Countdown to Brexit: 50 days – No-deal impacts on Life Sciences and Healthcare

/in /by

From 29 March 2019 in the event of a no-deal Brexit, the impacts on the life sciences and healthcare are profound.

The UK has a strong presence in the life sciences and healthcare sector.  There are tax incentives, and high levels of investment and funding for R&D.  The UK presently accounts for approximately 25% of the EU market – and will remain key mutual markets.  Switzerland – which is not in the EU – is one model for the sector successfully working outside the EU.

The implementation of uniform product safety laws across the EU has allowed advanced standards of product safety for products both imported and exported into and out of the EU.  This has allowed increased safety standards for consumers and a level playing field for enforcement within Europe.

Following Brexit, it is expected that the UK would continue to apply product safety standards in common with those in the EU – or higher – because failure to do so could affect the competitiveness of UK goods and suppliers given the global drive to higher standards.

Clinical Trials: The present clinical trial regime in the EU came into force in 2018.  The new Regulation sets the framework for clinical trials – and ensures harmonisation across the EU.  It provides for a single application for clinical trials across the EU via a single portal with an associated EU wide database – reducing administrative burdens on applicants.

The UK will be outside this system – posing additional administrative burdens on companies wishing to conduct multi-centre clinical trials in the EU and the UK.  Separate centralised and national clinical trial authorisation procedures will need to be followed.

Regulation of quality assurance of medicinal products:  is managed at a national level.  In order to ensure that high quality standards are maintained in respect of medicinal products for consumption in the UK, they must be manufactured in accordance with UK laws – which are presently based on EU Directives which lay down the principles of good manufacturing practice (GMP).  This requires all manufacturers and importers of medicines located in the EEA to hold a ‘manufacturing authorisation’.  The medicines regulatory authorities in each EU member state carry out periodic checks to ensure that GMP is being complied with.  The current UK/EU GMP are similar to those within other developed countries such as the USA.

UK Manufacturers would be able to continue exporting medicines to the EU – and vice versa – so long as the UK and EU regulatory frameworks remain ‘equivalent’.  The UK is likely to maintain the GMP standard in order to facilitate mutual recognition agreements with the EU and other trading partners and aid imports into those areas.  The cost of imports into the EU from the UK may, however, increase if additional checks would be required for non-EU imports.

A no-deal Brexit means the UK will be outside the EEA.  All medicines must be authorised before they can be marketed and made available to patients in the EEA – and the authorisation holder has to be located in an EEA state.

Pharmacovigilance:  EU legislation governs the procedures for pharmacovigilance throughout the EU.  It is comprehensive – setting out requirements for prompt collection of data, adverse reaction reporting, risk management, and transparency on marketing authorisation holders, national competent authorities and the EMA.  The EU pharmacovigilance system is coordinated by the EMA – which ensures effective and coordinated analysis, evaluation of risk, information sharing and periodic checks on market-authorisation holders throughout the EU.

Following Brexit the – yet-to-be-established – UK competent authority will have smaller data sets than those in the EU – and the EU would be deprived of data from the UK.  Less co-operation and sharing of expertise and information will result in pharmacovigilance being less efficient and more costly.

IPR: Territorial limits apply to intellectual property rights (IPR).  A purchaser’s freedom to deal with a protected product is typically limited to the territory in which the product is purchased.  Presently, free movement of goods extends the territory to the whole of the EEA.

Parallel imports have always been acute for pharmaceutical companies particularly during the life of the patent because the pricing and reimbursement of medicines are not harmonised and falls under the exclusive competence of EU member states.  This means that third parties are free to buy up branded medicines in an EU member state where the price is low – and make profit by selling in a more expensive EU member state – undercutting pharmaceutical companies’ market pricing.

A no-deal Brexit means the UK leaving the single market.  Pharmaceutical companies may be able to prevent importation into the UK by asserting their intellectual property rights (typically patents or trade marks) against the parallel importers – subject to any other defences that may already apply to parallel imports from outside of the EU.

