Brexit – Preparing for the end of the transition period
On 2nd May 2018, minutes were published of an Industry Stakeholder meeting on Brexit and operation of the centralized procedure for human medicinal products that was held at European Medicines Agency on 23rd March 2018.
The purpose of this meeting was to update European Union trade associations on the Agency’s Brexit preparedness activities.
A couple of days prior to this meeting, the draft text of the Withdrawal agreement of the UK and Northern Ireland from the EU was published. The withdrawal agreements needs to ratified on both sides. The “Transition period”, until 31st December 2020 (inclusive) is part of the Withdrawal agreement.
Despite this “Transition Period” it was stressed at the Industry Stake holder meeting that this Withdrawal agreement is still not agreed upon (“nothing is agreed before everything is agreed”) and not yet ratified by the concerned parties. In terms of governance, as of 30 March 2019, the United Kingdom will no longer take part in the decision making of EU institutions and bodies, nor will it have a role as a leading authority, meaning that the UK will not have a role as rapporteur or reference Member State.
It was very clearly recommended to prepare on the scenario of a “hard Brexit”. It was stated:-
“In view of the considerable uncertainties, industry should not rely on the “transition period”. Even if there is commitment to reaching an agreement on the UK’s orderly withdrawal, this should not dispense from ensuring ‘preparedness’. The Withdrawal agreement needs to be ratified by the UK and the EU and this is only expected early in 2019. Therefore preparedness is a matter of today.”
So with this advice from the EMA, it is timely to look in detail at your supply chain risks. Here are some elements to consider:-
Review your Supply Chain Maps and Staff Appointment:
After Brexit, UK entities will be no longer permitted to hold EU Market Authorisation or to be sponsors of orphan designations. Companies need to be actively seeking out alternative arrangements for MAHs and MAAs.
Therefore, companies will need to look at roles currently carried out by UK entities and determine the most appropriate changes to be made. This could change the supply chain dramatically and trigger review of licenses such as Manufacturer’s / Importers Authorisations and Wholesale Distributor Authorisations. Relocation or recruitment plans for roles such as the QP role should be put in place as your QPs must be EU Residents.
Risk to your Customers:
Companies need to have contingency plans in place to ensure delivery of your end product to your customers. There is no guarantee that border procedures will operate smoothly immediately after Brexit, and companies will need a contingency plan for continuity of supply in case systems fail. One scenario to consider, for example, is that there could be delays of up to two days between the UK and EU because of the need for document checks. To counteract that, companies could consider setting up a supply cache and asking customers to take extra stock in advance. It has been reported that some pharma companies have already planned for this. https://www.thetimes.co.uk/article/drug-firms-build-brexit-stockpile-pq0gw8sb2
The pharmaceutical companies most at risk are those involved in medicines that require certainty in supply chain timelines (for example cell and gene therapies). Companies such as this need to address this risk carefully.
Risk from your suppliers:
Consider your suppliers. Do your suppliers have contingency plans for Brexit? Do your QTAs or contracts with your suppliers need to be updated to ensure robust supply chain through the Brexit process? As part of your contingency planning, look at your high risk suppliers.
Communication Strategy:
No matter what the actual outcome, Brexit is going to cause disruptions across the supply chain which is bound to have a knock on effect throughout. Ensure all your customers and suppliers throughout the supply chain are in the loop. A robust communication strategy will be needed.
Review processes and systems for data capture:
Based on the UK Government’s current commitment, it is likely that Brexit will establish a customs border between the UK and the EU at some point. This may lead to the introduction of new customs processes, tariffs and import taxes. With this it is inevitable that new data will need to be captured, and communicated. In light of this, companies can be cleaning their current data and preparing their systems to collect new data fields (eg. for export declarations versus an Intrastat declaration). It would be prudent for companies to review options for data storage outside of the UK in case geographical restrictions appear.
We, at PharmaLex, are ready to help you prepare. Have you considered all scenarios? Are your contingency plans in place for supply chain interruptions? Please contact us to discuss.
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