United Kingdom: Brexit Deal - Challenges for the Life Sciences sector

In brief

On 28 January 2021 the Association of the British Pharmaceutical Industry (ABPI) and BioIndustry Association (BIA) held a special Brexit Lead Network to review the outcome of the Brexit deal for the life sciences sector. Government experts joined the panel to discuss details of the deal, what comes next, and issues on supply and regulation.

Details of the Deal 

On 24 December 2020, the UK finally agreed a Trade and Cooperation Agreement (TCA) with the EU which came into effect from 1 January 2021. The TCA offers pharmaceutical and medical device companies regulatory provisions to smooth trade between the EU and UK. However, both entities now function as separate legal and regulatory jurisdictions, therefore distinct regulatory regimes for medicines and medical devices will now apply in the UK and the EU, plus products must meet relevant requirements for the market in which they are sold. The EU and UK will base domestic technical regulations and inspection procedures on international standards (as far as possible) and will exchange information on product safety and compliance.

The TCA also allows UK researchers to remain eligible for European research funding - the UK will participate in the EU’s 2021–2027 €95.5 billion research program, Horizon Europe. The UK will also collaborate in other EU research programs for example, nuclear research under the EURATOM treaty (despite having withdrawn from the treaty).

UK Regulation Post Transition Period 

The Medicines and Healthcare products Regulatory Agency (MHRA) is the regulatory body for UK and works independently for England, Scotland and Wales. However, in Northern Ireland (NI), where UK and EU regulation overlap, EU regulation takes precedence. As a result, market entry can occur via direct application processed domestically in accordance with the EU rules, or reliance on EU decisions. Mutual recognition agreements have been entered into, however the TCA lacks provisions for the mutual recognition of conformity assessment standards, which would have allowed EU member states to recognise certification by UK bodies to demonstrate compliance with EU standards. As a result, UK products must undergo a further certification step to enter the single market and device makers must navigate different regulatory regimes for the EU and UK. 

Government work during this mutual recognition period is focusing on two key objectives: 

  • having a shared understanding of issues and an effective, workable timeline to address each issue
  • creating a blog of work on live snagging and troubleshooting as issues are addressed. 

Hurdles to Overcome 

One of the key issues which the Government face involves clarity around the exact nature of the exemptions agreed in regards to the application of EU rules, as well as the need for clarity surrounding compliant marking of medical devices, importation from GB to NI, and recognition of product batch testing. 

Medical Devices 

On 1 January 2021, the MHRA introduced the UK Conformity Assessment (UKCA) marking for medical devices on the GB market after the transition period (mandatory from 1 July 2023). Currently, a CE marked device with a valid declaration of conformity or certificate will meet the UKCA mark requirements and will be recognised in GB until 30 June 2023. In contrast, the EU will not recognise UKCA marking and certificates issued by UK Notified Bodies. Further, Notified Bodies are not able to issue CE certificates other than for the purposes of the “CE UKNI” marking, which will be valid in NI and have become UK Approved Bodies. As EU regulation takes precedence, NI goods must align with EU rather than UK product regulations. It has therefore been suggested that essentially the UK will offer a 'UK only' marking and 'UK wide' marking (recognised by NI), however these advancements raise known uncertainties. 

In addition, the EU Medical Devices Regulation (EU MDR) and EU in vitro Diagnostic Medical Devices Regulation (EU IVDR), due to take effect in May 2021, will not be implemented in GB. However, the regulations as implemented and in existence on 1 January 2021 will continue to have effect in GB after the transition period and the regulatory regime in GB will to be based on the requirements derived from current EU legislation, which suggests some consistency. 

Another key issue is that, Authorized Representatives and Responsible Persons based in the EU will no longer be recognised in GB. They will need to be based in the UK for products being placed on the GB market which may pose problems.

Supply to NI 

The EU strives to ensure a high level of public health protection, thereby aiming for an undisrupted supply of medicines to NI and other small markets which are historically dependent on medicines supply from or through GB. Therefore, for the 12 months following the end of the transition period, temporary solutions will apply for the import of medicinal products into NI from GB, with the aim of giving all relevant stakeholders sufficient time to adapt to the UK's withdrawal and to establish new supply routes where necessary. 

