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During CPhI Worldwide in Madrid, Lynne Byers, executive director of NSF International detailed the facts about how Brexit can impact the pharmaceutical industry.
Brexit can be a rather flummoxing subject, with many trying to predict which scenario will be more likely the result come 29 March 2019. However, the pharma industry is already feeling the impact of the United Kingdom’s (UK’s) decision to leave the European Union (EU), with many companies preparing for what some consider to be the worst-case scenario-a ‘no-deal’ Brexit.
During a media breakfast held at this year’s CPhI Worldwide in Madrid, Spain, Lynne Byers, executive director for NSF International, laid out the facts on Brexit, the pharmaceutical industry and what a ‘no-deal’ scenario might mean for companies.
“Looking at the import and export of medicines going between the UK and EU each month, we know that 45 million packs are sent from the UK to the EU and 37 million packs are sent the other way every month,” stated Byers. “Therefore, we are faced with a massive question as to how this trade will keep flowing after Brexit.”
A failure to secure a Brexit deal could lead to disruptions to the medicines supply chain and result in harm to patients. Uncertainty extends beyond UK’s population as the impact of Brexit will affect those living in Europe as well. This uncertainty, Byers anticipates, will last over the next one to three years.
Yet, there are several potential post-Brexit scenarios on the table. “The less contentious or less difficult situation would be for the UK to become part of the European Economic Area (EEA), which means that there is still free trade possible across the member state boundaries,” Byers continued. “However, this scenario does not comply with the government’s red lines.”
Assessing the UK government’s so-called ‘red lines’-the starting principles of Brexit deal negotiations-Byers revealed that the preferred relationship from the UK’s perspective would be similar to that of Canada or the World Trade Organization. The UK government has specified it does not want the free movement of people, it wants the ability to negotiate its own trade deals, it doesn’t want to contribute too much to the EU budget, it doesn’t want jurisdiction of the EU courts of justice, and it wants to have regulatory autonomy (1).
Since Theresa May triggered Article 50 in March 2017, the official preparations for the UK’s exit from Europe have been underway (2). During the second phase of these negotiations, both the UK and the EU came to an agreement that if a deal is struck then a transitional period would be allowed, alleviating some of the pressures on government and industry resulting from the regions’ divorce.
This transitional period has been agreed to start after the official Brexit date, 29 March 2019 and will continue for 21 months until 31 December 2020. During this period, the UK will continue to follow all the EU rules and will still pay into the EU and the different regulations. Also, the UK may sit on some of the European bodies and committees, but it will not have any voting rights.
However, there are no assurances that this transitional period will happen as it is conditional on whether or not the UK and EU can come to an agreement on a Brexit deal. “Over the past few months, the UK government has published masses of advice on what a ‘no-deal’ scenario may mean, but what we don’t really know is what Europe is saying about this outcome,” Byers said.
Currently, there are four potential routes a company can follow to obtain marketing authorization for a medicinal product within Europe: the centralized procedure, the national procedure, the mutual recognition procedure, and the decentralized procedure. The specific choice of route to follow depends on where the product will be marketed, and the type of medicine concerned (3).
Looking at new marketing authorizations post-Brexit in more detail, Byers revealed that for centrally approved products, the EU advice is that it will be a legal requirement for companies to have a marketing authorisation holder (MAH) located within the EEA from the end of March 2019. “The UK, however, are being a bit a more flexible on this,” she continued, “and have stated that it will not be a requirement for companies to have a MAH in the UK until the end of 2020.”
For authorization applications that would fall under the mutual recognition or decentralized procedures, which is a common route for many generics, for example, the EMA has specified that the UK can no longer be used as a reference member state or a concerned member state. “Reference or concerned member states are those who can assess the applications,” explained Byers. “If the UK is a third country, it cannot be used for these applications according to the EMA. However, the UK government has said that if an application is ongoing on the exit date, then the UK will accept the outcome of that assessment.”
In the instances where marketing authorizations are in place, the EMA has specified that the legal entity needs to be based in Europe, not the UK, whereas the UK government has stated that it will automatically assign UK licences or a UK marketing authorization to these products. “So, for many companies it has become necessary for them to set up new legal entities outside of the UK,” Byers added, “with Ireland proving to be a popular destination in these cases.”
Legislation dictates that medicinal products to be marketed within Europe must be tested against the EMA-approved specifications and released by a qualified person (QP) in the European territory. Manufacture of the product can be performed outside the region; however, the site will be subject to inspection by EU authorities (4).
There are some caveats; for example, certain countries that have mutual recognition agreements (MRAs) in place can perform batch testing and this will be accepted within Europe. However, it is highly unlikely the UK will have an agreement of this sort in place by 29 March 2019.
“A lot of people are hopeful that the UK will achieve mutual recognitions with different countries,” said Byers. “Yet, putting an MRA in place doesn’t just happen in five minutes, it would probably take a year or longer unless there is a very, very pragmatic approach by the regulators.”
If MRAs are not in place then it will mean that companies based in the UK will be subjected to inspections by the EU, Australia, Canada, Israel, Japan, New Zealand, and the United States (US). Also, the Medicines and Healthcare products Regulatory Agency (MHRA) in the UK would be legally required to inspect manufacturing facilities in those countries.
“Once the UK leaves the EU in a ‘no-deal’ scenario, the EMA has advised that products released in the UK for export into the EU will need to be re-tested and released within the region,” said Byers. “The UK government, however, have stated that if a product has been tested and released in Europe to then be imported into the UK, there will not be a need to perform further batch release and testing by a QP.”
