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The Impact of the EU-UK Trade and Cooperation Agreement on Life Sciences Companies | Insights

Many months of intensive negotiations finally culminated on December 24, 2020, when the UK and the EU (“the Parties”) reached an agreement in principle on their future relationship. The EU-UK Trade and Cooperation Agreement (“the Agreement”) has since been approved by the UK Parliament and the European Council in expedited procedures. The Agreement came provisionally into effect on January 1 (following its signing on December 30, 2020) until February 28, awaiting the confirmatory vote of the European Parliament. The Agreement — over 1,200 pages — aims to minimize barriers to trade created as a result of the UK leaving the EU single market and to minimize disruption following the introduction of customs formalities on January 1.

Does the Agreement address industry’s concerns?

Unfortunately, the Agreement falls short of the broad “mutual recognition of conformity assessment” that the UK was asking for, which would have allowed EU member states to recognize certification by UK bodies to demonstrate compliance with EU standards. Therefore, many products, for example medical devices, will have to undertake two sets of conformity assessments, which will add costs and cause delays for businesses. Medical devices are not specifically mentioned in the Agreement, so there may be discussions between the UK and the EU, for example, regarding the recognition of different product markings or the cooperation of notified bodies.

Although it is encouraging for pharmaceutical companies that the Agreement includes Annex TBT-2 (Annex) that specifically relates to medicinal products for human and veterinary use — reflecting the importance of facilitating the availability of medicines — many important issues are unaddressed by the Agreement and remain open for future discussion, not least the fact that the mechanism of “dispute settlement” established in the Agreement does not apply to a dispute in relation to the interpretation and the application of this Annex.

Free trade and cooperation

The Agreement achieves a fundamental positive step in the future relationship between the UK and the EU by ensuring free trade. From January 1, there will be no tariffs or quotas on trade in goods, including medicinal products and medical devices, provided that the rules of origin are met. This goes well beyond traditional free trade agreements, demonstrating a determination by both Parties to secure a free trade deal and maintain cooperation. This cooperation is further observed by the introduction of some flexibilities to the customs formalities that began to apply when the UK became a third country on January 1.

Of particular interest to companies in the life sciences sector is that medical equipment and animals imported for medical purposes will benefit from conditional relief from import duties and taxes, and import prohibitions or restrictions of an economic character will not apply to them subject to certain conditions when they are brought into the customs territory of the UK or EU. Additionally, transport of medical products, appliances, equipment, and other articles required for medical care in emergency relief may be conducted without a valid road haulage operating license. These steps will help to limit disruptions to the supply of medicinal products between the UK and the EU, which is increasingly important in light of the COVID-19 pandemic. The body of the Agreement also confirms the continued application of intellectual property rights that are vital for companies in the Life sciences sector, including patents, supplementary protections certificates, and regulatory data protection and marketing protection. Additionally, the Agreement enables the continued participation of the UK in certain EU programs, including the Horizon Europe innovation and research program.

Mutual recognition of good manufacturing practice inspections and certificates

The Annex achieves one of the key industry objectives by providing for mutual recognition of good manufacturing practice (GMP) inspections and certificates to avoid doubling up on processes for the two markets. Further, before any new measures or changes concerning any of the applicable laws, regulations, and technical guidelines relating to GMP (as listed in the Agreement) can be adopted, they will be subject to a 60-day notification period to give the other side the opportunity to comment on the proposed changes. Both Parties have also agreed to endeavor to consult each other on proposals to introduce significant changes to technical regulations or inspection procedures and to endeavor to cooperate to strengthen, develop, and promote the adoption and implementation of internationally agreed scientific or technical guidelines. Further, the Annex preserves the need for both Parties to ensure a high level of protection of public health in line with internationally harmonized requirements and standards and the establishment of a Working Group on Medicinal Products to assist in monitoring, reviewing the implementation, and ensuring the proper functioning of the Annex.

This Working Group will offer a forum for discussion in relation to important issues that the Agreement has not addressed. For example, the Annex does not address some of the “immediate priorities” identified by the industry in a joint presentation by various pharmaceutical associations in November 2020 (Joint presentation: pharmaceutical and biotechnology industry associations from November 30), such as mutual recognition of batch testing and release for medicines or conformity assessments for medical devices or pharmacovigilance.

Issues affecting life science companies that are not covered by the Agreement

Existing guidance issued by the UK and EU authorities will continue to apply to the areas that have not been covered by the Agreement. For example, in the UK, the Medicines and Healthcare Products Regulatory Agency (MHRA) has confirmed that the UK will accept batch testing and Qualified Person certification conducted in the European Economic Area (EEA) for a period of two years, until January 1, 2023. In contrast, the European Commission’s position is that the EU will not mutually recognize batch release and that each batch of finished product must be certified by a Qualified Person in the EEA before being released for placing on the market in the EEA. For medical devices being placed on the Great Britain market after the transition period, the MHRA introduced the UK Conformity Assessment (UKCA) marking on January 1, which will become mandatory starting July 1, 2023. The MHRA has confirmed that CE markings will continue to be recognized, and certificates issued by EU-recognized Notified Bodies will continue to be valid until June 30, 2023. In contrast, the UKCA marking and certificates issued by UK Notified Bodies are not recognized on the EU market. Further, the EU Medical Devices Regulation (EU MDR) and EU in vitro Diagnostic Medical Devices Regulation (EU IVDR) will not be implemented in Great Britain. The regulatory regime for medical devices in Great Britain will continue to be based on the requirements derived from current EU legislation. For more information on the regulation of medical devices from January 1, see the following update.

A new European Commission Notice also creates certain time-limited exceptions for markets historically dependent on medicines supply from or through Great Britain after the end of the transition period (namely Cyprus, Ireland, Malta, and Northern Ireland). Pursuant to the Notice, for a period of one year, competent authorities in these jurisdictions may enable wholesalers to import medicinal products/investigational medicinal products from Great Britain without a manufacturing authorization, providing certain conditions are met. In “justifiable cases” certain controls, such as batch testing, may also be completed in Great Britain for medicines imported into these jurisdictions (however, marketing authorization holders need to notify the relevant competent authority explaining why theirs is a “justifiable case” by January 30). Finally, the Notice confirms the commission’s intention to amend Regulation (EU) 2016/161 to temporarily relax the requirement for unique identifiers affixed to medicinal products to be decommissioned on export to Great Britain (as a “third country”) only for new unique identifiers to be applied by importers in Cyprus, Ireland, Malta, or Northern Ireland – the Notice recognizes that compliance with these requirements would currently be impossible as there are currently no importers holding a manufacturing authorization located in Cyprus, Ireland, Malta, and Northern Ireland with capacity to meet the obligation to affix a new unique identifier.

Comment

The EU-UK Trade and Cooperation Agreement marks a positive first step in the future relationship between the UK and the EU. However, pharmaceutical companies, like many other businesses, are now facing unnecessarily burdensome and costly procedures to be able to place medicinal products and medical devices on the UK or EU markets as well as to demonstrate that the products in question comply with UK or EU law.

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