Last month, I highlighted Brexit as a potential focal point in pharma for 2020. Shortly ahead of the delayed exit deadline of January 31st, it was already clear that – in the UK in particular – Brexit was going to have an impact this year. However, defining that impact, and explaining exactly how Brexit is going to affect the pharma industry, is a little more difficult.
Clearly, a big part of the problem is that, as of January 31st, when Britain ‘left’ the EU, no deal had been signed. Of the 12,300 medicines used in the UK, around 7,000 come from or via the EU, so if tariffs were levied on all these medicines the costs of healthcare in the UK would be markedly affected. A ‘no deal’ Brexit also threatened to disrupt the supply of medicines and medical supplies manufacturers. However, the UK government’s Brexit Secretary, Stephen Barclay, has been clear that he is working to secure a "zero tariff, zero quota" free trade deal with the EU. The pressure is on to achieve this by December 31st – up until then, the UK is in an agreed ‘transition period’ with the EU. During this transition period, there should be no real changes in the way the EU deals with the UK, and no tariffs will be charged, so the region has effectively bought itself a little more breathing space to figure out the details. It seems that the ultimate aim for trade is ‘no change’.
Outside of the EU, the UK is negotiating and signing new trade deals with the rest of the world, as existing trade agreements with the UK (as part of the EU) will no longer apply. For example, the US Treasure Secretary, Steve Mnuchin, has said he believes the UK and the US should be aiming to agree a post-Brexit deal with the UK by the end of this year.
Perhaps even more interesting is the fact that Brexit offers opportunities for the UK to negotiate free trade agreements with countries that currently have no such deals with the EU. For example, Brexit opens the door for the potential negotiation of a free trade agreement between the UK and China. This could benefit the UK by giving its exporters a competitive advantage in China, and by enabling cheaper imports of Chinese intermediates. In turn, China might see the UK as a gateway into the EU market (provided the EU does not close any loopholes on ‘backdoor imports’).
Early in the process, Brexit prompted concerns about free movement of skilled personnel. However, the EU Settlement Scheme appears to have allayed concerns over EU nationals living in the UK, and the EU has indicated that British citizens will have the right to remain. Even for workers in the UK from outside of the EU, there has been a move towards greater leniency, such as reducing the £30,000 minimum salary rule for migrants entering the country to work. Therefore, although this is one of the issues that remains to be clarified, free movement is no longer topping many people’s lists of concerns. As with trade, it would appear that the ultimate aim is ‘no change’.
From a regulatory perspective, the European Medicines Agency (EMA) has already relocated from London to Amsterdam, effectively moving the seat of power for marketing authorization applications (MAA) and clinical trial regulations from the UK to The Netherlands. It is difficult to believe that the UK will not continue to follow EMA requirements, but this is one of the many issues that remains to be clarified. The most sensible aim would appear to be ‘no change’.
Having said that, experts are predicting that a ‘UK REACH’ is looking likely. The REACH legislation, which governs the regulation of all chemicals, is one of the most complex legal instruments ever created by the EU. Compliance with REACH will be of critical importance for a huge section of the UK's economy, including the pharma industry and those in chemicals manufacturing. However, Simon Tilling, Partner at law firm Burges Salmon, predicts the creation of 'UK REACH' and a UK chemicals agency to come into force once the transition period is over. “Despite industry calls for close alignment, a UK REACH, with its duplicative register and potential for divergent decision-making, now looks highly probable,” he wrote on the company’s...
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