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Business & Regulation Trends & Forecasts, Supply Chain

Withdrawal Symptoms

The UK parliament is set to vote on the draft withdrawal agreement from the EU – concluded after many months of negotiations. EU leaders have already approved the “deal” but, at the time of writing, it remains to be seen as to whether UK members of parliament will follow suit. If the agreement passes, the UK would enter into a 21-month transition period – which may be extended by mutual consent – allowing time for further negotiation of the future agreement. Until December 2021, EU law would still apply in the UK, but Britain would not have voting or representation rights on EU bodies.

If the two sides are unable to come to an agreement at the end of the transition period, the “backstop” would kick in. There, Northern Ireland would effectively remain inside the single market for goods (not services, capital or people) and the UK as a whole would enter into a customs union with the EU. This is intended to prevent the need for any border checks on the island of Ireland, but there may be some regulatory and VAT-related checks between the UK and the EU, and between Northern Ireland and the rest of the UK. The two sides also agreed a draft Political Declaration, which sets out the framework for the future relationship.  

With over 500 pages of legal text to consider... we asked three experts whether, in their opinion, the Withdrawal Agreement should allay the fears of pharma companies – worried about the prospect of new border checks disturbing their highly integrated supply chains, as well as the long-term impact of regulatory divergence from the EMA in terms of investment and patient access to new medicines.

 

David Jefferys, Senior Vice President for Global Regulatory, Healthcare Policy and Corporate Affairs for Eisai Europe, and Chairman of Eisai’s Global Regulatory Council

We as a company, and I think all the pharmaceutical industry, welcomes the agreement between the UK and the EU 27 because, if ratified, it will provide the 21-month transition period and avoid the UK leaving the EU with no agreement in place. The industry has worked tirelessly to address the requirements of such a “hard Brexit” – and expended considerable money and resources. Even so, there are issues outside the control of the industry that could disrupt global supply in the pharma sector. We need the extra 21 months to ensure the optimal supply of medicines to patients across Europe, and for there to be negotiations on an agreement which benefits all stakeholders, especially patients.

Our long-term aspirations are clear in that we wish to see close collaboration and co-operation with the EU 27 regulatory system for pharmaceuticals and frictionless trade. The very recent changes in the Political Declaration are helpful in that clause 24 now states that parties will explore the possibility of the UK co-operating with union agencies such as the EMA. We also welcome the statements concerning ongoing participation in union programs in science and innovation and the reference to cooperation on “emerging threats to health security in a consistent manner.” If the deal is ratified as we hope, then the focus switches to the extensive negotiations on the final withdrawal text for December 2020.

 

Richard North, former research director in the European Parliament and Environmental Health Officer, author, and blogger at eureferendum.com

The deal, if it is agreed and ratified, gives a transition period that may be extended for up to two years. Thus, as long as the deal is not turned down – which is, as yet, not certain – during the period, free movement of goods is more or less assured. This will at least give time for industry to lobby hard for a workable long-term solution and allows adjustments to be made to accommodate changing conditions.

The worst case scenario, of course, is that the deal is rejected. But even here, the industry has some leverage in that the EU 27 will not be able to access products holding UK market authorization. That undesirable situation may pave the way for a post-Brexit “mini-deal,” which will restore some functionality to the market.

However, as long as the immediate downside of the Brexit process is uncertainty, it cannot yet be said that recent events have resolved anything. We still wait to see where our future lies, in a very volatile and uncertain trading environment. It may not be until well into the New Year that we can confidently see our way forward, and then only for a limited period.

 

Alex Stojanovic, researcher at the Institute for Government, an independent think tank based in the UK

For pharmaceutical companies, the Prime Minister’s deal is no panacea. If it ever came into force, British-based marketing authorizations would no longer be valid in the EU. There is nothing on participation in the EMA, and unless you’re based in Northern Ireland, it leaves in place a document check and possible regulatory controls at the border that could interrupt port logistics.

For all that, there are some real positives. The deal’s establishment of a customs territory would at least remove the requirement to prove the origin of goods. For complex products like medicines with many stages of synthesis, this removes one source of substantial cost. It also comes with a political declaration that, while not legally binding, does provide for the possibility of a softer Brexit than the EU had originally outlined in their mandate for the future relationship. Specifically, it does acknowledge a link between aligning to EU rules and the incidence of controls, even if this does not quite concede to the possibility of “frictionless trade.”

But the biggest plus for pharmaceutical companies is time. The transition and option to extend means companies have a lot more breathing space to make the necessary preparations.

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About the Author

James Strachan

Over the course of my Biomedical Sciences degree it dawned on me that my goal of becoming a scientist didn’t quite mesh with my lack of affinity for lab work. Thinking on my decision to pursue biology rather than English at age 15 – despite an aptitude for the latter – I realized that science writing was a way to combine what I loved with what I was good at.

From there I set out to gather as much freelancing experience as I could, spending 2 years developing scientific content for International Innovation, before completing an MSc in Science Communication. After gaining invaluable experience in supporting the communications efforts of CERN and IN-PART, I joined Texere – where I am focused on producing consistently engaging, cutting-edge and innovative content for our specialist audiences around the world.

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