Deal or No Deal: Brexit and Its Implications for Pharma

By Patricia Van Arnum - DCAT Editorial Director

September 19, 2018

UK Prime Minister Theresa May faces external and internal hurdles and the possibility of a “no deal,” meaning the UK would leave the European Union (EU) without a Brexit agreement. What is the impact for pharmaceutical companies in terms of regulation and supply?

Deal or no deal: where the process stands

In late August, the UK put out the first tranche of its “no-deal” technical notices (later updated in mid-September) to help prepare for the possibility of the UK leaving the EU without a Brexit deal. The UK is scheduled to exit the European Union on March 29, 2019, and is in the process of negotiating an agreement with the EU for its withdrawal. Such a deal has to meet external and internal hurdles: an agreement with the EU on any such plan and approval of the negotiated deal by the UK Parliament. EU officials are meeting this week in Salzburg, Austria to discuss how to organize the final phase of the Brexit talks, including the possibility of calling another meeting of the European Council, which is composed of the leaders of the EU member states, in November.

EU President Donald Tusk said the goal of the EU meeting in Salzburg this week is to review the progress of the Brexit talks and move the process forward with three key objectives. “First, we should reach a common view on the nature and overall shape of the joint political declaration about our future partnership with the UK,” he said in a September 18, 2018 statement. “Second, we will discuss how to organize the final phase of the Brexit talks, including the possibility of calling another European Council in November. Third, we should reconfirm the need for a legally operational backstop on Ireland, so as to be sure that there will be no hard border in the future. Let me recall that limiting the damage caused by Brexit is our shared interest. Unfortunately, a no-deal scenario is still quite possible. But if we all act responsibly, we can avoid a catastrophe.”

A no-deal for Brexit and the pharma industry

The pharmaceutical industry is urging for a negotiated agreement on Brexit, which would include cooperation between the EU and the UK on the regulation and trade of medicines. “What is clear is that the UK Government and the EU Commission agree there needs to be a deal. We agree,” said the Association of the British Pharmaceutical Industry, the UK-based trade association of research-based innovator pharmaceutical companies, in an August 23, 2018 statement. “…We need the full focus of Government on getting the right deal. Getting a deal, which includes cooperation on medicines, is in the best interests for patients not just in the UK but in the EU as well.”

In addition to issuing several technical notices and statements advising pharmaceutical companies how to prepare and proceed in the event that the UK does not reach a Brexit agreement, the UK government is advising pharmaceutical companies to assemble six weeks of supply in the case of a “no-deal” scenario. “In the unlikely event, we leave the EU without a deal in March 2019, based on the current cross Government planning scenario, we will ensure the UK has an additional six weeks supply of medicines in case imports from the EU through certain routes are affected,” said the UK Secretary of State for Health and Social Care Matt Hancock in an August 23, 2018 statement. “Under the medicines scheme, pharmaceutical companies should ensure therefore they have an additional six weeks supply of medicines in the UK on top of their own normal stock levels. The scheme also includes separate arrangements for the airfreight of medicines with short shelf-lives, such as medical radioisotopes. The Government is working closely with companies who provide medicines in the UK to ensure patients continue to get the medicines they need.”

In addition to advising pharmaceutical companies to increase their stockpiles, the UK government has put out a series of technical notices to provide information to allow businesses and citizens to understand what they would need to do in a “no-deal” scenario, so they can make informed plans and preparations. For the pharmaceutical industry, the UK government has put out plans in the event of a “no deal” as it relates to overall pharmaceutical regulation, batch testing, Qualified Person (QP) certification and release by manufacturers of human medicines, submission of regulatory information, and trade of drug precursors used in narcotics. The UK government says it will issue further information and instructions in the coming months, including on biological medicines, information technology systems requirements, manufacturing, and import licensing.

