ARTICLE THE UK POST-BREXIT
Brexit: The regulatory landscape
one year on
AUTHORS
Tracey Roberts, Senior Associate, Pinsent Masons, London; Natalie Coan, Associate, Pinsent Masons, London
KEYWORDS
Brexit, EU, Northern Ireland Protocol, exhaustion, biosimilars, SPC
ABSTRACT
A year since the UK departed from the EU, what has changed? The UK has started to depart from the EU in a number of different ways. This article
will explore what has changed, how it came about and what to look out for as the relationship between the UK and EU, as well as the rest of the
world, continues to evolve.
Brexit: the background and scope for change
During the Brexit negotiations, the UK government pursued a sovereignty-
first approach, prioritising the ability for the UK to set its own laws.
Therefore, following entry into the Withdrawal Agreement,1 from 11pm on
31 January 2020 the UK was no longer subject to EU law (except for what is
required under the Northern Ireland Protocol).
To maintain legal continuity post-Brexit, and to enable UK citizens and
businesses to continue without a huge shift in requirements, the UK kept the
laws and regulations of the EU on its statutes. These are now referred to as
retained EU law. It also entered into the Trade and Cooperation Agreement
(TCA) with the EU. It provides for free trade in goods and some services, as
well as for cooperation of policy areas, including in Good Manufacturing
Practices for medicinal products.
Despite this, divergence from the EU is inevitable, and may evolve in
different ways. Active divergence may occur where the UK government
proactively chooses to amend or remove retained EU law. The Medicines
and Medical Devices Act 2021 will facilitate the UK being able to change
exiting rules using secondary legislation (after consultation), while the EU
is required to obtain consent from its Member States.
It is also likely that divergence will take a more passive form. The UK courts
are no longer bound by EU laws or decisions of the Court of Justice of the
European Union (CJEU). Therefore, it is expected that case law in the EU and
UK will naturally develop, to either a small or large extent, in different ways.
For heavily regulatory industries, such as pharmaceuticals, the ability
for the UK regulators to set their own rules provides scope to push the
envelope. Over the last 12 months, the UK regulator, the MHRA has already
taken a much discussed divergent stance on biosimilars, as the UK pushes
to be a market leader in the pharmaceutical space.
This article examines the ways in which we are starting to see divergence
between the UK and EU in the pharmaceutical sector, through a mixture of
conservative steps and big leaps. This article will show how this is affecting
supply chains and the regulatory requirements of these important products.
Finally, the article will consider what this means for businesses and what to
look out for in the coming months and years.
Areas of divergence
Supply chains: overcoming challenges due to a lack of mutual
recognition
The UK is one of the world’s leading innovators and exporters of
24 | REGULATORY RAPPORTEUR | Vol. 19, No. 4, April 2022
pharmaceutical products. Likewise, the population of the UK healthcare
system, like others globally, is dependent on the import of key medicines
for patients. Therefore, minimising disruption to the supply chain is vital in
a post-Brexit world.
The movement of goods across the borders of the UK and EU have
caused complications for businesses, as the quality or testing of products
in one jurisdiction may not be recognised in the other. The UK has sought
to find workable solutions to the challenges faced, as over two decades of
collaborations with the EU start to unravel. Three areas, in particular, have
challenged the pharmaceutical sector over the past 12 months, as explored
below.
Northern Ireland Protocol
An area that has proved challenging has been the Northern Ireland Protocol.
This is an integral part of the Withdrawal Agreement, setting out Northern
Ireland’s post-Brexit relationship with both the EU and Great Britain. In this
instance, Great Britain refers to the geographical island of Great Britain,
comprising England, Scotland and Wales. This differs to the sovereign
country of the United Kingdom, which comprises Great Britain, Northern
Ireland and the British Isles.
The Northern Ireland Protocol states that Northern Ireland remains part
of the UK customs territory, and so Northern Ireland will be included in UK
free trade agreements. More significantly, it states that Northern Ireland
must follow the EU’s rules for bringing goods in and out of the EU (the
customs code). This approach means new checks and controls are needed
for goods moving between Great Britain to Northern Ireland. Also, different
rules are applicable to Northern Ireland but not the rest of the UK, such as
licensing, quality control and counterfeiting.
2021 saw some contention between the UK and the EU in relation to the
Protocol. In July, the UK government published a command paper outlining
how the Protocol should be reformed. It called on the EU to show more
"flexibility" and "creativity".2 Despite negotiations between the two sides,
there remains a few areas of difference.
