MSc Thesis: Legal Implications of Brexit on Mutual Authorisation

This report investigates the legal status of mutually recognised authorisations following the UK's departure from the European Union, particularly when the UK serves as the Reference Member State. It begins with a literature review covering key principles and legal bases, including Article 50 of the Treaty on the EU, the EU's regulatory system for medicines, and the pharmaceutical sector's landscape. The report delves into the potential impact of a no-deal Brexit, the meaning of the WTO's PTEA, and pre-Brexit figures related to drug pricing, biosimilars, and clinical trials. It further examines the post-Brexit effects on the pharmaceutical industry, including potential diminished innovation, loss of global research leadership, and decreased R&D spending. The report concludes with recommendations such as negotiating 'associated country' status in EU research funding programs, securing bilaterally favorable agreements for drugs and medical devices, and ensuring the free movement of skilled professionals.

A Mutually Recognised Authorisation: What will be
its legal status when UK leaves the EU where the
UK is the Reference Member State
By
This project is submitted in part fulfillment of the QQI/NUI requirements for the award of
Master of Science in Medical Technology Regulatory Affairs.
29 July, 2019

Declaration
Title: A Mutually Recognised Authorisation: What will be its legal status when UK leaves
the EU where the UK is the Reference Member State
Name: ___________
ID Number: _____________
Academic supervisor: _____________
Declaration: “I hereby declare that this project is entirely my own work and that it has not
been submitted for any other academic award, or part thereof, at this or any other
education establishment”.

Table of Content
Contents
Literature Review........................................................................................................................................4
Principles and legal basis.........................................................................................................................4
Article 50 process steps.......................................................................................................................4
European Union regulatory system for medicines...............................................................................8
The pharmaceutical sector......................................................................................................................9
Impact of No Deal..................................................................................................................................11
The meaning of WTO's PTEA.................................................................................................................16
Methodology.............................................................................................................................................18
Limitations.............................................................................................................................................18
Pre-Brexit Figures..................................................................................................................................18
Drug pricing and reimbursement...........................................................................................................20
Biosimilar drugs.....................................................................................................................................20
Clinical trials..........................................................................................................................................21
Effect of Brexit on the pharmaceutical industry – Post-Brexit...............................................................21
Diminished innovation...........................................................................................................................22
Losing its status of global research leader.............................................................................................23
Decreasing R&D spending..................................................................................................................23
Recommendations.....................................................................................................................................25
Negotiating 'associated country' status in research funding programs of the EU.................................25
Negotiating bilaterally favorable agreements for drugs and medical devices.......................................26
Assurance of free movement of skilled professionals...........................................................................26
References.................................................................................................................................................29

Literature Review
Principles and legal basis
In order to evaluate the regulatory aspects of Brexit, it is required that some of the basic facts
should recalled related with Art 50, Treaty on the EU process steps, the "Withdrawal Bill of the
EU" and the legal framework related with medicinal products.
Article 50 process steps:
The UK held a referendum on 23rd of June, 2016. The issue was if the United Kingdom should
remain a part of the European Union. It's a modest majority of 51.89% of the voting was in favor
of leaving the EU. On 29 March 2017, a notification was given by the United Kingdom to the
European Council. In this notification, it had revealed its intention of leaving the European
Union and thereby formally triggering Article 50, Treaty of the EU, which provides a chance to
the member states to voluntarily withdraw from the European Union. Article 50 provides the
process that needs to be followed by a member states for leaving the European Union according
to its own constitutional requirements (Surviving Brexit, 2016).
Once it has been triggered, Article 50 provides a period of two years for negotiating the two
agreements. The first agreement is the withdrawal agreement GT related with details of the exit.
The second agreement is a distinct framework agreement, which takes into account the
framework of future relationship of the member states with the European Union required to be
done in accordance with Article 218, Treaty On The Functioning of EU (TFEU). It provides the
details regarding how the negotiations need to be opened and concluded. It also regulates the

conclusion of international agreements by the European Union (Thompson, Williams, Ellingworth
and Bates , 2017).
The withdrawal agreement is going to cover the immediate issues like the rights of the residents
of the EU who are living in the UK and similarly the privileges of the UK residents who are
living in the European Union, the financial commitments undertaken by the UK as a Member
Nation, border issue's and the seat of EMA, as well as the other agencies and the international
commitments that have been undertaken by the United Kingdom as a member nation of the EU.
As mentioned by Article 50, the final withdrawal and is required to be ratified by the United
Kingdom and it should also be approved by the EU Parliament along with at least 20, out of 27
member states who are represented in the EU Council by qualified majority (Anekwe, 2015).
The agreement related with future framework has to describe the conditions concerning
collaboration on a vast range of subjects. For example, it includes the level of access of the UK
to the single market in terms of goods, people and services. Moreover, the requirements related
with financial contributions, influence over the rules and regulations of the EU and adherence to
the laws of the European Union are also some of the issues that are going to be a part of this
agreement. Consequently, keeping in view the pharmaceutical regulatory and pharmaceutical
industry, a major section is going to be the agreement providing the basis for trade in future and
the framework for cooperation concerning certain objects of regulation (Galsworthy and Davidson,
2015). The agreement related with future framework is also going to need unanimous support
from the members of the council and simple majority in the European Parliament. In the same
way, it also needs the approval of all the member states. Then this agreement should be ratified
by all the rest of the 27 member states and also the government of the United Kingdom
(Bradshaw, 2016).

