On January 17, 2017, Prime Minister Theresa May delivered her much anticipated speech on the UK Government’s plan for exiting the EU.

Continued membership of the EU’s single market and full membership of the customs union have both been explicitly ruled out. The plan for achieving a new partnership between the UK and the EU sets out 12 negotiating priorities including the UK:

  • being the best place for science and innovation
  • having control of its own laws
  • having free trade with European markets
  • having control of immigration

The Prime Minister’s speech included the following themes of relevance to the Life Sciences sector:

  • continued collaboration on major science, research, and technology initiatives would be sought
  • an agreement on free trade may take in elements of current single market arrangements in certain areas as it makes no sense to start again from scratch where the same rules have been adhered to for many years
  • a customs agreement would be sought which does not bind the UK to be part of the Common Commercial Policy or Common External Tariff, allowing the UK to negotiate its own trade agreements with other countries
  • appropriate contributions for continued participation in some specific EU programmes may be made
  • a disruptive cliff-edge would be avoided by seeking to take a phased process of implementation
  • the UK would always want immigration, especially high-skilled immigration

The Association of the British Pharmaceutical Industry (ABPI) has welcomed the Prime Minister’s speech and indicated that during the negotiation period it will seek to secure the UK’s continued cooperation and alignment with EU rules for the regulation of medicines. The BioIndustry Association has also responded by welcoming the speech.

Exiting the EU House of Commons Committee

On January 14, 2017, the Exiting the European Union Committee, appointed by the House of Commons to examine the policy of the UK Government’s policy, published its First Report of Session. Since the UK’s vote to leave the EU other Member States have been seeking to secure the relocation of the European Medicines Agency (EMA) which is currently in London. The Committee was not aware of a precedent for an EU agency such as the EMA being primarily outside the EU.

The UK’s future relationship with the EMA will be defined by negotiations over the UK’s future partnership with the EU. The ABPI told the Committee that the EMA was already working in co-operation with national regulators and there was a precedent for countries that are not members of the EU being able to work through that co-operation. It was stated that the ABPI would like “to be able to continue within that global, regulatory agreed process and to keep that co-operation as part of the network in a bespoke way”. In response to the report, the ABPI welcomed the Committee’s focus on the importance of transitional arrangements and the UK’s future relationships with regulatory agencies.

UK EU Life Sciences Transition Programme

On September 8, 2016, the UK EU Life Sciences Steering Group issued to the Government its report “Maintaining and growing the UK’s world leading Life Sciences sector in the context of leaving the EU”. The Steering Group supports the UK EU Life Sciences Transition Programme established between the sector and Government to ensure that the sector was in as strong as possible position as the UK establishes a new partnership with the EU.

Four key areas were identified by the Steering Group for the Government to address as it negotiates an exit from the EU:

Issue Challenge Opportunity
Long-term, predictable funding for scientific research, and continued ability to collaborate at scale

UK has been a major net beneficiary of EU funding for research and benefits disproportionately from collaboration opportunities offered by EU programmes.

The UK venture capital system is reliant on EU funds.

Long-term R&D funding could be retained through UK gaining ‘associate member’ status for Horizon 2020 as achieved by Switzerland and Israel. Funding for projects under Horizon 2020 has been guaranteed while UK remains an EU member.

Equity for venture capital can be maintained through continued participation in the European Investment Bank and European Investment Fund.

Ability to trade and move goods and capital across borders Trade could be subject to customs duties, import VAT and added import/export bureaucracy causing significant disruption and cost. Maintain free trade with the EU on terms equivalent to those of a full member of the EU customs union and EU common system of VAT.
A common regulatory framework with Europe Single regulatory system provides the scale and certainty required to bring innovative, effective and safe medical technologies to UK patients quickly. The EMA covers markets comprising 25% of global pharmaceutical sales. Commonality with the EU regulatory system, alignment of current and future regulations and participation in EU processes, could be achieved by a regulatory cooperation agreement.
Access to the best talent Access enables brain circulation critical to developing the next generation of innovators and commercial talent Continued ability to secure the most talented people through an immigration which facilities ease of movement for talented students, researchers and workers.

Cross-post from our firm sister blog, Inside Brexit.