Multiple international pharmaceutical companies are working furiously drawing up contingency plans to protect their interests if and when Brexit happens next March 30, 2019. The major uncertainties are the potential requirement for retesting of UK-manufactured batches of pharmaceuticals shipped to Europe and the requirement for transfer of UK product licenses to European-based entities. Contingency plans need to consider elements such as:
- Impact of Brexit on EMA Regulations for completed and approved drugs and also for those still in development phase of the pipeline.
- Effect of Brexit on recruiting and maintaining a work force
- Potential loss of scientific and medical funding coming in from the E.U. such as Horizon 2020
- Ensuring Supply Chain: Consideration if there will be a point after March 30 where all goods are stuck in transit because they can’t be shipped across the border from the U.K. to the E.U. without the appropriate paperwork
The UK government already declared they were aiming for continued co-operation in drug regulation after Brexit. However, that requires transition terms to be agreed with the remaining twenty seven EU countries – which could be viewed as far from certain. Key questions that companies needed to know as soon as possible is whether or not there would be a transition period. In the absence of that information, industry must put strategies in place to deal with the fallout of Britain becoming a non-EU “third country”.
So what are the possible scenarios?
No Divorce Agreement In light of difficulty in negotiating transition terms, there is certainly the potential for a harsh Brexit out there. Indeed, some pharmaceutical companies have already started to duplicate their testing and approval procedures elsewhere in Europe, in order to ensure access to the EU market after 2019. Whilst unlikely, there is a small chance that there will be no divorce agreement in place by 30March2019. The UK would no longer be bound by the EU treaties and there would be nothing to replace the thousands of international agreements that stem from them. Divorce Only Agreement A less disruptive potential outcome is a Divorce-only agreement which would be less harsh than a no deal scenario. An Article 50 agreement would be struck between the UK and the EU and the future relationship would be further negotiated. Interim trade would be based on World Trade Organization rules. The UK joins the European Economic Area In this scenario, similar to Norway, the UK would maintain full access to the single market. In this scenario, the UK will have to adopt certain EU standards and regulations and have to make a substantial contribution to the EU budget. It would also not be permitted to impose immigration restrictions. The UK would not participate in the EU common policies. The UK enters into a customs union with the EU. Under this union, goods may be exported to the EU without tariffs or customs restrictions, but the UK would be required to comply with various areas of EU regulation. The UK would also be required to apply EU external tariffs, without influence or guaranteed access to non-EU markets. Trade Agreements Limited tariff-free deal or a far ranging trade deal could be struck. In the event of a far-ranging trade deal, Britain would sign a bold and comprehensive trade deal with the EU. The UK would have to accept limitations on sovereignty the UK depending on the extensiveness of the deal. PharmaLex can help review your contingency plans to ensure your company is Brexit ready, please contact us at +353 1 846 47 42 or email@example.com