59.For organisations, businesses and healthcare authorities alike to prepare for business operation both during a transition period and thereafter, they need clarity over the UK’s future regulatory alignment with the EMA. Many organisations are looking to make business plans for 2018 and 2019 now. Johnson and Johnson, in written evidence, described an “urgent need for clarification” on the level of regulatory alignment that the UK is expecting to reach with the EU by the time of UK Exit day, to ensure there is no disruption of supply of products, and that no unnecessary costs are incurred.
60.The UK’s strength in early phase development in the pharmaceutical industry heightens the need for the level of regulatory alignment to be laid out in detail. We heard that the UK’s medical technology sector is the third largest in Europe and 98% of the sector is made up of SMEs with less than 250 staff and a turnover of under £5m (82%). As SMEs frequently have more constricted financial margins than larger pharmaceutical companies, early clarification from the Government on regulatory alignment to allow for detailed business continuity planning is critical.
61.The overriding message from almost all of the evidence received in this inquiry is that the UK should continue to align with the EU regulatory regimes for medicines, medical devices and substances of human origin both during any transition period and afterwards. Evidence submitted from large pharmaceutical companies, SMEs, academics, healthcare and workforce charities was all almost unanimous in the view that regulatory alignment with the EU would be the best post-Brexit option for the NHS, for patients, and for the UK life sciences industry.
62.If the UK diverges from the EU regimes in a manner that adds to the cost and timeliness of existing supply chains, then the UK will become a less attractive market for businesses. In this scenario, patients in the UK would not only experience delays in access to new treatments, but could also stand to wait longer to access generic drugs coming off patent. Johnson and Johnson’s written evidence summarised the situation:
Given the highly complex and integrated regulatory environment for this sector, we would like to see the UK maintain a regulatory system that is fully aligned with that of the EU. The continued supply of safe and effective medical devices, medicines and healthcare products currently on the UK market will depend on continued alignment with European regulation. J&J is not convinced that a UK-sovereign regulatory model is an improvement for post-Brexit Britain. It is unlikely whether globally-minded businesses would see it as a viable option to make this investment for a UK-only market authorisation. The UK must avoid introducing barriers to the adoption and diffusion of new medicines and devices. Any standalone approval system could limit the UK’s involvement in device development and pre-commercial launch evaluations, as well as access to innovation. Companies would prioritise markets where they can get early access. Taking a different regulatory course at this stage will result in significant disruption for companies and some may choose to withdraw from the UK market, with the result that UK patients no longer have access to the range of products currently available.
63.Dr Jayne Spink of Genetic Alliance UK elaborated in oral evidence on the effects on drug development and launch, arguing:
If the UK does not enable that seamless transition to continue collaboration on drug development, the UK will not only not be the first choice of country to launch, but it may be a disincentive to launching in the UK at all.
64.We heard that regulatory alignment was not just the more desirable option for the life science industry after Brexit, but it could actually be seen as the only feasible option. Dr Aisling Burnand of the Association of Medical Research Charities told us:
We have spent the last 40 years putting together frameworks to support research, and clinical trials to benefit patients. We have seen things like General Data Protection Regulation, which is coming into force in May; we have seen the clinical directive. To try to move to creating a new one overnight is just not workable.
65.Regulatory alignment with the EU was also highlighted as being the favourable option for substances of human origin regulation after Brexit. EU regulations cover the safety of blood, tissues and organs and have applied since the 2000s following scandals involving blood transfusions across a number of EU countries and ethical considerations involved in the transplantation of organs. The regulations stipulate minimum standards of quality and safety of blood, tissues, cells and organs, from procurement and donation through to the use of these substances in clinical care. In this area and more generally, Professor Jean McHale stressed in oral evidence to this inquiry the importance in the longer term of addressing how policy and law will adapt as these areas develop.
66.As previously outlined, the UK could look to align with EU regulations by adopting EEA membership as countries such as Norway do. However, as Michel Barnier has pointed out, this scenario is likely to be unacceptable to the UK Government as it would breach previously set out ‘red lines’ including coming under ECJ jurisdiction (to a greater or lesser degree) and accepting freedom of movement. As such, this inquiry heard limited evidence as to what this would look like for regulatory alignment.
