Contact

BREXIT: Consequences and preparation tips for Biotech & Pharma
19-10-2017

#BREXIT: Consequences and preparation tips for Biotech & Pharma

Triggering Article 50 by Theresa May has been a striking event of 2017 and will most likely be the start of a long and tedious road for all parties involved. Though the biotech and pharmaceutical industry in the UK has leaned towards remaining in the EU, legislative and operational changes are inevitable for them as well, since a large amount of regulation originates from membership of the EU.

So what’s changing? Actually, no one really knows just yet, so prepare for the worst case scenario is the EC’s recommendation. But is this really such a good idea?

Between a full Brexit and adhering to the current (EU) regulatory system (referred to as the Great Repeal Deal), there are two other likely options; adapting the European Economic Area model to which Norway, Iceland, and Liechtenstein adhere, or arrange separate sectoral agreements through the Economic Free Trade Association (EFTA) like Switzerland. Obviously, the administrative hassle increases significantly in the order as shown here below. The impact of the Brexit may be the highest for small and medium sized companies not having offices in other EU member states since their ability to move functions to other locations is limited.

 

Great Repeal

EEA

EFTA

Full Brexit

UK converts current EU law into British law (‘business as usual’)

UK participates as non-EU member (European Economic Area, like e.g. Norway)

UK develops sectorial agreements with EU (join Switzerland in European Free Trade Association)

UK develops own laws / drug approval system

General changes

Besides the administrative issues at hand, which will be present no matter what model is chosen, there will also be specific matters to be dealt with in the pharmaceutical industry. Of course, there will be the unavoidable relocation of the EMA head office, increased responsibilities of the MHRA which have to be secured into British Law, loss of EU membership benefits, and risks for continuity in several areas being compromised. But there is also a need to look into specific matters regarding Quality Assurance, Regulatory Affairs and Pharmacovigilance; all of which are regulated in the current framework.

Quality Assurance & QP

Currently, Quality Assurance and the role of the Qualified Person are stipulated in EU legislation so there will be changes anyhow. This is made even clearer in the recent statement by the EU Commission and EMA that the UK will be a ‘Third Country’ after 30 March 2019. Looking at it more specifically, you can question if the role of QP itself is about to change. Not in the EU, that is certain. For the UK it is to be expected that there will be little to no changes, even though the UK could theoretically abolish the role of the QP and adhere to the US system where QA signs off, for instance. It will be interesting to see how this will be laid down in British Law, also because there might be adaptations in sub-areas where the UK has had friction with EU regulations in the past. So will the UK keep the QP role and will it be comparable? Yes, most likely so.

EU QP

What will be the future of EU QPs is in the UK? Like most countries, the UK has some specific requirements for QPs in view of national legislation and it is most likely that this will not change unless they change the process of qualification of QPs. Since this is determined by British law, it is not very likely to be affected by consequences of the Brexit either. As communicated by the EU Commission and EMA, for companies who have their QP located in the UK, they will need to have a QP for batch release residing in the EU (EEA).

EU GMP

With regard to changes in EU GMP and whether it will continue to be applicable in the UK, one may assume that EU GMP will always be subject to updates, but should not suffer any consequences due to the Brexit. The joint cause has always been to harmonise rules governing the production of medicines, so it is not to be expected that EU GMP and whatever regulations the UK will conform, will be much different from each other. The past years EU GMP principles have been strongly embedded in the UK’s pharmaceutical industry, and form the base of inspections. Thus, making significant changes would result in a lot of administrative strain on the UK, making it seem rather unlikely as well. But then again, so did Brexit.

Importation testing & Recertification

Will importation testing and recertification be required for exports to the EU? Basically, if there is no mutual recognition agreement between the UK and EU there is a need for retesting and recertification, which would be a significant economic burden to UK located pharmaceutical companies. It would actually similar to the current situation between the EU and US.

Mutual Recognition Agreement

It is in the best interest of both the UK and the EU to get a Mutual Recognition Agreement in place to prevent economic downfall, meaning it is most likely that the UK regulations will closely mirror those of the EU.  Adoption of the FDA guidelines is less likely because they differ more from the current EU GMP, which is applied in the UK. 

Regulatory Affairs

One area that is bound to go through an administrative ordeal is Regulatory Affairs. For about 25% of  EU procedures, the MHRA is currently the (Co-)Rapporteur or RMS  and simply because they will no longer be part of the EU this workload will need to be shifted to the remaining 27 countries. This alone should cause a lot of work and consideration (proper distribution among the member states) until the ratification of Article 50 in 2019, but there is also the significant participation in EMA committees/Working Parties and the Inspection, and most likely a to be expected delay of the entire approval process.

