Brexit and the life sciences sector

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Brexit and the life sciences sector

03 Oct 2016

The marketing of medicines and medical devices are heavily governed by EU regulations. Although the UK’s formal exit from the European Union won’t happen for at least two years, companies in the life sciences sector need to consider the potential implications of Brexit for their UK and EU operations. Like a lot of other areas, what happens following Brexit depends a lot on whether the UK:

• Continues to be member of the European Economic Area (“EEA”);
• Joins the European Free Trade Association (“EFTA”); or
• Operates only as a member of the World Trade Organisation (“WTO”).

As an EEA member:

– Limited impact: whilst less able to shape the rules, the UK will still be bound by current and future EU pharmaceutical laws and therefore would still be able to apply for, and hold, EU authorisations for pharmaceutical products. UK companies would also still be able to benefit from single, centralised EU authorisations (although these would now also need to be supplemented by a further UK authorisation, in order to take effect).
– Similarly, in terms of medical devices, the UK would also continue to participate in the EU medical device regime and UK notified bodies would still be able to self-certify their devices themselves.

If the UK joins EFTA:

– The UK would no longer participate in the EU pharmaceutical system. This would mean that UK-based pharmaceuticals companies wouldn’t be able to apply for or hold EEA marketing authorisations or clinical trial authorisations, and wouldn’t automatically be able to import products into the EEA.
– Whilst the EU medical device regime is less heavily regulated, its benefits would also cease to apply to the UK. Companies solely based in the UK would now need to designate an additional, EEA authorised representative and also maintain a technical file within the EEA.
– There is scope for the UK, like Switzerland, to negotiate an EFTA mutual recognition agreement under which the EU recognises the quality and compliance of pharmaceutical products and medical devices manufactured in the UK (and vice versa), which may alleviate some of these concerns. The cost of imports into the EU from the UK may, however, increase if additional checks are required for non-EU imports.

If the UK joins neither, and is only trading under the WTO model:

– This sort of model would result in the UK having even greater separation from the EU pharmaceutical regime. UK regulators would be approving and supervising standards solely for the UK, and there would be no requirement for those standards to be harmonised with the EU regulatory scheme.
– Similarly, for medical devices, UK regulators would only regulate medical devices solely for the UK so there would be two regimes to follow if medical devices were also to be supplied into the EEA – the UK device rules and also the EU device rules.

Irrespective of the status of the UK following Brexit, the EU’s European Medicines Agency (which grants single market authorisations for pharmaceuticals) will need to leave its London headquarters. Many member states have already expressed their wish to become its new home.

Inevitably, companies within the life sciences sector will be concerned about the future. However, Switzerland is a good example of how the sector can operate outside of the EU, and the UK may well learn some lessons from its example. In preparation, we recommend that companies in this key sector carry out a full review of their existing regulated functions, in order to ensure that they are ready to respond to any future changes brought on by Brexit, as the future unfolds…

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