A Third Option

In January, the UK Prime Minister, Theresa May, set out the Government’s 12 objectives for negotiations with the EU. In the speech, May emphasized, “What I am proposing cannot mean membership of the Single Market.” Those words seemingly dashed industry hopes of the UK retaining its membership of the single market though the European Economic Area (EEA) and European Free Trade Association (EFTA): the “Norway Model.”

In the latest issue of The Medicine Maker, John Barber, EEA-Qualified Person Responsible for Pharmacovigilance (QPPV) & Head of Pharmacovigilance, European Operations at Dr. Reddy’s Laboratories, set out the many ways in which leaving the EU could impact pharmacovigilance, if the UK also leaves the EEA (1). But what if the UK were to remain a member of the EEA? As it pertains to pharmacovigilance, the UK would retain access to the Article 57 and EudraVigilance databases, UK-based EEA-QPPVs could continue to work with Marketing Authorization Holders (MAHs), and the MHRA would continue to perform Periodic Safety Update Report (PSUR) single assessments (for more information please see Barber’s article) (1). More broadly, this model would eliminate the possibility of timely and expensive customs checks for UK exporters, as well as allowing drug companies to get EEA-wide marketing authorization.

May ruled out this model saying, “Being out of the EU but a member of the Single Market would mean complying with the EU's rules and regulations [...] without having a vote on what those rules and regulations are.”

Whether this is a fair characterization of the “Norway Model” is debatable. Firstly, EEA/EFTA members are not under the jurisdiction of the European Court of Justice (ECJ), and although the EFTA Court does shadow ECJ rulings, unlike the ECJ it is not “supranational,” in that its rulings are not legally binding on states (2), and there is no mechanism by which penalties can be imposed for non-compliance (3). Moreover, EEA/EFTA members are able to veto the incorporation of new EU legislation into the EEA Agreement through the “Right of Reservation” guaranteed by Article 102 of the EEA Agreement (4)(5). Although EEA/EFTA members have no say once laws reach the EU voting stage, countries like Norway are able to exert some influence at earlier stages through participation in EU committee meetings and hearings (6).

Secondly, Norway only implements around a third of EU law (7), most of which originates at various international organizations (8). Although the UK would lose some influence and all voting rights at the EU level, it would no longer be represented by a European Commission common position at the international level. The MHRA could thus become an independent member of bodies such as the International Conference on Harmonisation (ICH) – indeed, it has reportedly made an application (9) – whose guidelines have been incorporated into the EMA’s Good Pharmacovigilance Practices (GVP) (10).

The elephant in the room is immigration. For many of the UK’s “Leave” campaigners, having to comply with the Freedom of Movement makes EEA membership unpalatable. Yet Liechtenstein, a member of the EEA, was able to negotiate an opt-out to free movement through Article 112 of the EEA Agreement (which EEA members have the unilateral right to invoke), suggesting that room for maneuver may be possible.

What happens now is anyone’s guess. Following the UK’s general election on June 8 2017, May’s party has lost its majority in government and her leadership looking fragile. Some senior members of her party are also calling for a rethink of the Brexit strategy. Will this mean EEA? Who can say? The UK Government reiterated its desire to leave the single market in the first week of the Brexit negotiations, suggesting no immediate change in its approach.

But as March 30, 2019, draws ever closer, the EEA option may begin to look increasingly attractive, at least as a transitional step – as Richard North has argued with his “Flexcit” plan (4) – towards a more permeant agreement that could be negotiated without Article 50’s ticking clock. But even negotiating EEA/EFTA membership may take time. The EEA Agreement, despite often referred to as an “off the shelf” solution, contains many country specific protocols and annexes – meaning it would have to be customized for the UK. If, months down the line, the Government realizes it won’t be able to negotiate a comprehensive Free Trade Agreement in the time available, will it be too little too late for the Norway model?