“A scenario in which the UK leaves the EU without agreement (a ‘no deal’ scenario) remains unlikely given the mutual interests of the UK and the EU in securing a negotiated outcome,” said the UK Department of Health & Social Care in an updated September 14, 2018 statement. “Negotiations are progressing well, and both we and the EU continue to work hard to seek a positive deal. However, it’s our duty as a responsible government to prepare for all eventualities, including ‘no deal’, until we can be certain of the outcome of those negotiations. For two years, the government has been implementing a significant program of work to ensure the UK will be ready from Day 1 in all scenarios, including a potential ‘no deal’ outcome in March 2019. It has always been the case that as we get nearer to March 2019, preparations for a ‘no deal’ scenario would have to be accelerated. Such an acceleration does not reflect an increased likelihood of a ‘no deal’ outcome. Rather it is about ensuring our plans are in place in the unlikely scenario that they need to be relied upon.”

Overall pharmaceutical regulation

The UK government provided an update on September 14, 2018 to businesses on the arrangements that will come into force for human medicines regulation currently subject to EU rules if the UK leaves the EU on March 29, 2019 with no deal. The Medicines and Healthcare products Regulatory Agency (MHRA), the UK pharmaceutical regulatory body, is also planning a consultation in early autumn, covering the regulation of medicines, medical devices and clinical trials. The UK government said that a more comprehensive technical notice covering the life-sciences sector will follow after the consultation.

The UK provided two cases for pharmaceutical regulation, one before March 29, 2019 (so prior to the UK’s withdrawal from the EU), and one after March 29, 2019 if the UK government does not have a Brexit deal.

Pharmaceutical regulation pre-Brexit. Under the current EU membership, the UK is integrated in the EU medicines regulatory network (EMRN), including the European Medicines Agency (EMA). The EMRN manages some aspects of regulation, including EU licensing procedures, pharmacovigilance, and legal presence requirements. In UK law, the Human Medicines Regulations set out a regime for the authorization of products, including their manufacture, import, distribution, sale and supply, as well as labelling, advertising and pharmacovigilance (i.e., monitoring the effects of medicines). The MHRA functions as the UK pharmaceutical regulatory body.

Currently, clinical trials are managed nationally in the UK by the MHRA. Some aspects of clinical trials are shared across the EMRN. For example, a clinical trial sponsor or legal representative for clinical trials in the EU should be based in the EU and the European Economic Area (EEA) (which includes the EU member states and Iceland, Liechtenstein and Norway). The requirements and procedures for clinical trials in the UK are set out in the Medicines for Human Use (Clinical Trials) Regulations of 2004. These regulations require all interventional clinical trials to be authorized by the MHRA and ethically approved. They also include requirements for the application and assessment, the supply of investigational medicinal products, and safety reporting. The EU is planning to implement new regulations for clinical trials, which will further integrate clinical trial processes and requirements.

Overall pharmaceutical regulation with a no deal. If there’s no deal for Brexit, post March 29, 2019, the UK’s participation in the European regulatory network would cease, explained the UK Department of Health and Social Care in a September 14, 2018 statement. The MHRA would take on the functions currently undertaken by the EU for medicines on the UK market. This would require changes to UK law, via the Human Medicines Regulations of 2012. The MHRA is planning a public consultation in early autumn on some of the key proposed legislative changes.

For clinical trials, if there is no deal, the Medicines for Human Use (Clinical Trials) Regulations of 2004 will remain in force, modified using powers under the EU Withdrawal Act (EUWA) to make sure they still work in the UK after exit. The new EU Clinical Trials Regulation (CTR) 536/2014 will not be in force in the EU at the time that the UK exits the EU and so will not be incorporated into UK law on exit day under the terms of EUWA. The UK government said, however, it will align where possible with the CTR without delay when it does come into force in the EU, subject to usual parliamentary approvals. This alignment will happen after March 29, 2019 so it’s not addressed specifically in the government’s “no- deal” guidance.

Implications of a no-deal scenario to overall pharmaceutical regulation. The EU Withdrawal Act (EUWA) is designed to ensure that existing EU rules are converted into UK law at the moment of exit, with changes where necessary to make sure the rules work in the UK. Where this is needed, the UK government says it will give adequate time for business to implement any new requirements. There are a number of changes where a UK approach will be required (a detailed listing may be found here). Other areas and further detail on some of the areas included will be covered by the MHRA consultation in early autumn.

