtain that clarity soon.
- Life science industry calls for continued regulatory alignment in the face of Brexit
- Pharma Intelligence published an article on March 13, 2017, following a meeting of the UK EU Life Sciences Steering Group. The article highlighted the importance of “avoiding regulatory divergence between the UK and EU following Brexit” and synergies between the UK and a post-Brexit EU (topics previously covered in Baker McKenzie’s blog posting of October 24, 2016 and in the ABPI / BIA report of September 8, 2016).
- The findings of the “Economic contribution of the UK Life Sciences industry Report” (March 2017) prepared by the industry, reaffirm the importance of the sector in its economic contributions to the UK in the areas of employment, taxes and GDP. Key highlights from 2015 are that the UK life sciences industry supported 482,000 jobs while providing the UK Government with £8.6 billion in taxes and £30.4 billion in UK GDP (of which, £14.5 billion is a direct contribution – the economic value generated by life sciences companies themselves).
- Next steps? Securing support for long-term regulatory alignment between the UK and post-Brexit EU is of paramount importance to the industry, including decisions around UK access to the EU IT systems and access to information relating to clinical trials.
- ABHI’s “Healthy outside the EU” report (April 2017)
- On April 3, 2017, the Association of British Healthcare Industry (ABHI) launched a new report, representing its latest response to Brexit. The ABHI ‘s Report recognises the huge benefit to the UK industry in having the NHS as the world’s biggest single payer health system, and proposes five themes for policy development: (1) regulatory stability; (2) favourable terms for trading within and outside the EU; (3) support for manufacturing; (4) bespoke support for the SME community; and (5) enhanced collaboration with the health and care system.
- To build a stronger sector, the report encourages the UK government to focus on two key policy areas: (1) growth of British MedTech SMEs; and (2) initiatives to encourage the NHS’s commitment to the collection of data.
- Next steps? In balancing the Brexit challenges, the Report outlines the trade opportunities with the need for “integrated domestic and trade policy, offering a degree of certainty while leveraging the flexibilities that leaving the [EU] may bring”.
- Operation of new EU IVD and MD Regulations
- On April 5, 2017, the European Parliament and Council adopted Regulations on (1) In Vitro Diagnostic Medical Devices; and (2) Medical Devices, which are to be published in the official journal expected by the end of April, coming into force from June with transitional operation.
- Industry bodies MedTech Europe (April 5, 2017) and ABHI (April 6, 2017) welcomed the Regulations and in statements, emphasised the years in planning and shaping that have been invested into the new legislation. It seems apparent from the ABHI’s statement that the association is very supportive of the UK adhering to the Regulations post-Brexit.
- Next steps? the Regulations will commence transitional operation from June 2017, that is, before the UK’s withdrawal from the EU. With industry support for the Regulations, as well as the UK’s pivotal role in developing the Regulations over recent years, it seems unlikely that there would be an appetite to repeal the new Regulations post Brexit once they have been enshrined into UK law under the “Great Repeal Bill”.
- Gove pushes for ‘taking back control’ of drug safety trials
- A recent article from the UK’s Independent dated March 25, 2017, reported that Michael Gove has called for the scrapping of some of the European Commission’s rules contained in the Clinical Trials Directive (which is to be replaced by the Clinical Trials Regulation, coming into force in 2018). This is not new for Gove, who on his 2016 blog, campaigned for the removal of “EU red-tape” and says “rules like the EU clinical trials directive have slowed down the creation of new drugs to cure terrible diseases .”
- Next steps? Watch this space – it may be that there is some appetite from politicians like Gove to push for the UK to diverge from the pan-EU rules under the Clinical Trials Directive and forthcoming Regulation but such views contrast with more mainstream opinion on the importance of the UK remaining fully aligned with the whole EU pharmaceutical regulatory regime, including the rules on Clinical Trials that the UK has helped to shape, to maximise patient safety as well as to minimise disruption for pharmaceutical companies operating across the region, in the UK and the EU-27.
We continue to keep close to our clients and to the industry associations on this key topic. Please get in touch with us to discuss further.
For further information please contact Julia Gillert of our London office, or Els Janssens of our Abu Dhabi office.