Impact of Brexit on life sciences and healthcare

General Impact

How might the life sciences sector be affected when the UK exits the EU and the implementation period comes to an end?

The European Union (Withdrawal) Act 2018, in combination with the European Union (Withdrawal Agreement) Act 2020 and the Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community of 19 October 2019 (Withdrawal Agreement) preserve the operation of EU law in the UK until the UK leaves the EU and the implementation period has ended (end of 31 December 2020). This means that procedures for registration and application for rights, rules and enforcement remain as is until the end of the implementation period. Thereafter, UK law may diverge.

Regulatory

Will the UK continue to comply with EU regulation concerning safety of medical products after the implementation period?

The life sciences sector is unique in that its activities are highly collaborative and regulated. Clinical trials and trade involving human and veterinary health within the EU have depended on the application of tested and common high standards. With the EMA (European Medicines Agency) at its core, the common legal and regulatory framework provided the foundation for the co-ordinated EU effort of monitoring and supervising operations to ensure the safety and efficacy of medical products (including devices). The system benefits from a network of experts qualified in a range of specialist medical fields to advise, evaluate and process applications relating to medical products based on shared, collective data. However, the government’s proposition that no regulatory alignment would be sought with the EU in the future signals a likely exit from the European medicines regulatory network. The non-binding Political Declaration is accordingly lukewarm, merely recording the intention of the parties to “explore the possibility of cooperation“ between the MHRA (Medicines and Healthcare products Regulatory Agency) and the EMA (European Medicines Agency).  

Thus as things stand, pharmaceutical companies are likely to face dual regulatory systems after the implementation period. Legislative and logistical preparations are made to ensure that the MHRA can handle all applications which were previously handled by the EMA (such as dealing with marketing authorisations, clinical trial authorisations, manufacturing licences, pharmacovigilance). If conditions and standards were to diverge, EU-UK trade of medical products are likely to face strict regulatory barriers.

Will personal data transfer between the EU and the UK be freely allowed after the implementation period?

The pre-Brexit position will be maintained throughout the implementation period.  After the implementation period, the “Data Protection, Privacy and Electronic Communications (EU Exit) Regulations” SI 419/ 2019 will come into effect which essentially generates a UK version of the GDPR, meaning that all of the standards and requirements of GDPR will be preserved. No problem is envisaged for transfer of personal information from the UK to the EU, but the same may not be said the other way.

This is because the adoption of an adequacy decision by the EU Commission (which is one of the ways to ensure lawful transfer of personal data from the EU to third countries) is not a given.  This is because the EU Commission will be required  to take into account the national security and surveillance laws of the UK which must offer guarantees ensuring an adequate level of protection for personal data that are “essentially equivalent” to EU law. Reaching this standard could be a challenge with the UK’s track record, which includes a ruling by the European Court of Human Rights (Big Brother Watch v United Kingdom) that the UK national security and surveillance laws (Regulation of Investigatory Powers Act 2000) is incompatible with European Convention on Human Rights.

If no adequacy decision is obtained EU sites and sponsors of clinical trials may face difficulties in transferring data, such as patient data, to the UK after the implementation period.  

How can the UK Life Sciences sector retain and recruit talented scientists from the EU after the implementation period?

Readers should refer to the Employment page of our Brexit Insight Hub for a comprehensive overview.

EU citizens in the UK:

Prior to a new immigration system coming into effect in January 2021, EU citizens, EEA EFTA nationals and Swiss nationals can continue to enter the UK. All EU nationals who have the right to enter the UK before that time can apply under the EU settlement scheme for settled status (where they have been resident in the UK for five years) or pre-settled status (where they have been resident for less than five years). Those who have pre-settled status can apply for this to be converted to settled status when they have been resident for five years.  This will allow those individuals to continue living and working in the UK after the implementation period.

From 1 January 2021, there will be a new immigration system which will control how EU nationals who do not have settled or pre-settled status and their family members visit, live and work in the UK. The details on this are still to be finalised, but the Government’s proposal is to introduce a new single immigration system post-Brexit, which will end freedom of movement for EU citizens so that the new immigration system will be based on the worker’s skills and not the country they come from in the same manner as migrants from outside of the EU.  This means that an employer wishing to employ EU citizens will need to have a sponsor licence and pay the Immigration Skills Charge (£1,000 per worker per year).

UK Citizens in the EU:

UK nationals living and working in the EU will enjoy reciprocal rights in other states for EU citizens in the UK. UK citizens who are currently living in one of the EU’s other 27 countries may need to apply for residence status to confirm that they were already resident in the EU before 31 December 2020.

Will intellectual property rights holders be able to assert their rights over cheaper goods coming from the EU into the UK and vice versa both during and after the implementation period?

