LONDON – Following 3.5 years of uncertainty, the U.K. will be leaving the EU at 11 pm on Jan. 31, after the newly elected Conservative government finally got the withdrawal agreement bill voted through Parliament on Dec. 20, by a majority of 124.
That opens the way for talks to start on the future relationship between the EU and U.K., as sketched out in the political declaration, agreed to in October, with the EU expected to agree to its mandate on Feb. 25 and for the negotiations to begin in mid-March 2020.
As those negotiations progress, while no longer a member, the U.K. will continue to operate on the same terms as today, adhering to EU regulations, having access to the EU single market and contributing to EU coffers, during a transition period up to the end of 2020.
The significant 80-seat majority won by Prime Minister Boris Johnson ended the parliamentary deadlock over Brexit, which had seen the leaving date being postponed in March and October.
Steve Bates, chief executive of the U.K. Bioindustry Organization, said the size of the new government’s majority “offers a new era of political stability” that “makes long-term business decision-making simpler for our sector.”
The sector has had a difficult time in 2019, being told by the government to stockpile three months’ supplies of drugs and devices, as a hedge against a no-deal crash out on the original Brexit day at the end of March. Companies have been required to maintain those stockpiles – including many products with short shelf-lives or those requiring refrigeration – ever since.
With the withdrawal agreement bill voted through, Brexit day will lead seamlessly to the transition period and the threat of a no-deal crash out at the end of January is removed. Bates said he expects the government to call an end to no-deal contingencies in the new year. However, speaking in a webinar earlier this month, he recommended member companies stay ready and follow previous advice until there is a formal announcement.
The scale of Johnson’s victory has removed the need for compromise with Parliament and gives him free rein to shape the future relationship between the U.K. and the EU. Johnson has set course for a hard exit, with the U.K. leaving the single market and the customs union.
Underlining the determination to deliver on the election slogan to “‘get Brexit done,” the government added a clause to the withdrawal agreement bill, to outlaw any further extension and lock in the end of the transition period to midnight on Dec. 31, 2020, regardless of whether negotiations on the future relationship are completed.
As Bates noted, blocking any extension to the transition period leaves open the possibility of leaving the EU without a trade deal at the end of 2020. The ratification of trade deals is incredibly complex, and there are many commentators who think it will not be possible to conclude a comprehensive agreement in 10 months. “There’s still a chance of no-deal outcome,” Bates said.
Meanwhile, in Brussels, a new cast of characters took charge on Dec. 1. Both Charles Michel, the new president of the European Council, the body that brings together EU heads of state, and Ursula von der Leyen, new president of the European Commission, the EU’s administrative arm, have said a “level playing field” remains a must for any future relationship.
That is reference to the EU’s demand that any free trade agreement, with zero tariffs and zero quotas, will require the U.K. to stay in regulatory alignment with the EU.
Impact on regulators
The future trading relationship is important for the life sciences industry, of course, but there are many other issues of critical importance for the sector. Those include the position of the U.K. Medicines and Healthcare products Agency (MHRA) in the EMA’s regulatory network; agreement on data protection and sharing clinical trial data; and what access the U.K. has to EU research programs, from which it currently is a net recipient of grant money.
With U.K. biotech companies employing many skilled staff from EU27 countries, question marks over mobility of labor are also a major concern.
But with only 10 months to complete the negotiations, it is likely those issues will be put to one side to focus on trade. The outcome could be a “shallow and narrow” agreement, according to Raoul Ruparel, former special adviser on Europe to former U.K. Prime Minister Theresa May, in a paper published earlier this month by the think tank, the Institute for Government.
One issue that could be left up in the air as a result, is whether MHRA is part of the EMA’s network. In practice, ties between the two were cut at the end of March, in advance of what was the first possible date for the U.K. to leave the EU.
The industry across Europe is lobbying for full alignment between MHRA and EMA, but there is no escaping the fact that Brexit already has taken a toll on medicines regulation in Europe.
As it convened its management board earlier in December, the EMA was homeless, stuck between the temporary accommodation it moved into in March on relocating from London to Amsterdam, and a new purpose-built office that opens next month.
In total, 82 EMA staff members were occupied full time on Brexit and preparing to relocate, forcing cuts to regulatory work.
The agency now faces challenges in “reinitiating its activities” following three years of relocation and Brexit preparedness planning, and in the face of postponed investment in business-critical infrastructure, EMA Executive Director Guido Rasi said during the management board meeting.
In addition to losing access to MHRA’s regulatory skills and expertise in assay development and quality control, many of the EMA’s own staff chose not to go to Amsterdam. There are now 775 on the payroll, compared to 900 before the move.
All of which means the agency will continue to operate at a scaled-back, baseline level at the start of next year, and plans to assess if activities it has put on hold can be relaunched from June 2020. It will take time to get back up to full speed.
In the words of Johnson’s election slogan, the EMA can be said to have “got Brexit done.” But as the agency’s current state illustrates, the underlying implication that everything will then be done and dusted is far from being the case. The U.K. will leave the EU on Jan. 31, but Brexit uncertainties and fallout for life sciences will persist.