Rules and games
Helen Kimberley and Laura Whiting, Hogan Lovells’ senior associates, and scientific assistant Joseph Wiseman
The Life Sciences industry is one of the UK’s leading manufacturing sectors. It is also one of its most highly regulated sectors. The current UK legal framework governing medicines derives largely from EU legislation, and so one of the key post-Brexit concerns is what will happen to existing and future marketing authorisations in the UK and the EU. However, the uncertainty surrounding the future regulatory regime also extends to other important areas including data exclusivity periods, orphan products, supplementary protection certificates, and clinical trials.
Marketing authorisation and regulators
The MHRA is heavily involved in the granting of Marketing Authorisations (MAs) within the EU. According to its 2015/2016 annual report, it was the Reference Member State for 43 percent of all procedures in which the applicant has sought a UK licence in this period. The MHRA’s influence and expertise, and its central involvement in the EU regulatory process, may be a key selling point for the UK in any negotiations regarding existing MAs and future collaboration.
The EMA is also currently located in London and works closely with the MHRA. A number of remaining EU Member States, including Ireland, Sweden and Italy have already expressed an interest in becoming the new home of the EMA. However, relocation to another host country, post-Brexit, is unlikely to be simple due to hundreds of EMA employees being settled in London, its strong symbiotic relationship with the MHRA, and the 25-year lease for its Canary Wharf headquarters that it moved into at the beginning of last year.
Meanwhile, The Clinical Trials Regulation, which entered into force on 16 June 2014, is expected to apply across the EU before Brexit takes effect. The UK will need to decide whether to implement equivalent legislation in the UK, post-Brexit, and if so, would need some form of agreement with the EU if it wishes to continue to fully benefit from these new EU Regulations, such as the multicentre approval process.
Protection for innovators
It seems likely that the UK will continue to protect both developers of innovative medicines and orphan drugs under the data/market exclusivity rules, both to ensure the UK remains equally as attractive as the remaining EU Member States for innovators, and continues to stimulate research and development of medicinal products for rare diseases. Brexit could, however, provide an opportunity for the UK to provide longer protection for innovators or diverge from the EU’s approach in other ways over time.
Carrying a maximum of five years’ additional exclusivity at the end of the life of the basic patent, supplementary protection certificates (SPCs) are also considered to be hugely important by innovator companies. As with data exclusivity, if the UK wishes to maintain its commitment to rewarding pharmaceutical research and innovation, it is to be expected that a parallel SPC system would be retained. As SPCs are subject to frequent challenges from the generics industry (which, if successful, allow earlier access to the market), there are likely to be differing views presented by the industry to the UK Government.
What can pharma companies do?
A newly formed UK EU Life Sciences Steering Group is working with a number of stakeholders across the life sciences industry. The Association of the British Pharmaceutical Industry (ABPI) and the UK BioIndustry Association (BIA) have been working with their members to produce a report setting out its views on Brexit. This was presented to the UK EU Life Sciences Steering Group on 6 September.
The MHRA is also working with the UK Government (along with many other stakeholders in the industry) to analyse the opportunities, and its role, in a post-Brexit world. In its response to Brexit, the MHRA makes it clear that continuing a full and active role in regulatory procedures for medicines remains one of its priorities.
It isn’t just the UK that is considering the impact of Brexit on the industry. A recent statement by the Japanese Government emphasised the concerns of Japanese companies regarding the relocation of EU agencies which are currently located in the UK, including the EMA.
While the preferred Brexit model remains unknown (and the formal process for Brexit has not yet begun), businesses with an interest in the life sciences industry should be thinking about what is important to them. As the UK government continues to gather its Brexit team and develop its strategy, now is the time to be involved. The government is listening.
Relocation, relocation, relocation?
Vincenzo Salvatore, member of the Healthcare Focus Team at BonelliErede
With the initial shock surrounding Brexit dying down somewhat, it is now the time for pharmaceutical companies to put their thinking caps on and devise a strategy to ensure their future is as bright as possible. It is still difficult to decipher when and how changes will be made, but it is not too early for companies to be considering their options. It is not a matter of standing by and waiting until article 50 is triggered – now that we know that is an inevitability, firms can think about the best business continuity strategies they can be adopting once the UK has separated from the EU.
There are initial concerns which the pharma industry needs to tackle: how will European pharma companies do business with. and inside, the UK going forward? And even more importantly, how will these changes affect the wider pharma industry?
It is very unlikely that the UK will want to drastically change how things are done with respect to the freedom of movement of medicinal products, from which the UK benefits greatly. The European internal market is extremely convenient for the UK and it is perfectly logical for the UK to want to continue to abide by EU pharma legislation.
The first way in which the UK could still benefit from freedom of movement of medicinal products is by going with the Swiss model: EU pharma law does not need to be implemented and the UK would have to make an application to the UK regulatory authorities to be able to sell these goods in the UK – this is something that could have far-reaching implications to businesses so they would need to consider this carefully. The procedures for evaluating medicinal products and granting marketing authorisation for them, as set out by the EU, could not be employed and the UK would have to rejoin the European Free Trade Association.
An alternative option for the UK is to join the European Economic Area (EEA) which Norway, Liechtenstein and Iceland are currently part of. This would involve abiding by ECJ case-law in relation to medicinal products, as well as acknowledging all EU administrative decisions. The benefits of adopting this model are numerous: it would mean that pharma firms which are solely based in the UK are able to be a part of a new harmonised procedure for approval of clinical trials taking place throughout the EU, as well as using an EU-wide database to share important information from these trials.
Most pressing is the need for UK-based businesses to think about relocating. Pharma companies might want to consider relocating to a country within the EU or the EEA if they do not already have a presence in one of these countries. Pharma companies that may have manufacturing sites of a registered office in the UK are deemed to be in the EU or EEA, as are clinical trials conducted in the UK.
For companies conducting clinical trials in the UK, they will need to jump through the hoops of proving that they are complying with standards that are equivalent to those that the EU has in place, otherwise these trials cannot go ahead as they are considered to be taking place in a third country. Relocating could therefore be less of a hassle than staying in the UK.
The UK will need to demonstrate the ways in which the pharma industry will be able to operate as seamlessly as possible post-Brexit, which will certainly be a challenge. Issues such as the transferring of patients’ personal data between the UK and the EU will need to be governed differently; for example, exporting active substances to the EU will be subject to the Active Product Ingredient Requirement under the EU Falsified Medicines Directive; and all branches of the UK pharma industry – from clinical trials to marketing – will be governed differently under UK-EU bilateral agreements.
The UK faces many challenges ahead with regards to its relationship with the EU, which inevitably has an effect on the pharma industry; losing its membership to European regulatory networks and no longer being part of major decisions that are made regarding rules governing the EU pharma sector are just a couple of the factors which no doubt make the UK a less desirable destination for pharma companies. However, as the uncertainty begins to lift, businesses in the pharma sector can at least go about taking the correct measures to manoeuvre their way through the changing landscape and try to come out of it unscathed.