A key issue in the event of a “no deal,” is how marketing authorizations would work. Most medicines on the UK market already have a UK marketing authorizaation, and this will be unaffected by the UK exit from the EU, explained the UK Department of Health and Social Care in a September 14 notice. Most new medicines, however, come to market via a licensing route overseen by the European Medicines Agency (EMA), the regulatory body of the EU, and are collectively known as centrally authorized products (CAPs). To ensure such medicines will continue to be authorized for use in the UK, all CAP marketing authorizations will automatically be converted into UK marketing authorizations on March 29, 2019. MHRA will write to all CAP marketing authorizations holders prior to March 29, 2019 to inform them of the conversion process (known as “grandfathering”) and to provide them with the opportunity to opt out of receiving a UK marketing authorization. Marketing authorization holders will have a period of time from exit day to provide the MHRA with baseline data for CAPs that are converted into UK marketing authorizations. The UK Department of Health and Social Care said the exact requirements will be communicated at a later date as this is subject to consultation.

For initial marketing authorization applications, after the UK exits the EU, to market a product in the UK, an initial marketing authorization application will need to be submitted to the MHRA and go through a national assessment. The UK will no longer be a part of the EU centralized, mutual recognition and decentralized procedures.

A different process will exist for medicines licensed via mutual recognition and decentralized procedures. The mutual recognition and decentralized procedures are two EU routes to obtaining a marketing authorization to market a medicine within multiple EU and EEA countries. Existing medicines that received a marketing authorization for the UK via the mutual recognition and decentralized routes prior to March 29, 2019 will be unaffected as they already hold a national UK marketing authorization.

Batch testing and QP certification

Batch testing and certification of the Qualified Person (QP) for drug release would also be impacted if a deal is not reached. Batch testing is the process of confirming every batch of medicine has the correct composition through laboratory tests. QP certification and release is the confirmation that the batch meets the requirements of the marketing authorization and is suitable for sale and supply or export.

“We recognize that companies need certainty on the future requirements for batch testing and QP certification and release after the UK leaves the EU, and it’s important that we put in place appropriate contingency plans for other potential outcomes from the EU exit negotiations,” said the UK Department of Health & Social Care in a September 14, 2018 statement.

The UK government spelled out batch testing and QP requirements before the UK’s withdrawal from the EU on March 29, 2019 and the requirements after March 29, 2019 if no deal for Brexit is reached. “These arrangements will continue until the government considers any further change is necessary,” said the UK Department of Health & Social Care in its September 14, 2018 statement. “We are committed to working with industry ahead of any such changes to the arrangements outlined in this technical notice which might impact supply chains and manufacturing processes and to giving at least two years notice of the introduction of any changes, in order to allow industry to fully prepare for their implementation.”

Batch testing and QP certification before March 29, 2019. Before the UK’s withdrawal from the EU on March 29, 2019, manufacturers can batch test medicines anywhere in the EU, the EEA, or third countries in which the EU has a mutual recognition agreement. For human medicines manufactured in the UK, a UK-based Qualified Person (QP) must certify the batch testing and ensure compliance with the marketing authorization and good manufacturing practice (GMP) guidelines. These medicines can then be sold or supplied anywhere in the EU or EEA, including the UK, without further certification. For human medicines manufactured in the EU/EEA, the batch testing and certification or release by an EU or EEA based-QP allows a batch of human medicines to be sold in any other EU or EEA country (subject to the requirements of the country), including the UK, without the need for any further certification).

For human medicines manufactured in a third country outside the EU or EEA and imported into the UK through the EU or EEA, batch testing is required within the UK, EU or EEA, unless the medicine has been manufactured in a third country with which the EU has an mutual recognition agreement. However, a human medicine manufactured in a third country requires a QP based in the UK, EU or EEA to certify that it meets all the required standards and specifications of the marketing authorization, before it can be sold or supplied in the EU or EEA (including the UK).