EMA Office and Activities Relocation

The EMA will need to find a new home for its head office and about 900 expertly skilled staff. Apparently, countries are already lining up to embrace this task including The Netherlands, Denmark, Ireland, Italy, Sweden and Spain. But, as said before, MHRA also handles a large share of EU procedures meaning that a relocation of the EMA office would also mean the reallocation of Rapporteur and Co-Rapporteur activities and Reference Member State (RMS) activities. Withdrawal of concerned Member State (CMS) activities from the EU procedure will only impact on the Market Authorisation in the UK. Compensation by the remaining countries would put a burden on the existing structures which are currently suited to a specific need. This means these institutions would need to expand, which might be problematic for those who receive funding through larger organisations instead of directly receiving funds for the activities they undertake for the EMA.

Approval procedure

The current Centralized and Mutual Recognition/Decentralized procedures are forfeited by the UK by exiting the EU. Consequently, the UK needs to set up its own approval procedure for new drugs and this is best explained by looking at the 4 models mentioned earlier: Great repeal deal, EEA model, EFTA model, and Full Brexit.

The Great Repeal Deal is out of the question because being part of the EU is quite essential to the entire concept of EU procedures with equal rights between the EU countries. So the next best option would be joining Norway, Iceland, and Liechtenstein in the EEA model. This way the UK can participate in the centralised procedure, albeit with a significantly reduced influence. The UK would be able to participate in the discussions but in no way be able to vote in the CHMP (whilst before the MHRA had a major influence).

In the case of the latter models, the UK would have to implement their own national approval procedure (and legislation to place this responsibility in the hands of the MHRA). This way there will be a need for the UK to come to terms with the EU (and all other countries) through an MRA like Australia, Canada, Israel, Japan, New Zealand, Switzerland, and the US.

Marketing Authorisation Holders

We can surely assume there’s work to be done for all Market Authorisation Holders (MAHs) present in the UK. This is made very clear by the EU Commission and EMA statement mentioned earlier which also says:

“EU law requires that MAHs are established in the EU (or EEA).”

Meaning a pharmaceutical company will need a registered and licensed office or facility with a license in the EU/EEA.

That being said, all companies are recommended to look into the transfer of EU MAs (CAP: Centralised Authorisation Procedure) from UK companies to EU based companies. The UK needs to question whether existing MAs for CAPs will still be valid for the UK?  Or is there going to be a need to relicense? They need to find new (Co)Rapporteurs for existing CAPs and new Reference Member States for existing Mutual-Recognition-Procedure/DeCentralised Procedure products. And of course, all Summaries of Product Characteristics and Artwork for drugs with a UK-based MAH need to be adapted. A large number of variations is expected as a result of Brexit. All of which is most likely coupled with a huge administrative burden and accompanying costs for companies.

International companies

The EU offers many advantageous aspects to international companies which will no longer be applicable after Brexit is completed. Many international companies have regarded the UK as a bridging point to the rest of the EU thanks to their facilitating role and infrastructure, but also due to the fact that they were indeed a part of the EU.

A relevant example is the upcoming new ‘Clinical Trials Regulation 536/2014 adopted June 2014’ which is expected to come into force by October 2018. This particular regulation will allow for a single application for clinical trials across the EU with single portal and EU-wide database. The UK will be bound by it in the near future but only until its departure from EU after which companies would probably need separate submissions for the UK. And then there is also the question whether or not EU approved products will be considered an unauthorised product in UK Clinical Trials.

 

Pharmacovigilance

QPPV function and the location of the PSMF

Currently, the majority of the QPPV functions (N= 1,300; 60%) is located in the UK and,   many of them will have to decide to either relocate abroad or find new employment. As stipulated by the European Commission  (Article 8 of Directive 2001/83/EC & Article 74 of Directive 2001/82/EC PSMF) that:

“the QPPV must reside and carry out his/her tasks in the Member State of the Union (EEA)”

Companies will need to take a strategic decision to decide how to move forward with the QPPV function and investigate the different options; such as relocation or appoint new QPPV and/or deputy who resides within one of the remaining member states.  As a consequence, the location of the Pharmacovigilance System Master File, must be brought in line with the Brexit situation and in compliance with the Commission Implementing Regulation (EU) No 520/2012. Again, this will be accompanied by an administrative burden and costly fees because QPPV and PSMF details need to be updated through Article 57. 

How to prepare?

From what we’ve seen many companies are adopting a ‘wait-and-see’ approach. This is very understandable due to the high degree of what is actually still unknown/uncertain. However, to support the preparation process and to ensure business contingency, a good prepared and more proactive approach is advised.

 

If there is any helpful advice to be given to biotech and pharmaceutical companies at this moment it might not be to prepare for the worst. Regarding the specific nature of these upcoming issues, which are bound to be different for all companies, it might be wise to investigate all business cases individually to prevent unnecessary costs.

Every company should at least follow these steps to ensure that they are properly prepared:

  • Know what activities are currently being carried out in the UK
  • Consider the impact of all possible scenarios
  • Analyse risks (but don’t forget to see opportunities either)
  • Determine risk minimising strategies
  • Map employees having to leave UK to return to EU (or vice versa send employees to the UK with unknown prerequisites)
  • Prepare for questions by investors, what is impact on existing financing and timelines

For any further questions, please contact us.

 Blog by: Nick Veringmeier - Xendo


Subscribe to newsletter