Post-Brexit: impact in the Life Sciences sector (so far)

In a Q&A with European Pharmaceutical Review, Marie Manley, Partner at Sidley Austin and Will Holmes, Associate at Sidley Austin discuss the post-Brexit landscape for Life Sciences.

Brexit - missing puzzle piece

Where are we now in the Brexit process?

After years of notice period and further delay, the UK left the EU on 31 January 2020, triggering a transition period currently projected to extend to 31 December 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 country is no longer a part of EU political institutions (ie, there are no UK members of the European Parliament and no UK ministers attend European Council meetings).  

What does this mean for the Life Sciences sector?

Life sciences companies will continue to benefit from EU legal framework until the end of the transition period. However, from January 2021, companies must have established an entity in both the UK and EU to continue operating in both markets. The future of the life sciences industry in the both locations will be determined through 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.

Brexit wrecking ballsWhile 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 initiate 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 yet clear whether the exceptional situation presented by the COVID-19 pandemic will trigger an extension of this transitory period, given that negotiations cannot 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 (MDR) will come with delays for the UK, too.  

What is the Medicines and Medical Devices Bill?

The UK has introduced an early legislative bill to tackle the challenges presented to the life sciences industry after Brexit. While EU law that exists at the end of the transition period will be preserved in the UK, the country 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, 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. This bill creates targeted delegated powers, to keep the existing regulatory frameworks updated while consolidating the enforcement regime for medical devices. Furthermore, the bill enables the Secretary of State to impose civil sanctions for breaches of the medical device regime. 

What does the new bill cover?

As currently drafted, the bill is in four parts:

  • 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 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; making it an offence to fail to comply with human medicine regulations; and supply of human medicines in an emergency.
  • Part 2 allows for the amendment or supplementation of the Veterinary Medicines Regulations 2013, relating to the manufacture, marketing, supply and field trials of veterinary medicines; the charging of veterinary medicine fees; making failing to comply with regulations an offence; and the powers of a Veterinary Medicines Directorate Inspector
  • Part 3 allows for the updating of the UK MDRs 2002 in relation to the manufacture, marketing and supply of medical devices; the charging of fees in relation to medical devices (eg, 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 
  • 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.

Is the bill finalised and legally binding?

The bill still has to go through several stages before it is a legally binding Act. However, the provisions currently set out in the bill potentially enable a number of changes to the UK life sciences legislative environment. For example, it would allow the government to amend the process for applying for or holding a marketing authorisation and align UK legislation with the new EU Clinical Trial Regulations. For medical devices, the bill would establish a new system of civil sanctions for legislative breaches and allow the government to introduce requirements such as a quality management system relating to medical devices not yet on the market.

How will restrictions on free movement of people and goods impact the sector?

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

Life sciences researcherDuring this 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. 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 uphold the EU’s state aid rules, as well as its environmental and social regulations, after the transition period.

In February 2020, the UK announced that EU goods imported into the country 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 it can write its own rules relating to the movement of people into the country. On 19 February, 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 where EU and non-EU citizens will be treated equally. While the effects of this on the UK life sciences industry and its interaction with European talent is unclear, what is evident 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.  

What else is being done to help prepare the UK life sciences industry for the impact of Brexit?

Scientists in labThe UK has been preparing to seize any opportunities that may arise from leaving the EU by establishing legal solutions to provide for some flexibility and offer a more attractive platform for innovation and investment in life sciences. 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 in the update include:

  • 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 R&D and innovation collaborations
  • Investment in health research and development saw $3 billion invested in 2017, around double that of Germany, Japan, Canada and other competitors and behind only the US globally. The UK has committed to boost spending on R&D to 2.4 percent of GDP by 2027 and an additional $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 National Health Service (NHS), and the improvement of approval timelines with the Medicines and Healthcare products Regulatory Agency (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 US federal, state or local tax penalties that may be imposed on such person.

About the authors

Marie Manley leads Sidley’s Life Sciences team in London and is a distinguished thought leader and adviser on EU and UK regulatory law. Prior to joining Sidley in 2018, Marie was partner and head of a regulatory department at a major UK law firm. She has previously worked in Switzerland, New York and Brussels.

Will HolmesWill Holmes is an Associate at Sidley, advising and litigating in the highly regulated fields of medicinal products, biotechnology and medical devices, food and food supplements and cosmetics.