67.As a third country, the UK could align with the EU through either a regulatory cooperation agreement or a mutual recognition agreement. However, according to the Medical Research Council, Switzerland gains access to new medicines 157 days later on average than the EU, despite bilateral trade agreements. Similarly, Canada and Australia have mutual recognition agreements with the EMA, but wait on average 6–12 months longer than the EU or US for new drugs to come to market. Steve Bates of the BIA argued:
If you look at markets that are not within the largest global regulatory environment—not the FDA or the EMA—we see that there is a difference of about 45% of medicines that were not launched in Switzerland, Canada or Australia.
68.The UK could align with another large market after Brexit other than the EU, such as the Food and Drug Administration (FDA) in the USA, but our evidence was almost unanimous in the view that EU alignment is preferable. Cancer Research UK stated that alignment with the FDA in the USA:
… may seem initially attractive given that drug manufacturers often prioritise the US for launching new drugs, and that the FDA is relatively quick to approve new drugs. However, there would be significant uncertainty in this approach. The US President has suggested deregulating the FDA, which has caused some concern among pharmaceutical companies, since this could pose a risk to patients.
Furthermore, the healthcare system is very different in the US, as is the way that drugs are paid for–with insurance companies playing a significant role rather than a national budget for drugs. Similarly, aligning with the FDA would necessitate a much wider assessment of the UK’s approval processes and its wider regulatory framework, such as those governing clinical trials or medical devices, which is far more consistent with that of the EU than the US, due to years of collaboration between the MHRA and EMA. Any significant step away from current practice would necessitate significant resource and would be incredibly risky, especially given the relatively short timelines involved. This would lead to further uncertainty and could jeopardise recent progress made to streamline UK drug approvals.
69.Along with the nature of regulatory alignment after Brexit, evidence to our inquiry also suggested that the duration of this regulatory alignment would be crucial. Fiona Loud of Kidney Care UK pointed out that, while on ‘day one’ of the UK leaving the EU the harmonisation of regulations may have been more or less achieved, the question remains over future regulatory divergence. She argued regulatory divergence may be an issue once again in five or ten years’ time, and we would like to see provisions put in place to ensure that alignment with the EU on regulations for medicines and medical devices extends beyond simply UK Exit day, with regular and systematic reviews of the level of ‘regulatory drift’ from EU regulations that the UK undergoes. With this in mind, we welcome the confirmation that the Government is seeking a close working relationship with the EMA to replicate the arrangements that we have now, as set out by Prime Minister in her 2nd March speech:
Associate membership of these agencies [including the EMA] is the only way to meet our objective of ensuring that these products only need to undergo one series of approvals, in one country.
But it would also be good for the EU because the UK regulator assesses more new medicines than any other member state. And the EU would continue to access the expertise of the UK’s world-leading universities.
70.We were also encouraged in September to hear Lord O’Shaughnessy assure stakeholders that the EU (Withdrawal) Bill would transpose new EU regulations covering medical devices and in-vitro diagnostics into UK law.
71.The UK must look to secure, as a priority in the next round of negotiations, the closest possible regulatory alignment with the EU. The continued supply of safe and effective medical devices, medicines and substances of human origin currently on the UK market will depend on continued alignment with European regulations.
72.At the same time, the UK Government should also be open to exploring other potential trade and regulatory agreements with the wider international life sciences community. If full regulatory alignment with the EU is not secured, then a distant second-best option for the life science industry and patients in the UK would be alignment with another large market such as the Food Drugs Administration in the USA. While this form of alignment would raise significant financial and patient safety issues, it remains preferable to the UK endeavouring to create a standalone regulatory system after leaving the EU.
73.We recommend that the nature and level of UK ‘regulatory drift’ in the life science sector from the EU be systematically assessed at regular intervals by current and future UK Governments, in order to prevent issues over a lack of harmonisation occurring in the future.