As a result of the wide range of legal, political and economic links that are present among the EU
and the UK, a deadline of two years for concluding the exit agreement appears to be nearly
impossible. This position is further corroborated by a glance at the real negotiation practice. For
example, the negotiations that took place between Canada and the European Union concerning
the CETA Treaty had lasted for eight years and they have not still being ratified by the national
parliaments. In the same way, Switzerland and the European Union required five years for the
first tranche having more than 120 individual agreements.
It is also worth mentioning at this point that in case no deal concerning Article 50(2) sentence 1
TEU can be arrived at within the period of two years, in such a case, two options are available.
The first option is that the period for negotiations can be extended through an unanimous
agreement among European Council and the retreating member nation. The other option is that
the UK leaves the EU without including any withdrawal agreement. The result will be that the
duties of the European Union will cease to apply in case of the United Kingdom and there will be
no arrangement for managing this transition. Therefore it is clear that the second option is going
to result in considerable uncertainty. For many people, for example, the citizens of the United
Kingdom who are living in the European Union or the businesses of the UK, who are trading
with the European Union states and also for the UK organizations that depend on funds from the
European Union. Therefore, for example, if the parties did not reach at a trade relations
agreement, the country will be required to transact with the European Union in accordance with
the rules of the WTO. A transitional agreement will be almost necessary for making sure that the
businesses contribute in the trade that takes place with the European Union. It will also allow the
negotiations to be held in a less pressurized environment, which will be beneficial for all the
parties concerned. Article 50(3) TEU provides in this regard that of formal renewal of the

deadline will need unanimity from the European Council. Therefore, also negotiations for a long-
term can be expected, the risk of an unregulated exit of the UK from the European Union will
still be the case of politically indisputable and a unanimous decision of the European Council.
However on the other hand, if it is decided that the period of withdrawal is going to be extended,
the parties will be protracted for a time of legal uncertainty.
It has been mentioned at the website of the European Medicines Agency (EMA) that "no
member state had earlier made a decision to leave the European Union. Therefore, there is no
precedent present regarding this section". As a result, there has been an urgent need for guidance
concerning different regulatory topics. In a notice given by them to the marketing organization
holders (MAHs), the European Commission (EC), EMA and the Co-ordination Group created for
the Mutual Recognition and Decentralized Procedures-human (CMDh). It has been revealed that
there is a need for the MAHs to act sufficiently in it once and they should be ready for taking the
required steps in order to enable the undistracted supply of medicines for the benefit of the
patients' (MHRA, 2017). Moreover, it should also be the objective of all the stakeholders that
any delay it should be avoided in approving new and important drugs in the UK and also in
Europe (Department for Exiting the European Union, 2017).
However, in case of the pharmaceutical industry, a strong business aspect is present in the
background of the regulatory strategy concerning the necessity investments in terms of sex, and
time and money. Therefore it becomes important to thoroughly evaluate and analyze the major
issues that can have a potential effect on the business activities in a company for the purpose of
making sure the continuous validity of the marketing organizations (CMDh, 2017).
European Union regulatory system for medicines:

There is a vast body of legislation which decides the access to medicinal products for the
European market. For many years, this legislation has been harmonized. The result is that in the
European Union, the authorities have control over the applied standards, whose design and their
uniform application in the member states of the EU is under the supervision of the European
Court of Justice. In the year 2015, the 50th anniversary of the adoption of the first legislation
related with the authorization of pharmaceuticals at the level of European Union has been
celebrated, which provided the basis for some of the key principles that are still applicable today.
The European medicines regulatory system is unique in itself and it is based on a network of
nearly 50 regulatory authorities that are present in 31 European Economic Area (EEA) nations.
A number of legal acts of the European Union have been explained by Article 288 TFEU.
Therefore, different tools of EU legislation can be briefly described as follows:
A regulation is going to have general application. It will be obligatory in its totality. It would
also be directly applicable in all the Member States.
A directive is going to be obligatory, regarding the result that is going to be achieved, for each
member state, to which it has been addressed. However, it did issue related with the choice of
form and methods is going to be left for the state authorities to decide.
A decision is going to be binding in its entirety. Any decision specifying those to whom it has
been addressed, is going to be binding only on such parties.
The recommendations and opinions will not be having any binding force.