Batch testing and QP certification in the event of a “no deal.” In the event of the UK leaving the EU with no deal, there are different implications for the pharmaceutical sector, depending on whether they are selling human medicines onto the UK, EU or EEA market. To ensure continuity of supply in medicines, the UK would continue to accept batch testing of human medicines done in certain countries included on a list which will be set out by the MHRA, the UK pharmaceutical regulatory body. On exit day, this list would include EU countries, other EEA countries, and those third countries with which the EU has a mutual recognition agreement. The UK will also continue to accept batch testing of investigational medicinal products (IMPs), which are substances being used in clinical trials and manufactured in EU and EEA states. There will be no change to the present arrangements for batch testing of IMPs manufactured in third countries. Overall, the UK government would apply the same approach to QP certification and release as it does now.

In the event of no deal, the UK would no longer be part of the European Medicines Agency (EMA), the EU pharmaceutical regulatory body. The EMA has published guidance as to the approach EU and EEA countries will take to human medicines that are batch tested and certified and released by a UK-based QP if there’s no deal.

Batch testing and QP certification in a “no deal” with different manufacturing origins. The UK government spelled out several ways in which batch testing and QP certification would be handled in the event of a no deal, depending on manufacturing origin, and applicable to both commercial products and investigational products.

For human medicines manufactured in the UK, the UK government will continue to require a UK-based QP to certify the batch testing and to ensure compliance with the marketing authorization and GMP guideline before these medicines can be sold or supplied in the UK.

For human medicines manufactured in a third country and directly imported into the UK, the UK will continue to require a UK-based QP to certify the batch testing as well as to ensure compliance with the marketing authorization and with GMP guidelines before they can be sold or supplied in the UK.

Where human medicines are manufactured in a third country but are imported into the UK from a country on a separate list maintained by MHRA (on exit day, this list will contain EU and EEA countries), the UK will continue to recognize certification, release, and assurance of compliance with the marketing authorization and with GMP guidelines, if conducted by a QP based in the listed country, without the need for any further certification.

For human medicines manufactured in a country on the MHRA’s QP list, which have the relevant QP certification, the UK will continue to recognize certification, release, and assurance of compliance with the marketing authorization and with GMP guidelines, if conducted by a QP based in the listed country, without the need for any further certification.

Submission of regulatory information

Submission of regulatory information would also be impacted by a “no-deal” scenario. The UK is currently a part of the EU regulatory networks for medicines and medical devices, which have shared processes and systems. Examples of these shared systems, in the case of human medicinal products, are: the Common European Submission Portal (CESP), a platform for communicating with national regulatory agencies in Europe via one platform; the European Medicines Agency gateway; and EudraVigilance, the system for managing and analyzing information on suspected adverse reactions to medicines which have been authorized or being studied in clinical trials in the EEA. Before March 29, 2019, companies can continue to submit information into one place for it to be shared around all EU and EEA countries.

In the event of a “no deal” for Brexit, after March 29, 2019, the UK would no longer be part of the EU medicines and medical devices regulatory networks. The sharing of these common systems, and the associated exchanges of data, between the UK and EU/EEA countries would end, said the UK Department of Health and Social Care in a September 14, 2018 statement. “We would have our own processes and systems to manage UK human medicines and devices regulatory activities. To do this, some new systems are being developed for March 2019,” said the UK government in its statement.

The UK government said it would have systems up and running for March 2019, but they would then be developed further over time. “We’ll provide communications and guidance on the new processes and systems ahead of March 2019, so that you are able to use them from day one,” said the UK government in its September 14, 2018 statement. “We’ll communicate as soon as possible and intend to do this later this year. We’ll need some of our stakeholders to help us test our systems before March 2019, and where, required, we’ll also provide training.”

These systems will have a national portal(s) for companies of individuals to submit regulatory information. The following types of information would be submitted via a portal (not an exhaustive list): marketing authorization applications; periodic safety update reports (PSURs); pediatric investigation plans (PIPs); clinical trial applications; qualified person for pharmacovigilance (QPPV) and pharmacovigilance system master file (PSMF) notifications; individual case safety reports (ICSRs) and subsequent transmission of anonymized single patient reports (ASPRs). For applications in which an applicant plans to submit to both the EU and the UK (for example, a marketing authorization for both EU and UK markets), applicants would need to submit the information separately through EU systems and the UK portals.