74.We heard that contingency planning is already underway by businesses and organisations for the possibility of a ‘no deal’ in the Brexit negotiations, a situation which would mean that full regulatory alignment would not be possible. Leslie Galloway of the Ethical Medicines Industry Group stated:
Coming back to the issue of a hard Brexit, on the basis of no information—and, no matter what is said in the media about having reached agreement or whatever, nothing is final until it is final—companies have to be responsible and assume a hard Brexit will happen. As a consequence, marketing authorisations have been moved to mainland Europe, at a very significant cost, and they will not come back to the UK. They are making preparations that will protect their businesses and that makes sense, otherwise medicines would not be available to patients.
Phil Thomson of GSK told us:
I can tell you that our latest estimate is somewhere between £60 million and £70 million of cost to be as prepared as we can be in a no-deal, hard Brexit situation. … We have to move on some of this now because the timeline to implement the laboratories takes 18 months. We cannot and do not want to be in a situation as a company in March 2019 where we have some sort of disruption in supply.
75.This opinion was echoed by Hugo Fry of Sanofi UK, who stated to us that, “There is a lot of work, and I reinforce the point that we have to do this now”, and Leslie Galloway of EMIG went even further, arguing, “For some companies it is too late … It is the message we have been delivering for some time.” Steve Bates also warned us in oral evidence that not all organisations across the life science sector are currently undertaking contingency planning for the possibility that a deal in the Brexit negotiations is not agreed. This lack of preparation poses its own problems, both for businesses and patients, if the UK finds itself exiting the EU without a deal on March 29th 2019:
Some in the industry are prepared to take some risk in the sense of the risk being that hard Brexit is not the outcome that we are heading towards and carry that risk at this point. You can buy certainty by investing against hard Brexit happening in March 2019, which probably means significant disruption with some significant costs, or you can take some risk that perhaps something will come through. That is the uncertainty that companies are operating in at present.
76.Businesses are faced with a choice between two options: investing substantial resources in preparations for a ‘no deal’ that may never come to fruition, with consequential costs which the NHS will eventually bear in purchasing their products, or declining to prepare for a ‘no deal’ at all and running the risk of being unprepared should this situation emerge on March 29th 2019. On being asked whether the sooner businesses have certainty over the UK’s desired relationship with the EMA the better, Phil Thomson of GSK responded, “Absolutely, yes.” When pressed on this at the final evidence session of this inquiry, Lord O’Shaughnessy stated that:
… we want to be in a position where we can defer or even dismiss those kinds of spending commitments because of guarantees we can give about the future relationship, but we are not there yet.
77.We reiterate the point made in our letter to the Secretary of State regarding Brexit transitional arrangements (15 February 2018), that rather than undermining the UK’s negotiating position, clarity about contingency planning to guarantee patient safety and continued health supplies will strengthen the UK’s negotiating position by demonstrating that we have a credible fall-back position. This contingency planning should be published as soon as possible to alleviate the concerns of businesses and patients. The European Medicines Agency has published its guidance on what is necessary for the UK to maintain continued access to medicines in a ‘no deal’ scenario, and we believe that this one-sided picture may harm confidence if it is not possible to compare it to the Government’s planned approach. Contingency planning is already taking away money that could otherwise be invested into pharmaceutical research or patient care, and calming the fears of life science companies to prevent them from investing in a ‘no deal’ scenario should be considered a priority in the next round of negotiations with the EU.
78.In line with the consistent calls for regulatory alignment with the EU after Brexit, evidence submitted to this inquiry also argued that the UK should avoid any duplication of the requirements covering batch testing, Good Manufacturing Practice (GMP) and Good Distribution Practice (GDP). The GMP and GDP are international standards converted into EU law and then applied to practice across Member States relating to production processes and supply chains. Steve Bates of the BIA told us:
In the UK, we have the second highest number of all good manufacturing practice sites [in the EU]. The impact for manufacturers will be increased cost of doing additional batch testing, if we end up with a hard Brexit.
79.As regulatory divergence over GMP and GDP will place unnecessary financial burdens on UK businesses and make the UK less desirable as a market as outline below, we believe that the UK should look to transpose these regulations into UK law in the EU (Withdrawal) Bill.