The present system of national patent protection obtained through the UK Intellectual Property Office (UKIPO) or the European Patent Office (this is not an EU institution) remains unchanged.

Businesses have been urged to review their patent protection and future enforcement strategies.

Supplementary Protection Certificates: are an additional right for patentees for medicinal, veterinary, and plant protection products which have obtained market authorisation in the EU.  An SPC can extend the patent protection of a product by up to five years.  Given the high investment, the 20 year patent term and the long lead time to market, SPCs are valuable in protecting a patented product at the point when sales may be highest.  Equivalent extensions to patent protection are available in other countries, for example Japan and the US.

The EU introduced the SPC via two EU Regulations which will no longer bind the UK upon Brexit.

Trade Secrets:  the UK presently has a unilateral strong trade secret protection regime.  The level of protection of trade secrets currently varies between EU member states.  The EU Trade Secrets Directive (Directive (EU) 2016/943) came into force on 5 July 2016 – and addresses this issue by setting a minimum level of protection.

Illustration of UK Government No-Deal Technical Notice on “batch testing of medicines”. 

We have illustrated one of the 20 UK Technical Notices on leaving the EU with no-deal in place.  We have access to the list of notices set out at the end of this article – and the equivalent set published by the European Commission on impacts of a no-deal Brexit for the remaining EU27 Nations.  Please contact us at if you would like to explore further impacts on life sciences and healthcare in more detail.

Up to 29 March 2019:

  • pharmaceutical manufacturers can batch test medicines anywhere in the EU – or other third countries with whom the EU has a ‘Mutual Recognition Agreement’ (MRA) – under Article 51(2) of Directive 2001/83/EC (“the Directive”).
  • for human medicines manufactured in the UK, a UK-based Qualified Person must certify the batch testing and ensure compliance with the MA and Good Manufacturing Practice (GMP) guidelines.  these medicines can then be sold or supplied anywhere in the EU or EEA – including the UK – without further certification.
  • for human medicines manufactured in the EU/EEA, the batch testing and certification or release by an EU or EEA based QP allows a batch of human medicines to be sold in any other EU or EEA country (subject to the requirements of the country) – including the UK – without the need for any further certification.
  • for human medicines manufactured in a third country outside the EU or EEA and imported into the UK through the EU or EEA, batch testing is required within the UK, EU or EEA, unless the medicine has been manufactured in a third country with which the EU has an MRA.
  • human medicine manufactured in a third country requires a QP based in the UK, EU or EEA to certify that it meets all the required standards and specifications of the Marketing Authorisation, before it can be sold or supplied in the EU or EEA (including the UK).

After 29 March 2019

If there’s no-deal, the UK would no longer be a member of the European Medicines Agency EMA.  In order to ensure continuity of supply in medicines:

  • the UK will continue to accept batch testing of human medicines carried out in countries named on a list set out by the MHRA.  On exit day, this list would include EU countries, other EEA countries and those third countries with which the EU has an MRA.
  • the UK will continue to accept batch testing of Investigational Medicinal Products (IMPs) – substances being used in medical trials – manufactured in EU and EEA states.  There will be no change to the present arrangements for batch testing of IMPs manufactured in third countries.
  • for human medicines manufactured in the UK, there will continue to be a requirement for a UK-based QP to certify the batch testing and to ensure compliance with the Marketing Authorisation and GMP guidelines before these medicines can be sold or supplied in the UK.
  • for human medicines manufactured in a third country and directly imported into the UK, there will continue to be a requirement for a UK-based QP to certify the batch testing, as well as to ensure compliance with the MA and with GMP guidelines, before they can be sold or supplied in the UK.
  • where human medicines are manufactured in a third country but are imported into the UK from a country on a separate list maintained by MHRA (on exit day, this list will contain EU and EEA countries), there will continue to be a recognition of certification, release and assurance of compliance with the MA and with GMP guidelines, if conducted by a QP based in the listed country, without the need for any further certification.
  • for human medicines manufactured in a country on the MHRA’s QP list, which have the relevant QP certification, there will continue to be a recognition of certification, release and assurance of compliance with the MA and with GMP guidelines, if conducted by a QP based in the listed country, without the need for any further certification.
  • the approaches to QP certification of licensed medicines set out above will also apply to IMPs.