This re-testing requirement has an impact on the transference of analytical methods, which is already being undertaken by some companies at great cost, both in terms of time and resources. Furthermore, if a product enters the UK from another country-such as India-to then be further distributed within Europe, this product will need to not only be tested on entry into the UK but will then need to be re-tested to enter Europe, thereby duplicating the workload.
“Another important point to consider for exports is that if your company is exporting products from the UK into the European distribution chain, then after Brexit you will need a special authorization to do this,” continued Byers. “This is called a manufacturing import authorization (MIA).”
If there is a ‘no-deal’ outcome, then the EMA has advised that the UK will no longer have access to EudraVigilance-the system used to capture all the potential adverse events within Europe (5). “This is rather worrying,” said Byers. “Although, the UK has stated that they are going to develop their own systems by March 2019, which is challenging.”
Currently, many qualified persons for pharmacovigilance (QPPVs) are in the UK, but after Brexit, UK QPPVs will not be eligible within the EU. “Legally, after Brexit, the QPPV will need to be physically present in a European country,” confirmed Byers. “At the moment, many are based in the UK, which is probably a result of multinational companies basing their headquarters there. So, these QPPVs are being required to move.”
EMA has confirmed good manufacturing practice (GMP) and the good distribution practice (GDP) will still apply and the UK has stated it will continue to follow the European guidance. “So, this should mean that equivalence can be maintained between the two systems for this, at least,” Byers added.
Among the changes pharma companies face, changes to packaging may have biggest impact, according to Byers. “If you change a batch release site, your QP, and your marketing authorization number, the packaging will be affected,” she confirmed. “All the artwork will need to change and everything will need to be repackaged, which is a substantial issue.”
Some countries do allow a ‘grace period’ to change the packaging; however, this can be limited to six months, which may not suffice depending on the number of units that need to be changed. So, this is a huge undertaking that Byers believes may have been missed by many companies in their Brexit preparations.
In February 2019, the whole of Europe, including the UK, will be expected to be compliant with the falsified medicines directive (FMD), which will involve the implementation of various measures to ensure the safety of medicines. These measures include obligatory packaging safety features-a unique identifier and an anti-tampering device-as well as strengthened record-keeping requirements for wholesale distributors (6).
“This record-keeping requirement involves a system whereby data is sent from the manufacturers to a national database,” said Byers. “From there it then goes up to a European database that tracks every pack in Europe. This information is then transferred back down the chain to the pharmacies, where a barcode can be scanned and the product is confirmed as being legitimate or counterfeit. Again, we are questioning what will happen with this European system and the UK after March, will there be access or not?”
Once the UK has left the EU, active ingredients manufactured within the UK will be considered the same as an imported active substance and will require confirmation that it has been produced under European GMP standards. A ‘white list’ includes some countries outside of the EU that are considered to have equivalence relevant to API manufacture (7).
“Hopefully, the UK will be included on this ‘white list’,” said Byers. “But, if that doesn’t happen, then the UK will need to have special certification of every batch of API product that is manufactured in the UK to be used in Europe.”
In 2019, the way clinical trials are conducted with the EU will undergo change. The Clinical Trial Regulation EU No. 536/2014 is set to replace the existing directive early in the year and is aimed at harmonising the assessment and supervision processes for clinical trials throughout the EU, via a pan-European database and portal (8).
“Unless there is a special agreement in place, the UK will not have access to this portal,” said Byers. “Therefore, the UK will need a separate clinical trial authorization for trials taking place in the UK versus those taking place in Europe, and will also need to perform separate QP certification for the investigational medicinal products depending on the location of the trial.”
The pharma industry faces many consequences resulting from the UK’s decision to leave the EU. Best-case scenario-as in the one with the least impact-would be for the UK to join the EEA; however, based on the UK government’s ‘red lines’ this outcome is highly unlikely.
All other options, including a ‘no-deal’ scenario, will mean a multitude of changes for companies in the UK and the EU. There are some aspects that could help reduce the impact on the pharma industry, such as MRAs and the UK being listed on the European API ‘white list’, but these will depend on Brexit deal negotiations.
“Basically, we need some pragmatic solutions to help the product to keep flowing between Europe and the UK, whether it is going one way or the other it actually impacts all countries with the EU, not just the UK,” Byers concluded.
1. House of Commons Library, “Brexit: Red Lines and Starting Principles,” researchbriefings.parliament.uk, Commons Briefing Papers, 22 June, 2017, https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7938.
2. BBC News, “Brexit timeline: UK’s departure from the EU,” bbc.co.uk, news story, 26 March 2018, https://www.bbc.co.uk/news/uk-politics-43546199.
3. Taylor Wessing, “The Treatment: A guide for life sciences companies coming to Europe,” united-kingdom.taylorwessing.com, guidance document, published 2016.
4. N. Dinwoodie, “Batch Release Testing: A Geographical Driver for Outsourcing in Europe,” BioPharm International, 2009 Supplement, Issue 3, April 2009.
5. EMA, “EudraVigilance,” ema.europa.eu, https://www.ema.europa.eu/human-regulatory/research-development/pharmacovigilance/eudravigilance.
6. European Commission, “Falsified medicines,” ec.europa.eu, Policies, Information, and Services, https://ec.europa.eu/health/human-use/falsified_medicines_en.
7. European Commission, “Importation of Active Substances-Listing of Third Countries,” ec.europa.eu, Policies, Information and Services: International Cooperation, Pharmaceuticals, https://ec.europa.eu/health/international_cooperation/pharmaceuticals/Importation_activesubstances_en.
8. EMA, “Clinical Trial Regulation,” ema.europa.eu, Human Regulatory: Research and Development, https://www.ema.europa.eu/en/human-regulatory/research-development/clinical-trials/clinical-trial-regulation.