80.Throughout this report, we have used textboxes and diagrams to illustrate case studies of the arguments we are conveying. The first of these can be seen below:
Box 1: Case Study: Availability of medicines for prostate cancer patients
Prostate cancer treatment utilises a product which is manufactured only in the UK and is marketed in over 80 countries. State of the art, sterile, manufacturing facilities have been built and investment continues to support both the manufacture of this highly complex product and the testing laboratories, equipment and skilled staff required to assure product quality. The low turnover, long-service workforce has developed and retained the technical capability required to ensure the on-time release of this treatment to meet the needs of patients in over 80 markets. Total manufacture lead time is 12 months from active pharmaceutical ingredient (API) production to finished pack release.
Impact on patients:
A continued agreement and mutual recognition on testing between the UK and EU, or a suitable transition period and a future relationship between the UK and EU that maintains alignment on medicines regulation and trade would reduce the risk of complete supply disruption.
Source: Brexit and the impact on patient access to medicines and medical technologies - Brexit Health Alliance, January 2018
81.Qualified Persons (QPs) are individuals legally responsible for the safe batch release of medicines before they are placed on the market or used in clinical trials. Quality control testing by a QP is performed in one member state and then applies across the EU. If QPs in the UK are no longer recognised in other EEA countries, then there will be a requirement for any medicines or devices exported from Britain to have a QP based in each customer’s country. The fear expressed by many organisations in written evidence was that this will increase the cost of doing business and thus dissuade companies from investing in British trials, as well as leading to those QPs currently residing in the UK moving to other EEA states. The severity of this issue was underlined by Thermo Fisher in written evidence, who stated that:
Brexit jeopardises the entire clinical trials industry as pharmaceutical companies feel they cannot now commission new trials in the UK as the drugs would not be easily exportable to the European Economic Area.
82.Thermo Fisher went on to call on the Government to provide some form of reassurance around the future of QPs in the UK:
We have not received an assurance or recognition of QP status as a lynchpin in the life sciences ecosystem. Without this [we] cannot continue to function in the long-term. The likely result–which we have already seen through a steep drop off in our inward investment–will be businesses moving their manufacturing sites out of the UK.
83.These business decisions relating to investment in contingency planning for a ‘no deal’ Brexit will, we heard, ultimately have implications for patient care and the NHS. Steve Bates of the BIA argued that:
There could be a cost implication for the NHS, which would then have a knock-on effect [on patients] because this stuff does not come for free. Then there is delay, and once you are in a second-division market or regulatory environment, global companies will see this as a place where they may choose not to come.
84.While we are pleased to note the Government’s position that arrangements must be put in place to protect patients, we are concerned that the contingency planning has not been made public to ensure it has received the appropriate scrutiny to guarantee its effectiveness. Additionally, while Lord O’Shaughnessy was correct to point out in oral evidence that “The MHRA does about a fifth of the EMA’s pharmacovigilance work, so, from a domestic capacity point of view, we do have domestic capacity”, this conclusion appeared to have been reached without consideration that many UK QPs are relocating or making plans to relocate to the EU already over fears that mutual recognition agreements may not put in place. This is likely to significantly affect the QP capacity the UK retains domestically after Brexit.
85.To allay fears within the life science sector, and to prevent the relocation of Qualified Persons (QPs) from the UK to the EU-27, the Government must seek agreement with the EU for those QPs currently working in the UK to continue to have their work recognised in EEA countries, ideally in the Withdrawal Agreement for the short to medium term and in regulatory cooperation or a mutual recognition agreement for the longer term.
86.At the same time, as any Brexit deal, and the agreements proposed within it, could collapse, we recommend that the Government publish its contingency planning as soon as possible for a situation in which no mutual recognition of QPs in the UK and EU is agreed. This should include proposals to prevent the exodus of UK QPs, and contingency planning around the training and recruitment of new QPs to fill any vacancies.