These arrangements will continue until the Government considers any further change is necessary.

References:

Regulating medicines and medical equipment

1. Batch testing medicines if there’s no Brexit deal

2. Ensuring blood and blood products are safe if   there’s no Brexit deal

3. How medicines, medical devices and clinical trials   would be regulated if there’s no Brexit deal

4. Quality and safety of organs, tissues and cells if   there’s no Brexit deal

5. Submitting regulatory information on medical   products if there’s no Brexit deal

6. Trading in drug precursors if there’s no Brexit deal

Regulating veterinary medicines

1. Accessing animal medicine IT systems if there’s no   Brexit deal

2. Registration of veterinary medicines if there’s no   Brexit deal

3. Regulation of veterinary medicines if there’s no   Brexit deal

 

Countdown to Brexit: 51 days – Future fishing rights negotiations delayed – and Royal Navy strengthens UK fishery patrol fleet

/in /by

It is unlikely that discussions on EU-UK fishing arrangements will begin before Parliament accepts the deal and the UK enters the post-Brexit transition period on 30 March 2019 – according Parliament’s European Scrutiny Committee report, published this week.

The Committee examined evidence from the Fisheries Minister including 2019 quotas and plans to reduce the discarding of unwanted fish.

Working arrangements during the post-Brexit implementation period are unlikely to take place until there is certainty that the UK will enter an implementation period.  The importance of establishing such arrangements is accentuated by the EU agreement on quotas for 2019.

Meanwhile, The Royal Navy is boosting the UK’s fishery patrol fleet ahead of Brexit.  Trouble between British and French scallop fishermen off the coast of France in Autumn 2018 – which prompted calls for the Navy to step in – have cast doubts on the Navy’s Fishery Protection Squadron ability to maintain peace and protection of UK fishing rights – and even more so in a no-deal Brexit.

The Royal Navy’s Fishery Protection Squadron patrols the UK’s “Extended Fisheries Zone” with the remit and responsibility to:

  • enforce fishery protection laws by patrolling the British fishery limits and conducting inspections of fishing vessels;
  • inspect fishing vessels in the offshore waters of England, Wales and Northern Ireland;
  • perform “other tasks such as counter-piracy, counter-smuggling, counter-terrorism, border control and humanitarian/disaster relief”.

‘Marine Scotland’ is responsible for patrolling the waters off the Scottish coast since fishery protection is a devolved matter.  Scotland had a dedicated Royal Navy vessel until 1999.

At the time of writing, the squadron comprises four Offshore Patrol Vessels – three type 1s: HMS Clyde, Tyne and Mersey; and first of the new type 2s: HMS Forth.  The four remaining Type 2’s should be in service by the end of 2020.

The Squadron has for many years deployed three vessels in UK waters with HMS Clyde permanently based in the South Atlantic as the Falkland Islands patrol vessel.

In 2013 the Government announced that it was buying three new type 2 ‘River-class’ OPVs.  A further two were ordered in 2016.  This was originally designed to sustain work and keep shipbuilding skills in the UK at in BAE Systems’ shipyards until they begin work on the new Type 26 frigates.  The additional craft may well be needed urgently in a no-deal Brexit and no agreement on fishing rights between UK and EU.

We reported on this in detail in our ‘seasonal’ insight:  “Three French Coques”

 Background

There were face offs and altercations between French and British fishermen off the coast of France in August/September 2018.  Dubbed ‘the Scallop Wars’ there were echoes of the ‘Cod Wars’ of the 60’s and 70’s.

The UK Government declared the Bay of Seine to be: “the responsibility of the French authorities” – and the Fishery Protection Squadron is unable to enter the waters of another country without invitation, except in very limited circumstances, such as: protection of life at sea in the event of there being a threat to life, or protection of the right of innocent passage in order to enable vessels to transit through an area without interference.”