Supply Overview

Since the UK has left the EU there has been reduction in trade across Q1. UK exports and imports highlight that trade continues to be impacted, showing a 30% annual decrease compared to January 2020 (note however that we were not in the midst of a global pandemic during this time last year). COVID testing requirements are a new and additional challenge to navigate across borders, however there is no significant disruption to inbound or outbound traffic. From 1 July 2021 the UK will impose full control over its borders and will adopt a multi layered approach to allow companies to respond to changes in regulation. It has been confirmed that there is a workable timeline in place. All regulatory issues which need to be clarified will be considered and communicated by the end of Q1. Following this communication it should be clear what Government support will be provided and how this will impact business. Weekly meetings are currently taking place with the Trade Association to adopt a unified approach. 

Pharmaceuticals - Medicinal Products Annex and Batch Testing 

The commitment to the Brexit Working Group signals that the TCA is a foundation to build and strengthen relationships with European counterparts. A sound manufacturing process is good for both industry and regulator, plus it avoids cost duplication. The TCA provides for the mutual recognition of good manufacturing practice (GMP) inspections of manufacturing facilities for medicinal products. The Agreement Annex on medicinal products allows acceptance of GMP documents issued by either party, but also allows for rejection in certain circumstances. The agreement, although recognising GMP inspections, does reserve the right of either party to conduct their own inspections of facilities certified compliant by the other party, so long as conditions are met. This exemplifies the EU and UK working to facilitate trade. 

However, the lack of mutual recognition regarding product batch testing in the UK poses deep concern. As a result, the UK have been granted a two year period for unilateral recognition, where the UK will accept batch testing and Qualified Person certification conducted in the European Economic Area (EEA) until 1 January 2023. The European Commission juxtaposes this as the EU will not mutually recognise batch release, and a Qualified Person in the EEA must certify each batch of finished product before being released for placing on the market in the EEA.

This period of stand still for batch testing is deeply disconcerting. Currently, the UK are gathering evidence to show why this stand still is insufficient, especially in regards to particular problems such as cell therapy and rare disease. The requirements are complex and difficult to interpret in some circumstances. It is desired that this two year period allows for network collaboration and exploration of regulatory evolution to reach consistency. Throughout this time, the UK have emphasised that patient safety is paramount, as highlighted in the recent strengthening of the Medical Devices Bill by the House of Lords. 

Potential Industry Priorities 

The UK must streamline its efforts into industry in order to move forward. The UK must prioritise the extension of the time period for which EU batch testing is accepted in the UK alongside prioritising a permanent Mutual Recognition Agreement with the EU / NI. Other areas of focus include a UK domestic state aid regime and other tax and grant changes, as well as ensuring the smooth flow of personal data and people. A further cause for concern will be the exhaustion of IP rights and parallel trade, this must be addressed during the transition period. 

EU Central Securities Depository (CSD)

The UK has been denied access to the CSD. However, the European Securities and Markets Authority (ESMA), the EU’s securities markets regulator announced that the CSD established in the UK, will be recognised as a third-country CSD after the end of the UK’s transition period. The UK has also been granted access to parts of the EU database systems which are essential for core process regulatory work. There is a continued line of enquiry to make more resources available.

The Big Picture

Although the TCA is far from perfect, the UK departure from the EU presents opportunity for UK growth and development as a leading regulator. The MHRA is a full member of the Access Consortium (which also comprises of the national regulatory authorities of Australia, Canada, Singapore and Switzerland) building strong links into international health systems. The UK looks to build its relationship with the EU and EMA as a third country alongside piloting new innovation pathways and forming MHRA and NICE (National Institute for Health and Care Excellence) agendas driven around patient involvement. We look to the next two years to provide legal certainty and assurance in trade. 

For further information please contact Harriet Jupp, Magda Tovar or Julia Gillert of our London office.

Contact Information
Magda Tovar
Knowledge Lawyer at BakerMcKenzie

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