The Life Sciences Sector Post-Brexit (So Far)

Written by: Sidley Austin
Published On: 21 Apr 2020
Category:

Brexit has now happened. After years of notice period and further delay, the United Kingdom left the EU on January 31, 2020, triggering a transition period currently projected to extend to December 31, 2020. During the transition period, the status quo is mostly preserved insofar as EU law relating to the life sciences sector continues to apply in the UK, even though the UK is no longer a part of EU political institutions (i.e., there are no UK members of the European Parliament, and no UK ministers attend European Council meetings).  

This means that life sciences companies continue to benefit from the EU legal framework until the end of the transition period. However, starting in January 2021, companies will have to have established an entity in both the UK and the EU to continue to operate in both markets. The future of the life sciences industry in the UK and the EU will be determined by legislation passed by, and agreements reached between, the two during the transition period. While the UK’s European Union (Withdrawal) Act 2018 converts EU legislation as of the last day of the transition period into UK domestic law, if no further legislation is passed and no agreements reached, the life sciences industry will face something akin to a “no-deal” Brexit scenario.

While it is possible that the UK and EU could agree to an extension of the transition period for up to two further years, the UK Government has made it clear that it does not intend to trigger such an extension, even including wording within the EU (Withdrawal Agreement) Act 2020, which legislates against any attempt by the UK to apply for such an extension. This legislative provision can only be overturned by the passing of further legislation by the UK Parliament. It is not clear whether the exceptional situation presented by the COVID-19 pandemic will trigger an extension of this transitory period, given that negotiations have not been able to be pursued as initially planned. It is also unclear what effect the pandemic will have on the implementation of legislation already agreed – for example, the proposed delay to the implementation of the new EU Medical Devices Regulation will come with delays for the UK, too.  

The UK and EU are releasing new guidance and proposals all the time. Below we consider some of the proposals and measures with regard to the life sciences industry that have been taken so far, in preparation for the end of the transition period.  

Medicines and Medical Devices Bill

The UK has introduced an early legislative bill to tackle the challenges presented to the UK life sciences industry after Brexit. While EU law that exists at the end of the transition period will be preserved in the UK, the UK relies on the European Communities Act 1972 (ECA) to amend regulations in line with industry changes. The ECA will no longer be available for this function after the transition period. The Medicines and Medical Devices Bill (The Bill), which the Government introduced to Parliament at the end of 2019, seeks to address this by introducing regulation-making, delegated powers covering the fields of human medicines, veterinary medicines and medical devices. The Bill creates targeted delegated powers, to keep the existing regulatory frameworks updated, while consolidating the enforcement regime for medical devices. Further, the Bill will allow the Secretary of State the ability to impose civil sanctions for breaches of the medical device regime. 

As currently drafted, the Bill is in four parts:

1. Part 1 creates a power to amend or supplement human medicines law by virtue of amending the Human Medicines Regulations 2012, the Medicines for Human Use (Clinical Trials) Regulations 2004, the Medicines (Products for Human Use) Regulations 2016 and some parts of the Medicines Act 1968. The amendments would allow for updates relating to the manufacture, marketing and supply of human medicines; falsified medicines; clinical trials; the charging of fees in relation to human medicines provision; creating an offence of failing to comply with human medicine regulations; and supply of human medicines in an emergency.

2. Part 2 allows for the amendment or supplementation of the Veterinary Medicines Regulations 2013, specifically as it relates to the manufacture, marketing, supply and field trials of veterinary medicines; the charging of fees in relation to veterinary medicines provision; creating an offence of failing to comply with veterinary medicine regulations; and the powers of a Veterinary Medicines Directorate Inspector.

3. Part 3 allows for the updating of the UK Medical Devices Regulations (MDRs) 2002 in relation to the manufacture, marketing and supply of medical devices; the charging of fees in relation to medical devices (e.g., to register a device); recording information about the safety of devices; creating offences of breaching the provisions in the MDR; and the supply of medical devices in emergencies. 

4. Part 4 creates a duty to consult before changes are made under the Bill and provides that the statutory instruments made under these clauses will be subject to the affirmative resolution procedure.