In November 2018 the Defence Secretary announced that three Offshore Patrol Vessels will be retained in service for at least two more years, “to bolster the UK’s ability to protect our fishing fleet” as the UK exits the EU.  They will be built in Scotland at BAE Systems’ yards on the Clyde

The new vessels have a flight deck for a Merlin-sized helicopter; are faster; carry a bigger gun; and can accommodate up to 50 troops/Royal Marines.

Impact of a no-deal Brexit on Fishing and Fisheries

From 23:00 GMT on 29 March 2019, the UK will control and manage access to fish in UK waters, and be responsible for managing its:

  • territorial waters (out to 12 nautical miles)
  • Exclusive Economic Zone (out to 200 nautical miles or the median line with other states)

The UK will make sure that fisheries control and enforcement continue.

UK-registered vessels that are fishing in UK waters must continue to comply with the law and the conditions of their licence.

Non-UK-registered vessels will no longer have automatic access to UK waters – subject to any existing agreements covering territorial waters.

There will be no automatic access for UK-registered vessels to fish in EU or third country waters – subject to any existing agreements covering territorial waters.

If you’re a UK quota holder, the UK fisheries administrations will tell you what your allocation will be.  They aim to do this during March 2019.

The Government will also confirm arrangements for:

  • non-quota shellfish (scallops and edible/spider crabs)
  • demersal species under the Western Waters effort regime.

There will be no automatic access for:

  • the UK Fisheries Administrations to exchange fishing opportunities with EU member states; or
  • EU member states to exchange fishing opportunities with the UK

Prepare for the UK joining the North-East Atlantic Fisheries Commission (NEAFC).  For UK-registered vessels to continue fishing in the convention area, and landing into the EU, they must hold a current UK domestic licence.   You’ll need this before you can apply for an international licence from the relevant fisheries authority.  You’ll also need to register with the NEAFC’s electronic Port State Control system.

The UK will join all relevant “Regional Fisheries Management Organisations – RFMOs – as quickly as possible.  The UK will no longer be a member of RFMOs through its EU membership.  The joining process may take up to 6 months, so there may be a gap in our membership.

During this time, UK vessels may not be able to fish in international waters covered by RFMOs.  The Government will keep fishermen informed of progress and what the outcome of a decision will mean in practice.

If you have a UK-registered vessel, you’ll no longer have an automatic right to land fish in any EU port.  You will be allowed access to EU designated ports for:

  • port services
  • landings
  • transhipment
  • the use of market facilities – where vessels meet EU requirements on illegal, unreported and unregulated fishing

You must notify the relevant Fisheries Monitoring Centre of your intention to arrive into a designated port of the vessel and catch related information.

You’ll be allowed access to EU designated ports and third country ports without first telling the port of your plan to visit in cases of:

  • distress
  • an unexpected event (force majeure)

Your vessel may be inspected.  This could include:

  • a full document check
  • inspection of the catch
  • database checks (if you’ve supplied information electronically)
  • Non-UK vessels, including EU vessels, will need to follow the same rules that will apply to UK-registered vessels accessing an EU port.  For example, they’ll need to give notice of their plans to land, except in cases of distress and unexpected events (force majeure).

EU vessels fishing in the NEAFC Convention Area and landing into the UK will need to complete a Port State Control form.

A catch certificate will be needed for importing or exporting most fish and fish products between the UK and EU.

You will not need a catch certificate for trade in:

  • some aquaculture products
  • freshwater fish
  • some molluscs
  • fish fry
  • larvae

The rules on illegal, unreported and unregulated fishing will not change.

You will need a catch certificate with each consignment of fish or fishery products you export to the EU.  It will be your responsibility as the exporter to complete a catch certificate.

If the consignment will be sourced from more than one UK vessel, you’ll need to complete a Multiple Vessel Schedule.