87.Furthermore, as regulatory divergence over Good Manufacturing Practice and Good Distribution Practice will place financial burdens on UK businesses and make the UK less desirable as a market, we recommend that the UK should transpose these regulations into UK law in the EU (Withdrawal) Bill.
88.All EU Member States are part of the EMA. EEA countries are also part of the EMA, and have access to the centralised marketing authorisation procedures, but do not play a role in decision making and the operation of the EMA. For other countries, such as Switzerland, Australia and Canada the EMA has mutual recognition agreements, which outline what element of manufacturing or distribution practice will be recognised. The EMA has wide ranging responsibilities, but, as the diagram below shows, these only make up part of the total life cycle for products in the life science sector:
89.After a protracted period of delay, we welcome the clarity provided by the Prime Minister in her speech of 2nd March regarding the UK’s planning for its future relationship with the EMA, with the preferred position being that of ‘associate membership’. She explained how:
We would, of course, accept that this would mean abiding by the rules of those agencies and making an appropriate financial contribution.
I want to explain what I believe the benefits of this approach could be, both for us and the EU.
First, associate membership of these agencies is the only way to meet our objective of ensuring that these products only need to undergo one series of approvals, in one country.
Second, these agencies have a critical role in setting and enforcing relevant rules. And if we were able to negotiate associate membership we would be able to ensure that we could continue to provide our technical expertise.
Third, associate membership could permit UK firms to resolve certain challenges related to the agencies through UK courts rather than the ECJ.
Fourth it would bring other benefits too. For example, membership of the European Medicines Agency would mean investment in new innovative medicines continuing in the UK, and it would mean these medicines getting to patients faster as firms prioritise larger markets when they start the lengthy process of seeking authorisations.
But it would also be good for the EU because the UK regulator assesses more new medicines than any other member state. And the EU would continue to access the expertise of the UK’s world-leading universities.
And, of course, Parliament would remain ultimately sovereign. It could decide not to accept these rules, but with consequences for our membership of the relevant agency and linked market access rights.
90.We are encouraged that the Government has clearly articulated its desired future relationship with agencies such as the EMA, and we believe that associate membership is a desirable model for the UK. However, we note the draft text of the EU negotiating position which states that:
The European Council further reiterates that the Union will preserve its autonomy as regards its decision-making, which excludes participation of the United Kingdom as a third-country to EU Institutions, agencies or bodies. The role of the Court of Justice of the European Union will also be fully respected.
91.There appears a fundamental disjunction between the ambitions of the EU and the UK with regards to UK EMA membership, and we fail to see a clear solution that could be reached during the negotiation process. While there may be significant sector level advantages for the EU and the UK in allowing UK associate membership of the EMA, this does not guarantee that such a relationship will be ensured after the UK exits the EU. UK Exit negotiations are being conducted as a ‘single package’, meaning they have the potential to fall apart if any area of the negotiations fails to agree terms. The Government must therefore engage in contingency planning for how, if associate membership of the EMA is not achieved, they will be looking to fulfil their objectives of ensuring products only need to undergo one series of approvals, in one country and contributing to the setting and enforcing of relevant rules. The publication of this contingency planning will give much needed security to industry and patients, and in the highly technical areas around the safety monitoring and regulation of pharmaceutical products with complex supply chains, extensive public scrutiny of any contingency planning will ensure that all relevant aspects are covered to guarantee the health of UK patients regardless of the Brexit outcome.
92.We welcome the Government’s announcement that it will seek associate membership of the European Medicines Agency (EMA). We call on negotiators from both sides to put the needs of patients first and foremost as negotiations on this matter progress. However, the EU’s draft negotiating position appears to suggest that continued UK EMA membership may be rejected. We therefore recommend that the Government publish any contingency planning it has undertaken for a situation in which associate membership of the EMA is not achieved.
64 Q261 [Emma Greenwood]
68 [and others]
69 , , [and others]
70 , , [and others]
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78 Q150 [Steve Bates]
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84 Q175 [Leslie Galloway]
87 Q215 and Q216
88 Q214 [Steve Bates]
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98 Q225 [Professor Boyd]
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Published: 21 March 2018