Brexit Strategy: August 2018 Update
Developing your Brexit Strategy
We have been providing our clients with an ongoing appraisal of the risks and opportunities that arise due to Brexit. During this time the European Medicines Agency and European Commission have provided a consistent and intransient message about the responsibilities for the holders of Marketing Authorisations in the EU. The UK Government and the MHRA have made proposals for a continued working relationship with the EMA. At this stage of the negotiations it is possible that both parties are engaging in a high-stakes gamble waiting to call a bluff, before agreeing a compromise. Or alternatively, as one UK cabinet minister, Liam Fox, describes the situation "a no-deal Brexit is more likely than an agreement".
Regardless of the outcome it is now more improtant than ever for pharmaceutical companies to carry out a portfolio risk assessment and revise their strategy to meet both the needs of their business and patients. At Diamond Pharma Services we have been helping clients to prepare for Brexit by carrying out a portfolio gap analysis and to take action to plan for all scenarios.
Below is an updated version of our assessment of the Brexit issues (first published in June 2017).
Brexit Strategy Update
Any pharmaceutical company wishing to hold EU licenses must have a legal entity registered within Europe. Pharmaceutical companies that wish to establish a new ‘EU’ legal entity to hold their licenses, decide on ‘which country’ to choose within Europe. Up until 24th June 2016 (UK referendum result day) the UK was a reasoned choice for many pharmaceutical companies wishing to establish themselves in Europe. Good flight connections, the English language, a traditionally well regarded competent health authority, and of course the current home of the European Medicines Agency (EMA). This has led to many pharmaceutical companies and subsequent Marketing Authorization Holders (MAH) historically choosing UK based legal entities to hold their European medicinal product licenses.
Under current expectations, the UK will leave the European Union on March 29th 2019 and become a so called ‘third country’. The European commission is clear through Article 2 of Regulation (EC) No 726/2004 that holders of European medicinal product licenses must be established in Europe. Due to this it is likely that separate ‘UK’ and ‘EU’ legal entities will be required going forward to hold UK and EU licenses if pharmaceutical companies wish to operate in both markets. Companies should plan for this in advance of March 2019. It should be noted that the UK government issued a white paper in July 2018 that envisages a ‘softer brexit’ for the pharmaceutical industry (1). Whilst this could be welcome news for industry it is far from a certainty. Companies should plan for a hard Brexit scenario to reduce exposure and risk to medicines portfolios in line with EMA advice.
The draft EU-UK transition withdrawal agreement that will enable the UK to remain part of European processes and procedures until 2020 may buy industry more time (2). The agreement is due for ratification in October 2018. However, as of now EU companies are expected to plan in line with EMA guidance for a hard Brexit.
Any European medicinal product licenses held by UK legal entities are likely to be required to transfer the marketing authorisation holder (MAH) post Brexit. This will involve a transfer of ownership of the license from one legal entity (UK) to another (EU). Regulatory Affairs professionals typically deal with this type of change.
Conversely, EU legal entities holding UK medicinal product licenses may be required to transfer the marketing authorisation to a UK based legal entity for the Medicines and Healthcare Regulatory Agency (MHRA) to continue to accept their validity.
It is not just the legal entity changes that need to be considered as part of a so called ‘hard’ Brexit scenario.
European regulations also require certain persons with key responsibilities to be based in the European Union. This includes Qualified Persons for Pharmacovigilance (QPPV’s) and Qualified Persons in compliance and manufacturing (QP’s). Following Brexit, it is quite possible that there will need to be both QPPVs and QP’s in Europe and the UK. Some UK persons may well be asked to relocate to continue supporting the European role going forward.
Manufacturing supply chains are also likely to be affected. European legislation determines that medicinal products require a formal site of ‘batch release’ to be based in the European Union. UK batch release sites would no longer fall within this. Similarly, any product arriving into the EU from the UK could require re-testing by an appropriate quality control/batch control site. UK specific batch release sites and UK specific product testing could also be required for products being imported from Europe.