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2 years ago-Biopharma Group

Brexit day arrives; industry continues to face lack of clarity as transition period begins

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LONDON – Brexit finally becomes a reality at midnight central European time on Jan. 31, but for the life sciences industry uncertainty continues, as the U.K. enters an 11-month transition phase during which the terms of its future relationship with the EU must be negotiated.

After almost four years of working to secure the objectives of maximum alignment in medicines regulation, continued participation in the EMA, access to EU research programs and the ability to recruit staff from Europe, the U.K. Bioindustry Association (BIA) and the Association of the British Pharmaceutical Industry (ABPI) now need to redouble their lobbying efforts.

And while nothing will change during the transition period, companies will need to prepare for – as yet unspecified – new trading arrangements that will come into effect at the beginning of 2021.

The EU is expected to finalize its negotiating mandate next month and has published some interim conclusions. It is prepared to agree to a “balanced, ambitious and wide-ranging free trade agreement” as long as there are “sufficient guarantees for a level playing field.” That means it will not give the U.K. access to its market without a commitment that U.K. regulatory standards remain in alignment.

In terms of regulatory cooperation in the future, the EU is proposing a voluntary framework “in areas of mutual interest” such as medicines and medical devices.

The U.K. government, meanwhile, “has kept its position close to its chest,” according to Michael Warren, BIA’s Brexit consultant. “We hope for clarity next week,” he said. “We are hoping to see some detail in the mandate relating to life sciences.”

Talks will not start officially until March, and Warren noted, the EU will take time to ratify the agreement with all 27 member states. That means a draft agreement is needed by September/October. “So there is only six to eight months to negotiate,” said Warren, giving a status report to BIA members in a webinar held 24 hours in advance of Brexit.

If anyone thought the 3.5 years of negotiations around the Brexit withdrawal agreement coming into force on Friday were tough, the next few months are expected to be “a different order of complexity,” Warren said.

Anusha Panjwani, senior policy manager at the U.K. government Office for Life Sciences, told the webinar audience that the government is “acutely aware we have a very, very, tight timeline.” She promised frequent engagement with the industry “to reach a consensus for prioritizing your objectives for the free trade agreement” with the EU.

Panjwani reiterated that the U.K. government is committed to being outside the single market, meaning an end to the free movement of labor to and from the U.K. and the EU, and to be outside the customs union. As a result, after Dec. 31, “the way you trade will change; you need to prepare,” said Panjwani. Companies will have to make customs declarations to import and export goods between the U.K. and the EU, and guidance on what is required will be issued “in due course” and as negotiations progress, she said.

Although the industry continues on the same footing for the next 11 months, the status of the U.K. Medicines and Healthcare products Agency (MHRA) will change at midnight Jan. 31. For now it will still have access to EMA databases, but the agency will be outside the EMA medicines regulation network and only eligible to attend EMA committee meetings if something of specific interest to the U.K. is on the agenda.

Panjwani acknowledged companies need to understand the implications of what she termed this “diminished” position of MHRA. “A lot of you are requesting guidance. I request a little patience; MHRA will issue it very, very shortly,” she said.

While the transition period is portrayed as a limbo period where nothing changes, for medical devices companies it means they will have to go ahead and implement the new, stricter EU rules on getting marketing approval for devices, coming into force in May. The EU regulation “will apply,” Panjwani said.

Pulling out of the EU single market means British citizens will no longer have automatic rights to live and work anywhere in Europe. While both the EU and the U.K. have committed to guarantee the rights of U.K. citizens currently living in the EU-27, and vice versa, in the future it will be up to individual member states to decide their immigration policy vis-a-vis the U.K.

That is a concern for multinationals with operations in the U.K. and elsewhere in Europe. For U.K.-based companies, being cut off from Europe’s skills base would be even more serious.

At the start of the week, the U.K. government announced a fast track visa scheme, Global Talent, for leading scientists will open on Feb. 20. Further reforms to immigration policy post-Brexit are promised to ensure companies, universities and the National Health Service can continue to recruit staff from Europe.

“Workforce has been a sensitive issue for a large number of you,” said Panjwani. Under the Global Talent scheme, there will be no cap on numbers, dependents will have access to the labor market and there will be an accelerated path to settlement within three years of coming to the U.K.

Andrew Croyden, director of skills at ABPI, welcomed news of the Global Talent scheme and moves to introduce a points-based immigration policy, “There is now a clear opportunity to build a system which lets our members recruit the experts they need, wherever they’re from,” he said.

“Changing the rules about how companies can hire and move skilled people is particularly important for the pharmaceutical industry, as it grapples with the evolving skills shortages it faces now, and is likely to face in the future,” Croyden said in a statement when the new scheme was announced.

Free rein

The scale of U.K. Prime Minister Boris Johnson’s victory in the general election in December has given him free rein to shape the future relationship between the U.K. and the EU, without referring back to Parliament. Underlining the determination to deliver on the election slogan “get Brexit done,” the government added a clause to the withdrawal agreement bill, to lock in the end of the transition period to midnight on Dec. 31, 2020, regardless of whether negotiations on the future relationship are completed or not.

That leaves open the possibility of leaving the EU without a trade deal at the end of 2020. The ratification of trade deals is incredibly complex, and there are many commentators who think it will not be possible to conclude a comprehensive agreement in the next 11 months.

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