During the implementation period

The pre-Brexit position will be maintained throughout the implementation period. Goods which have been lawfully placed within the EU (that is to say by the IP right holder or with the IP right holder’s consent, for example by a licensee)) for the first time will be allowed to freely circulate within the EU because the IP rights pertaining to those goods are regarded as having been exhausted at the point the goods are placed in the EU market. The withdrawal agreement states that goods which were exhausted both in the EU and in the UK before the end of the implementation period shall remain exhausted both in the EU and in the UK.

Following the implementation period

As it stands, if no deal can be concluded by the end of the implementation period, goods which have been lawfully placed within the EU  (which will then not include the UK) may be allowed to continue to be freely imported into the UK (subject to the goods meeting relevant regulatory requirements if any) in accordance with the Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2019. The converse does not apply to importation of goods into the EU which are first placed on the market in the UK. Thus, EU rights holders may be able to prevent importation of UK goods into the EU. Whether we can expect large volumes of parallel importation from the EU into the UK would depend on the extent of price differences between the UK and the relevant EU Member State. There is also a possibility that the government decides on a different exhaustion regime during the implementation period.

What will happen to IP in the UK?

Readers may refer to the Intellectual Property page of our Brexit Insight Hub for a comprehensive overview. The position with intellectual property rights which are particularly relevant for the life sciences sectors are as below:

Patent right

The current system of national patent protection obtained through the UK Intellectual Property Office (UKIPO) or the European Patent Office (this is not an EU institution) remains unchanged.

A European patent regime, called the Unified Patent Court, was being planned, enabling proprietors of inventions to apply for a single, pan-European Unitary Patent (UP) covering most of Europe, and with a single Unified Patent Court (UPC) to hear and determine patent disputes on a pan-European basis. The UPC system has as its highest Court, the Court of Justice of the European Union and provides for EU law supremacy. As a result of the position the UK government is taking with regard to the EU, the UK government decided that it will no longer participate in the UPC initiative. Subsequently the German Constitutional Court has decided that the UPC Agreement is unconstitutional.  According to the press release of the Court, the UPC Agreement, which affects sovereign powers of Germany, lacked the requisite parliamentary approval of two-thirds majority. The procedural error may be reversed by obtaining the requisite number of approvals. However, as a result of the UK’s decision to withdraw from the UPC initiative, the UPC Agreement will require amendment, and should Germany decide that these changes be settled first before approving the UPC Agreement, major delays may be expected. The whole initiative may lose momentum. Whatever may happen to the UPC initiative, substantial delays can be expected.

Supplementary Protection Certificates (SPC)

An SPC is a national right and separate applications must be made in each European territory.  Even after the implementation period, existing rights and pending applications will be unaffected.

Following the implementation period, the Patents (Amendment) (EU Exit) Regulations (“the Patents Regulations”) can take effect, which are designed to maintain the current systems and processes as far as possible. The 6 month-extension of SPC protection period to which patent or SPC holders are entitled for compliance with paediatric investigation plans under the EU regime is designed to be available in the UK also. If the basis of the SPC is derived from an authorisation from the European Medicines Agency, the SPC holder may be asked to provide information on the equivalent converted UK authorisation, so that this can be recorded on the register.  Otherwise, application process, evidence and timelines for the UK are expected to remain the same.

Prior to the expiry of the implementation period, the SPC protection period amounted to the period between the patent filing date and the first marketing authorisation which allowed the product to be first sold on the market in the EEA, subject to a 5 year cap. After the implementation period, as far as UK law is concerned, the SPC protection period would be equivalent to the time between the patent filing date and the first marketing authorisation which allowed the product to be sold on the market in the EEA or the UK, subject to a 5 year cap.

The SPC manufacturing waiver which came into force 1 July 2019 will continue to apply during the implementation period. The plan is for the SPC manufacturing waiver to apply after the end of the implementation period as retained EU law.

Will the UK competition law regime change materially after the implementation period?

Readers should refer to the Antitrust and Competition page for a comprehensive overview. 

Will the UK continue to benefit from R&D Funding from the EU after the implementation period?

With 20% of all UK business R&D in the life sciences sector, the UK has established itself as a beacon for innovation in life sciences. This has entailed European grants (notably Horizon 2020) and collaboration with scientists across Europe to conduct meaningful research. 

The Withdrawal Agreement allows UK to continue operating within Horizon 2020 until the end of the implementation period; however whether it can participate in Horizon Europe, the successor scheme, as an associate member, would be down to UK’s negotiations with the EU. Even if the UK were allowed access to the fund (the budget of which is yet to be determined), it may be confined to collaborative projects led by scientists based in the EU.  To some extent any diminution in R&D funding may be offset by an increase in government spending on R&D.