The Bill still has a number of stages to go before it is a legally binding Act. However, it can be envisaged that the provisions set out in the Bill as it stands could allow for a number of changes to the UK life sciences legislative environment. For example, the Bill would allow the Government to amend the process for applying for or holding a marketing authorisation and to bring UK legislation into line with the new EU Clinical Trial Regulations.  For medical devices, the Bill would put in place a new system of civil sanctions for breaches of the appropriate legislation, and could allow the Government to introduce requirements like a quality management system relating to medical devices not yet on the market.

Ultimately, while the Bill is not finalised and may change somewhat before it is, its introduction demonstrates a commitment to ensuring that the UK life sciences industry remains world-leading after the end of the Brexit transition period. 

Free Movement – Goods and People

Following the transition period, the UK will no longer be a part of the EU’s rules on free movement of goods and people.  

During the transition period, the UK and the EU will engage in trade talks, to agree to the terms on which trade will be conducted after the end of the transition period.  This will have a clear and significant impact on the life sciences industry. So far, little is known about what outcome the trade talks will have. Michel Barnier, the EU’s chief Brexit negotiator, has rejected the UK’s call for a “Canada-style” trade deal freeing the UK from EU rules, noting that Prime Minister Boris Johnson had agreed to keep to the EU’s state aid rules, as well as its environmental and social regulations, after the transition period.

In a press release in February 2020, the UK announced that EU goods imported to the UK after the Brexit transition period will be subject to full customs checks. The Government has launched a consultation, asking for views from industry as to the formation of a bespoke UK tariff.  

The UK’s shift away from being part of the EU’s regime for the free movement of people means that the UK will make its own rules relating to the movement of people into the country. On February 19, the UK announced the introduction of a new points-based immigration system to take effect after the transition period. Points will be awarded for different skills, salaries and qualifications. EU and non-EU citizens will be treated equally. While it is unclear exactly what effect this will have on the UK life sciences industry, and its interaction with European talent, what is clear is that the new rules will significantly change the makeup of personnel working for the life sciences industry in London and the rest of the country.  

Office for Life Sciences

The UK has been getting ready to seize the opportunities that may arise from leaving the EU by putting in place legal solutions to provide for some flexibility and offer a more attractive platform for innovation and investments in life sciences. Some sources provide further insight into where the UK expects its life sciences industry to go in the years after Brexit. In January 2020, the UK’s Office for Life Sciences (OLS) released its Life Sciences Industrial Strategy Update. The foreword to this update states that the OLS aims to “ensure our regulatory and ethical environment remains world-leading post-Brexit, and take the opportunity to create maximum flexibility for innovative and responsive approaches to regulation, using health data to underpin rapid progress in the field.”  

Plans to secure the dominance of the UK life sciences industry set out in the update include these:

  • A proposed £500 million Innovative Medicines Fund will allow patients quicker access to new medicines.
  • Through the British Business Bank, the OLS has committed to deliver a dedicated life sciences scale-up investment programme worth around £600 million.
  • A number of targeted initiatives have been established to further increase public and private funding for innovative life sciences companies.
  • In July 2019, the UK launched a renewed Life Sciences Opportunity Zone offer to promote and support science parks and other regional innovation “clusters” to attract investment and enhance local research and development (R&D) and innovation collaborations.
  • Investment in health research and development saw US$3 billion invested in 2017, around double that of Germany, Japan, Canada and other competitors and behind only the USA globally. The UK has committed to boost spending on R&D to 2.4 percent of GDP by 2027, and an additional US$4 billion has been invested in R&D since 2017.
  • The UK is establishing five patient recruitment centres dedicated to late-phase commercial research.
  • Further provision for increasing the capacity of the UK’s clinical trials infrastructure include the introduction of mechanisms to ensure that all patients can be offered the opportunity to participate, measures making it easier to set up a study in the NHS, and the improvement of approval timelines with the MHRA. 
  • The UK has launched a number of initiatives to support the development and deployment of technologies such as artificial intelligence and emerging areas like genomic medicines and advanced therapies.
  • The UK is aiming to grow its existing skills base, investing to ensure that the UK has the skills it needs to support emerging industries. 

Sidley Austin LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers. In addition, this information was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any U.S. federal, state or local tax penalties that may be imposed on such person.

Attorney Advertising—Sidley Austin LLP, One South Dearborn, Chicago, IL 60603. +1 312 853 7000. Sidley and Sidley Austin refer to Sidley Austin LLP and affiliated partnerships, as explained at www.sidley.com/disclaimer.