Brexit is upon us – what does it all mean?

06.05.2020

Following the UK’s referendum on continued membership of the EU in June 2016, and after a number of false dawns (the authors are avowedly and unapologetically pro-remain), extensions, suggestions of second referendums and parliamentary intrigue, the result of the UK’s general election in December 2019 meant that the UK left the EU on 31 January 2020. We reflect on some of the obvious legal ramifications for those operating within the life sciences sector.

Stage one – the present

Stage one of ‘Brexit’ involves a standstill transition period as provided for in the amended Agreement on the Withdrawal of the UK from the EU dated 17 October 2019 (“the Withdrawal Agreement”). This period will last from the date the UK left the EU, i.e. 31 January 2020, until 31 December 2020, although there are provisions in the Withdrawal Agreement for the parties to agree a one-time extension of the transition period for up to 1 or 2 years. Nevertheless, the UK Government has indicated on numerous occasions that it has no intention to extend the transition period.

During this transition period, virtually all EU law[1] The exceptions are extremely limited and not of interest here (the acquis communautaire), including in relation to pharmaceuticals, shall continue to apply to the UK in full even if the UK is not formally part of the EU. For example, all unitary IP rights and regulatory approvals extend to the UK, all harmonised EU law continues to apply to the UK (including IP, regulatory, competition and data protection law), and free movement of goods (including rules on exhaustion of IP rights) and workers continues to apply. To all intents and purposes the UK retains the benefits of EU membership during 2020.

Stage two – the future

Readers should not assume that all uncertainty has been swept away. As noted above, the transition period is relatively short, and the UK Government has already indicated it has no intention of requesting or agreeing to an extension beyond 31 December 2020 (which would in any event have to be agreed by 1 July 2020). Indeed, the UK Parliament has legislated at the Government’s request so as to make it unlawful for the UK Government to request an extension although of course this legislation can just as easily be overturned if the need arises. The purpose of the transition period is to allow the UK and the EU to negotiate a future international relationship, which was not possible whilst the UK was still a member of the EU.

The UK and EU have agreed in parallel a set of political declarations (“the Political Declarations”) as to the nature of this future arrangement, although it should be noted that these do not have the specificity of the language of the Withdrawal Agreement itself, are not binding and are not always in accordance with statements made since by the UK Government.

It therefore remains to be seen what form this future relationship will take. At this stage it is not possible to provide an analysis of the legal implications of the potential future agreement. However, one thing is worth bearing in mind. The UK Government has indicated that it is confident that an agreement can be concluded within the 11 short months between departure from the EU and the end of 2020. Not all commentators, nor indeed the EU, share this enthusiasm. The UK Government has also indicated that it will be able to negotiate a major free trade agreement with the US within the same period. It is not inconceivable that the UK will fail in the former, notwithstanding stated enthusiasm on the part of the UK and the EU to avoid a future ‘hard Brexit’. No assumptions should therefore be made that the transition period will end on 31 December 2020 or that a new trading relationship with the EU will be in place before the UK exits the quasi-EU membership status it retains during the transition period.

What is known is that the UK Government has published its negotiating mandate for the UK’s future relationship with the EU[2]. This is not as ambitious or as harmonised as many in the industry would have liked and could lead to increased costs, trade friction and additional regulatory requirements for many sectors, including biotech. The EU has also published its draft negotiating directives[3]. Time will tell what this means for a potential UK – EU agreement.

In parallel, the Government has also published the Medicines and Medical Devices Bill 2019-21[4], which is intended to create delegated powers covering the fields of human medicines, clinical trials, veterinary medicines and medical devices so as to update UK regulatory law following the departure of the UK from the EU.

As currently drafted, these create wide-ranging powers to amend legislation from 2021, albeit with limited guidance as yet on the UK’s proposed future approach, including in a ‘hard Brexit’ scenario. It seems all bets are off for the time being, although it does seem that full harmonisation is no longer on the table.

————-
[1]The exceptions are extremely limited and not of interest here
[2] https://www.gov.uk/government/publications/our-approach-to-the-future relationship-with-the-eu
[3] https://ec.europa.eu/info/sites/info/files/communication-annex-negotiating directives.pdf
[4] https://publications.parliament.uk/pa/bills/cbill/58-01/0090/cbill_2019-20210090_en_1.htm

Gregory Bacon

Author

Xisca Borrás

Author