You’ll need to submit this along with the catch certificate.

Vessel owners or skippers making direct landings of UK vessels into EU ports will also need to issue a catch certificate.

You’ll need verification for the content of a catch certificate from the UK fisheries authority where the vessel is licensed.  You will need this before submitting the content to the competent authority in the EU country of import.  The UK fisheries authorities are:

  • the Marine Management Organisation (MMO) in England
  • Marine Scotland
  • the Department of Agriculture, the Environment and Rural Affairs (DAERA) in Northern Ireland
  • Welsh Government

The UK fisheries authorities are developing an IT system to deal with the increase in export catch certificates.

EU-caught fish and fishery products being imported to the UK will need a catch certificate for each:

  • consignment
  • direct landing of fish or fishery products.

The exporter will have to submit the certificate to the Port Health Authorities or relevant fisheries authority.

The certificate will need to be checked at least 3 working days before the estimated arrival time into the UK.  This deadline could be adapted to take account of the type of fishery or distance from fishing ground to port.

The rules and standards for labelling and marketing in the EU and UK will stay the same for:

  • fish sold for human consumption
  • fish and aquaculture products

The roles of Producer Organisations will also stay the same.

The UK government has guaranteed that all European Maritime and Fisheries Fund projects that are approved before 31 December 2020 will be fully funded.

Trade in the European eel (Anguilla anguilla) – within and outside the EU – will remain subject to the Convention on International Trade in Endangered Species (CITES).  This means the UK will not be able to import or export European eel.  Most of the eel (Anguilla japonica) consumed in the UK is imported from China – thus the impact on consumers should be limited.

References

https://www.gov.uk/commercial-fishing-and-marketing-of-seafood-if-theres-no-brexit-deal

European Scrutiny Committee Report

The Fisheries Bill 2017-19 

UK Fisheries Management 

The National Shipbuilding Strategy: January 2018 update

Countdown to Brexit: 52 days – for the avoidance of doubt – ‘no-deal’ means trading with EU under the most basic WTO rules

/in /by

Despite the rhetoric, the conditions under which the UK and EU will trade in a no-deal Brexit are not a matter for discussion.  There can be no debate on this issue: without a Withdrawal Agreement the UK and the EU will trade with each other solely under the “rules-based trading system of the World Trade Organization” – or WTO.

Statements have been made from many quarters – including the Prime Minister herself – to the effect that: “Article 24 of the World Trade Organisation treaty allows us to continue to trade with Europe on zero tariffs while we negotiate a free trade arrangement.”

We can now authoritatively dismiss the view that the relevant rule – General Agreement on Tariffs and Trade, Article XXIV – offers an easy solution to UK trade with the EU in the case of ‘no-deal’.

The Prime Minister then retracted saying that: “The question of ‘GATT 24’ is perhaps not quite as simple as some may have understood it to be…[the] expectation that it is simply possible to leave with no-deal and immediately go into that situation does not actually reflect accurately the situation that the United Kingdom would find ourselves in”.

What does Article XXIV mean for any future trade relationship between the UK and the EU under WTO terms in a no-deal Brexit?

No-deal Brexit means that from 23:00 GMT on 29 March the end of tariff-free trade between the UK and the EU.  This week, a group comprising both ‘Remain’ and ‘Leave’ Tory MPs have been looking at the possibility that GATT Article XXIV allows for an interim arrangement that – while the UK and EU negotiate a future free trade agreement – could maintain the existing arrangements with the EU for up to 10 years.

We reported this in detail under the so-called ‘Malthouse Compromise’.  It puts forward a “WTO-compliant standstill on trade with no tariffs, no quantitative restrictions and no new barriers” as part of a no-deal “triple safety net”.  It seems unlikely to be possible.