Directive 2001/83/EC which is also known as the "Community code related with medicinal
products for human use" and the Regulation 726/2004 mention the requirements and the
procedures that need to be adopted for marketing authorization of the medicinal products for
human use and also the rules for regular supervision of the products after they are authorized by
the authorities. These are also related with the harmonized provisions in concerned fields like
manufacturing, wholesaling or advertising the medicine or products that are going to be used for
the humans.
The rules related than that of criminal trials in the European Union have also been provided by
the community legislation. These are mentioned in Directive/EC of the European Parliament.
The new Clinical Trial Regulation EU 536/2014 has replaced the Directive 2001/20 EC. It was
adopted and published on 27 May, 2014.
The pharmaceutical sector
The pharmaceutical industry of the UK is one of the most productive industries of the country.
The turnover of this industry is £41.8 billion and it contributes nearly 1% of the total output of
UK and 7.7% of the manufacturing GVA. In 543 companies, around 62,600 people are
employed. These companies are further supported by 1,314 service and supply companies, which
further provide employment to 51,000 persons. Most of the pharmaceutical companies are
SMEs. The result is that 90% of the manufacturers have less than 250 employees. Similarly, 43%
of the companies are micro companies who have less than five employees. The pharmaceutical

products represent 8.2% of the total goods that are exported by the UK and 5.3% goods are
imported in the UK (Fulbright, 2016).
The pharmaceutical industry in the UK is a part of global industry that has high growth and
productivity. In this context, the United Kingdom forms of global cluster and is still considered
as a leading nation of Europe. The global pharmaceutical sector features regional manufacturing
locations, which serve the markets across the Continent. At present, the United Kingdom is a part
of the European market. The result is that it is heavily integrated with the European Economic
Area (EEA). In case of supply chains and regulating production and distribution. The decisions
related with the location of manufacturing pharmaceuticals within a particular region depend on
several factors, but there are specific and onerous regulatory requirements related with the
development, testing and release of medicines. As a result of these, the options are restricted for
manufacturers who want to access the markets and the European Union.
Pharmaceuticals are considered as a part of wider life sciences sector, which also includes
medical technology, biotechnology. The result is that together they contribute in generating
233,400 jobs in 5142 companies. In the same way, the total turnover is 63.5 billion.
Successive governments have provided significant support to the pharmaceutical industry. This
support includes the establishment of the Office for Life Sciences in 2014. This was jointly
created by the Department for Business, Innovation and Skills as the department of health. A
joint Minister for life sciences was also appointed between 2014 and 2016. Ahead of the
industrial strategy of the government in 2017, the pharmaceutical sector published the Life
Sciences Industrial Strategy. In this document, long-term recommendations were made to the

government regarding the support and collaboration that was required for maintaining and the
growth of the industry. The subsequent White Paper issued by the government on Industrial
Strategy was launched along with the announcement of new investment by the pharmaceutical
manufacturers Qiagen and MSD as well as the plans for Life Sciences Sector Deal. It was
subsequently launched in December 2017. This deal included the present as well as the new
commitments by the government and the industry for increasing investment in the sector,
developing new programs and increasing the collaboration between government and industry
(Frenk, Hunt, Partiridge, Thornton and Wyatt, 2015).
The EU Exit Analysis by the government identifies the pharmaceutical sector as the sector for
which the UK and European Union market access is most significant. It is worth mentioning that
pharmaceutical products worth £24.9 billion were exported by the UK in 2016. Out of these
products, nearly 48 percent (£11.9 billion) went to the European Union as this market has 446
million potential patients and customers. Another thing that needs to be mentioned in this regard
is that pharmaceutical products worth £24.8 billion were imported by the United Kingdom. Out
of these products, 73% (£18.2 billion) had come from the European Union. This results in a trade
deficit of £6.3 billion. By giving oral evidence, it was informed by the Association of British
Pharmaceutical Industry (ABPI) that the situation reveals that 45 million packs of medicines go
from the UK every month and they go to Europe and 37 million packs of medicines leave the
European Union and are received in the UK.
Impact of No Deal:

While the successful conclusion of the negotiation is for the first phase and the further progress
made on the withdrawal agreement brightens the chances of an orderly withdrawal from the
European Union, it has been stated by the Prime Minister of UK that "no deal for Britain is better
than a bad deal". However, if this remains a possibility, the pharmaceutical sector in the United
Kingdom, and also in the European union will have no choice but to become ready for such a
scenario. In fact, the industry is already doing so. Regarding the departure of the UK from the
European Union, the government is committed to depart from single market and customs union.
In case of no new agreement on trade such as situation will mean reverting back to the World
Trade Organization (WTO) tariffs.
The meaning of the Pharmaceutical Tariff Elimination Agreement of the WTO for the signatory
states like the United States, Canada, Japan, Australia and members of the European Union is
that the finished pharmaceutical products and some of the components are subject to 0% tariff.
However, in case of certain member states like Russia, China and Brazil, the tariffs remain
between 1 and 15%.
Regardless of the fact that the United Kingdom had become a signatory to the Pharmaceutical
Tariff Elimination Agreement after it had left the European Union, it will still be in a position to
carry on trade union on the basis of zero tariff regarding the pharmaceutical products. It has been
confirmed by the Government in written evidence in the EU External Affairs Subcommittee of
the House of Lords, that "the Pharmaceutical Agreement has been extended on the basis of most-
favored-nation (MFN). The meaning of this situation is that the signatories have extended the
elimination of tariff to all the members of the WTO. Therefore all the members of the Dublin to
enjoy the benefits of tariff free trade with the signatory countries regardless of the fact whether