On 24 December 2020, the European Union and the United Kingdom reached an agreement in principle on the EU-UK Trade and Cooperation Agreement (the Agreement). This was the result of many months of detailed negotiation within an increasingly difficult political environment. The final Agreement does not cover all of the aspects about which life sciences companies have been concerned, and there are areas that will likely be the subject of further discussion during the implementation of the Agreement. However, many view the Agreement as being an important first step in the UK’s continuing relationship with the EU. We set out below a summary of the key aspects of the Agreement relevant to life sciences companies.
Following conclusion of the Withdrawal Agreement on 24 January 2020, the UK left the EU on 31 January 2020. The Withdrawal Agreement includes an 11-month transition period, which will expire on 31 December 2020, during which the UK agreed to continue to apply EU law and procedure. During the transition period, the EU treats the UK as if it were a Member State (and not as a third country following the UK’s withdrawal), with the exception of participation in the EU institutions and governance structures. The transition period provides time for the UK and EU to negotiate a framework for partnership for the future, which is now crystallised in the Agreement.
The Agreement focuses primarily on free trade by ensuring no tariffs or quotas on trade in goods, including healthcare products such as medicinal products and medical devices from 1 January 2021. Thereafter, the EU and the UK will form two separate markets governed by two distinct regulatory and legal regimes. As such, the Agreement seeks to minimise barriers to trade in goods while accepting that border checks will become inevitable as a consequence of the UK no longer being part of the single market.
The Agreement includes an Annex that specifically addresses issues relating to trade and availability of medicinal products between the UK and EU. But those sector-specific issues are intertwined with the terms set out in body of the Agreement.
What are the trade-related issues concerning medicinal products?
The key elements of the Annex are as follows:
- The principal objective of creating the Annex is to facilitate availability of medicines, promote public health and protect high levels of consumer and environmental protection in respect of medicinal products. This will facilitate availability of medicinal products in the respective markets.
- The Agreement preserves the need to adhere to internationally harmonised requirements and standards to guide regulatory review of applications for marketing authorisation.
- The Annex provides a framework for the recognition of inspections for Good Manufacturing Practice (GMP) and for the exchange and acceptance of official GMP documents between the Parties, with a view to avoiding or otherwise minimising duplication of site inspections of manufacturing facilities. The Parties however retain their rights to conduct their own inspection of facilities that have been certified as compliant by the other Party. But the recognition regime provided in the Annex is not extended to batch release certification.
- Any changes to existing regulatory frameworks or requirements of the respective Parties are subject to a 60-day notification period before they are adopted according to the local procedural requirements. This is to ensure that comments on the proposed changes are taken into account.
- The Agreement confers rights and obligations on each Party within the framework for regulatory cooperation, while fully respecting their regulatory and decision-making autonomy. In this regard, the UK MHRA has already begun the process of reviewing new approaches to the assessment of clinical efficacy and safety to facilitate product approval.
- A Working Group is established to assist in monitoring and reviewing the implementation and ensuring the proper functioning of the sector-specific Annex for medicinal products. This will likely become the forum for exchange of information between the Parties.
What does this mean for life sciences companies?
The Agreement does not cover all regulatory areas relevant to the supervision of medicinal products, such as pharmacovigilance, which will likely be the subject of further bilateral discussions between the UK and EU.
The Agreement itself only covers GMP inspections and certificates for facilities. It does not include reciprocal arrangements for the recognition of batch testing certification, in order to avoid unnecessary re-testing on importation. In this regard, the UK and the European Commission have taken divergent positions.
- The UK has already developed the list of approved countries, including the EEA, to enable UK importers and wholesalers to continue to recognise QP certification and regulatory standards for active substance manufacture performed in those countries in the same way as before 1 January 2021. The UK will also accept batch testing performed in EEA countries for a period of 2 years after the transition period.
- In contrast, the European Commission had maintained that absent an agreement on future trading relationship, the UK would be treated as a third country in all respects. The Annex to the Agreement goes some way to avoiding unnecessary repeated site inspections. However, it stops short of a full mutual recognition agreement, which ordinarily removes the need for re-certification for batch release of products that originate outside the EU in order for such products to be placed on the EU market.
What about medical devices?
Medical devices are not specifically referred to in the Agreement. But medical devices will benefit from the overarching tariff-free and quota free trade on goods.
The Agreement does not cover recognition of CE marks or cooperation of notified bodies or competent authorities. Certain aspects of the Agreement may provide future opportunity for the technical requirements relating to evaluation of medical devices to be discussed.
As such, the UK will continue with its plan to have a free standing “UKCA” from next year. In addition, the MHRA has stated that until 30 June 2023, CE markings will continue to be recognised in Great Britain and certificates issued by EU notified bodies will continue to be valid for the Great Britain market. However, UKCA marks and certificates from UK based notified bodies will not be recognised in the EU.
In addition, the UK will not implement the new Medical Devices Regulation and the In Vitro Diagnostic Regulation. Rather, the UK regulatory regime will continue to be based on the existing Directives governing medical devices, active implantable medical devices and in vitro diagnostic medical devices.
Will the Northern Ireland Protocol be affected?
The Agreement will not change the terms of the UK Withdrawal Agreement, which remains in place, protecting amongst other things peace and stability on the island of Ireland. The Withdrawal Agreement – and the Protocol on Ireland and Northern Ireland, in particular – will be implemented on 1 January 2021. Under the Northern Ireland Protocol, Northern Ireland will continue to follow the EU rules after 1 January 2021. As such, the MHRA needs to operate outside the EU regulatory framework in respect of Great Britain, but continue to regulate medicines in Northern Ireland largely on the basis of EU law. This causes a number of complications in relation to management of the supply and movement of medicinal products around the UK.
The European Commission published a notice on the application of the EU pharmaceutical acquis in markets historically dependent on medicines supply through Great Britain. This acknowledges that Northern Ireland, among other territories, is dependent on medicines supplied through Great Britain, and that companies may need more time to put in place appropriate authorisations and testing facilities in Northern Ireland, given that Northern Ireland continues to follow the EU regime. The Commission is therefore allowing certain flexibilities to be in place through 2021 to ensure there are no medicine shortages in these territories.
What happens next?
The Agreement was reached very close to the expiry of the transition period. The terms of the Agreement have to be ratified by the UK and the EU through their respective legislative procedures. The European Council adopted on 30 December 2020, by written procedure, the decision on the signing of the EU-UK Trade and Cooperation Agreement and its provisional application as of 1 January 2021, pending the consent of the European Parliament and conclusion by the Council decision next year. The UK Parliament voted on the Agreement on 30 December on the legislative bill concerning the Agreement.