“No Deal Brexit”: Implications for the Pharmaceutical Industry

As the Brexit crisis continues in Westminster, firms within and beyond pharma and life sciences are worried by the lack of clarity and security. As a ‘No Deal’ exit looks increasingly possible, Dechert Partner Robert Darwin discusses how such an outcome could impact the industry.

Given the recent rejection by the House of Commons of the government’s proposed Withdrawal Agreement, absent of an agreement between the EU and the UK or extension to the timeline for the Brexit date of 29 March 2019 (‘Brexit Day’), the UK will leave the EU without a transition period or bespoke arrangements. From the perspective of the EU, the UK will then become a ‘Third Country’.

In relation to this possibility as it affects the pharmaceutical industry, it is the UK Government that has so far shown most flexibility. It has published several guidance documents setting out its position in a 'No Deal' scenario; in essence, aimed at preserving the UK’s role as a leader in public health, providing a framework to enable smooth and aligned market access to pharma companies selling into the EU and the UK, and to try to minimise patient disruption. Here are some key issues in relation to a 'No Deal' scenario, as they affect the pharmaceutical industry:

Marketing authorisations (MAs)

The approaches in relation to marketing authorisations and associated processes of the UK Government and the EU in the case of a ‘No Deal’ differ markedly. While the UK Government has essentially proposed unilateral recognition of existing EU processes to minimise disruption, the EU has offered no equivalent plan. Specifically:

• All existing EU centrally authorised MAs would convert automatically into UK MAs on 29 March 2019. Non-UK companies would have a period of transition before they are required to form a UK established entity to hold its MA (likely until the end of 2020)
  
  
• After Brexit Day, new applications for UK MAs would be required for the UK market; although it is intended that this would be a process dovetailed with the EU, with the aim of issuing a UK MA at the same time as the EU MA
  
  
• Conversely, the EU would require that any UK-based company who wishes to rely on an EU MA to sell products in the EU following Brexit Day, will need to immediately establish (or use) an appropriate EU-based entity as MA holder

Pharmacovigilance and batch testing

Following Brexit Day, the UK would no longer be part of the EU system for sharing pharmacovigilance information and it will no longer be shared between the UK and EU. Managing this information for the UK would be taken over by the MHRA, and a responsible person would need to be identified in the UK to collect this information; the opposite would be the case in the EU.

The UK would continue to allow the importation of medicines and products subject to batch-testing carried out in certain EU countries, and would also accept packaging and labelling in English for UK countries that mentioned other countries (provided that the information provided did not contravene UK rules). The EU has not suggested it will do the same; so far suggesting it would require batch control to be performed on importation. Pharma companies would therefore need to update their processes to allow for this. This issue, plus unresolved questions of tariffs/customs checks, could negatively affect the complex cross-border supply chains affecting medicines, many of which are time-sensitive.

Clinical testing

While the new EU Clinical Trial Regulation (the CTR) would not be incorporated into UK law on Brexit Day, the UK has stated that it intends to align itself with the CTR as far as possible. The current clinical trial regulation would largely remain the same, though an individual with responsibility for the trial would need to be based in the UK. Conversely, UK sponsors of clinical trials in the EU could well have to appoint a representative in the EU.

The original publication was first published in Pharmafocus magazine.