ghp July 2015 | 25 industry insight The life sciences industry, comprising pharmaceuti- cals, medical technology and medical biotechnology, is one of the UK’s leading manufacturing sectors, em- ploying in the region of 90,000 people and with exports of pharmaceuticals alone valued at over £21 billion. If the UK were to leave the EU, a so-called ‘Brexit’, it could result in disruption to supply chains, additional quality control testing, new export charges and un- certainty regarding elements of the regulatory regime going forward, such as the validity of crucial EU regulatory authorisations. The UK currently has amongst the lowest prices for medicines in the EU. Any increase in the complexity of ensuring regulatory compliance and/or additional charges to export products to the EU would likely impact on the UK industry’s competitiveness. The life sciences industry is highly regulated and the rules for clinical trials and the authorisation, manufac- ture, distribution, supply, labelling and advertising of medicinal products and the classification, assessment and CE marking of medical devices are (in most part) harmonised at EU level. The UK legal framework gov- erning medicines and medical devices derives from EU legislation. Some EU legislation is directly effective in the UK, while other legal instruments are imple- mented in the UK by national legislation, such as the Human Medicines Regulations 2012 and the Medical Devices Regulations 2002. If the UK were to leave the EU, there would be uncertainty as to the application of key parts of regulatory regime governing medicines and medical devices going forward. Taking the specific example of centrally authorised medicines, currently such products are assessed at EU level by the European Medicines Agency (“EMA”) (which is based in the UK) and are granted a single marketing authorisation which allows that product to be placed on the market throughout the EU/EEA. A complete Brexit and EEA would mean that EU legislation would no longer apply directly, potentially meaning that such products could no longer, at least technically, be legally marketed in the UK until a national authorisation had been granted. The UK regulator, the Medicines and Healthcare products Regulatory Agency (“MHRA”) currently plays a major role in EU regulatory activities, taking a lead role in approximately 15% of applications via the centralised procedure and is the Reference Member State leading the assessment in the decentralised pro- cedure in over 40% of cases. The ability of the MHRA to remain in this role would also depend on the exact outcome of any Brexit. In the medical devices sector, once products are assessed and certified as complying with EU medical device legislation requirements and CE marked, they Andrew Skipper, Partner, and Jane Summerfield, Senior Associate at Hogan Lovells discuss how the potential British exit from the euro could affect the life science industry. can be sold freely throughout the EEA. Again, if the UK were to leave the EU, it might no longer be automati- cally possible to sell a CE marked device in the UK. Even if issues such as these could be resolved relatively quickly, longer term questions as to the UK’s continuing relationship with the EU and the in- terplay between the UK and EU regulatory regimes for medicines and medical devices would need to be addressed. One option would be for UK to retain its membership of the EEA and follow the examples of Norway, Iceland and Lichtenstein, which are members of the EEA but not the EU. As a condition of the EEA Agreement, the EEA countries have adopted the complete body of EU legislation on medicinal products and are parties to the associated EU procedures. So, for the UK, this would involve agreeing to continue to implement EU legis- lation in this area and an ability to comment on the development of new EU legislation, though perhaps without the same negotiating strength as at present. Alternatively, the UK could decide not to be part of the EEA and instead agree a trade deal with the EU. Switzerland has taken this approach and issues sep- arate Swiss marketing authorisations for medicines, based on national requirements that closely mirror EU legislation. In relation to medical devices, Switzerland has transposed the EU Medical Devices Directives into its national law, allowing the free movement of CE marked medical devices in Switzerland. There are also mutual recognition agreements in place between the EU and countries such as Australia, Canada and New Zealand, covering issues such as the recognition of the outcomes of GMP inspections carried out in each country and acceptance of batch certificates without additional control inspections on import. However, this would likely include conditions such as adhering to the EU’s regulatory regime in all material respects, meaning the UK could agree to continue to comply with EU regulatory requirements but no longer have the same ability to influence these as it does at present. Currently, the MHRA plays an active role in the development of EU pharmaceutical and medical device regulation. A further option is that the UK might start to develop its regulatory regime separately from that of the EU. Any resulting increase in regulation could be burdensome for businesses. Any decrease in legislation would need to be considered carefully in a sector where safety and quality are paramount, particularly given that the current EU regulatory framework for medicines and medical device is regarded as one of the most compre- hensive and sophisticated in the world. Any divergence between the UK and EU regulatory requirements would almost certainly increase compliance costs for companies operating across markets.