The UK could, of course, unilaterally choose to apply zero tariffs to the EU in order to keep barriers to imports from the EU low as before.  However, the WTO’s Most Favoured Nation (MFN) rule prevents discrimination between WTO members.  In this scenario, the UK would have to apply the same zero tariff to imports from all other WTO members – or else it would be in breach of the MFN rule.  More importantly, the EU would not be able to reciprocate – unless it was happy to give imports from all other WTO members tariff free access to its market.  Although the EU has negotiated dozens of Trade Agreements – including after seven years negotiations, the World’s biggest trading partnership between Japan and the EU that came into effect last week.

EU Member States are permitted to trade tariff free under GATT Article XXIV (5).  Countries may form trade blocs in the form of a ‘customs union’ – or a ‘free trade area’ as an exception to the MFN rule.  They must maintain tariff-free trade with each other for “substantially all” their mutual trade – but need not offer the same access to their markets to all other WTO members.

Free trade arrangements, however, may not worsen the terms of trade for the non-participants – leading to higher duties or more restrictions on trade than before.  Customs Unions or free trade agreements have to be notified to the WTO – giving other WTO members the opportunity to coive any concerns.

Once outside the Single Market and Customs Union – GATT Article XXIV does permit the adoption of an interim agreement to underpin formation of a customs union or a free-trade area.  The intention is to allow a full free trade agreement to be in place within a “reasonable period of time”.  This recognises the fact that a customs union or a free-trade agreement cannot be concluded rapidly – and might need gradual implementation.  It is not a way of buying time to negotiate a move away from a single market and customs union.

In summary, an interim agreement:

  • Can be in force for a “reasonable length of time,” which WTO members have agreed should not exceed 10 years;
  • Needs to have a “plan and schedule” towards an end-state of a customs union.

The WTO must be notified of any interim agreement – and the rules are stringent.  Any of the other 148 WTO members can demand changes if they are not convinced that the interim agreement will in fact lead to a full free-trade agreement within the proposed time-frame.

The possibility that other WTO members can block an “interim agreement” has proven to be enough of a deterrent that no WTO members have notified an interim agreement since 1995.  And the Malthouse Compromise does not propose using a 10-year interim agreement to negotiate UK becoming a member of the EU Customs Union.

Trade law experts believe that the draft Withdrawal Agreement – negotiated between the UK and EU and agreed by all parties in November 2018 – will qualify as an interim agreement while the UK is negotiating a final trade deal with the EU – as set out in the Political Declaration.

The UK cannot effect an interim agreement unilaterally.  GATT Article XXIV states that both parties to this future trade agreement would have to agree.  The EU has made it clear that this is an integral part of the UK accepting the ‘deal’ as it stands – and securing both UK Parliament and European Parliament approvals before 29 March.

During the interim agreement – presently scheduled to run from 30 March to 31 December 2020 – the UK remains a full participant of the EU Single Market and Customs Union with free movement of goods, people and services.

GATT Article XXIV is key to any preferential trade relationship between the UK and the EU. The option of an ‘interim agreement’ will not be possible in a no-deal Brexit – but the UK should be gearing up to negotiation of bi-lateral agreements over the next decade to replace the dozens we will exit on Brexit.

References:

Malthouse Compramise: https://www.brexit-partners.com/blog/2019/1/30/countdown-to-brexit-58-days-as-the-prime-minister-is-sent-back-to-brussels-in-an-attempt-to-re-open-negotiations-with-the-eu-a-malthouse-compromise-has-emerged

Statement of Prime Minister on WTO Article 24: https://hansard.parliament.uk/Commons/2019-01-14/debates/694BA27D-566E-4F52-BC4B-8FC1ACA3F109/LeavingTheEU#contribution-E2011365-7307-42C7-BFF3-CD9D81658EFC

Follow up statement of Prime Minister on WTO Article 24: https://hansard.parliament.uk/Commons/2019-01-21/debates/0FBF8F8F-E4B4-47A2-BD0A-958EFC89BD7E/LeavingTheEU?highlight=article%2024#contribution-AFC0E354-C683-459A-9585-F4BE6E1708F3

Article XXIV (5) of GATT: https://www.wto.org/english/tratop_e/region_e/regatt_e.htm#gatt