In relation to medicines, where Northern Ireland currently follows EU
rules, the UK government has said that the “simplest way forward may
be to remove all medicines from the scope of the Protocol entirely”.3 This
proposition was rejected by the EU and the proposals put forward as an
alternative carried their own difficulties. For example, the EU suggested
that certain regulatory functions that must usually take place in the single
market, (such as quality control testing), may take place in Great Britain,
www.topra.org

but they must be conducted in accordance with EU law. Furthermore, those
products could not be sold outside of Northern Ireland. A further example
is that medicinal products authorised for use in Northern Ireland must be
assessed by the MHRA, applying EU law.
The result is that different regulatory requirements may apply in Great
Britain and Northern Ireland. This is likely to become more challenging in
years to come as UK and EU requirements fall out of kilter.
Exhaustion of Rights
Another very important factor in the supply chain of pharmaceutical
products is the exhaustion of IP rights. This is where the intellectual property
rights in a product are said to be exhausted, once they have been put on
the market by the IP owner, ie, they can be sold on without infringing those
IP rights. In the European single market, this allows for goods placed on
the market in one country to be resold by a third party in another Member
State, otherwise known as a parallel import.
Following the end of the transition period, rights in goods put on the
market in the EEA will be exhausted in the UK, so could be resold in the UK
market. However, there is no such reciprocity for goods put on the market
in the UK, ie, putting goods on the market in the UK will not exhaust the IP
rights in the EEA. This has been coined the UK+ regime and, in practice, it
creates asymmetrical exhaustion.
The UK intellectual property office (UKIPO) has therefore been
considering the future exhaustion of rights regime to be applied in the UK. It
opened a consultation on 7 June 2021, with responses sought by 31 August
2021. The consultation considered the following four possible exhaustion
of rights regimes:
 UK+: UK unilateral application of an EEA regional exhaustion regime,
ie, maintain the status quo
 National: only goods put on the market in the UK can flow around the UK
 International: goods put on the market in any country can be parallel
imported into the UK
 Mixed: certain IP rights or certain types of goods may have different
exhaustion regimes applied to them. This system is used in
Switzerland, where there is an international exhaustion regime, except
in respect of medicines for which national exhaustion applies.
Some of the pros and cons of each of the four options are set out in Table 1.
To aid the decision-making process, the consultation sought input not
only on the preferred regime, but also data on the volume of parallel imports
and the financial impact of the existing regime. The exhaustion regime
could have huge cost implications for the UK. For example, the Consultation
Stage Impact Assessment report document expressly states that the NHS
has been one of the largest beneficiaries of the regional exhaustion regime,
saving around £110 million from parallel imports in 2019 alone.4
In January 2022, the UK government announced that an initial analysis
of the consultation had been completed, but a decision on the choice
of regime had not yet been reached. A further analysis of the potential
economic consequences of each of the alternatives will now be undertaken,
but there is currently no timeframe for a decision. It is also possible that we
will see a change to the Northern Ireland Protocol, which could mean that
the national regime may become a real option.
The choice of regime can have enormous consequences on the UK
pharmaceutical industry. Until a decision is reached, holders of UK rights
who trade in the EEA, will need to consider the impact of parallel imports
into the UK on their businesses.
Batch Testing
During negotiations for the TCA, the pharmaceutical industry urged the
UK and EU to sign a mutual recognition agreement for inspections, batch
release and testing, to minimise disruptions to supply chains. Both sides
agreed with regards to inspections, but not batch testing. This is less than
www.topra.org
THE UK POST-BREXIT ARTICLE
ideal, as batch testing is both time and cost intensive.
On 16 March 2021, the MHRA unilaterally waived batch testing
requirements in relation to products coming from the EU/EEA and agreed
only to move away from this position with two years’ notice. Such notice
would only be triggered after a comprehensive review of future batch testing
requirements, which must be completed by December 2022. However,
the EU did not do the same, except with respect to Northern Ireland. The
European Commission has proposed to amend its legislation to allow
movement of medicines from Great Britain to Northern Ireland, without the
restrictions that would have been applicable under the Protocol.
Therefore, with respect to products sold in the UK and EU/EEA,
marketing authorisation holders must currently undertake batch release
activities in both the EU and Great Britain.
Regulatory
The pharmaceutical industry is heavily regulated and, until January 2020,
medicines could broadly be approved for sale in the UK, either centrally
by the EMA or nationally by the MHRA. Due to the international nature of
pharmaceuticals, however, medicines were predominately regulated by
the EMA. Now all medicines sold in Great Britain must be approved by the
MHRA (complicated provisions exist in respect of Northern Ireland, due to
the Northern Ireland Protocol). Brexit has therefore provided the UK with an
opportunity to develop the way it regulates these products, with a view to
promoting itself as a market leader.
Biosimilars: comparative clinical efficacy
One way the UK used Brexit as an opportunity to leap ahead of the EU
and position itself as an attractive jurisdiction for companies to launch
products, is in relation to biosimilars.
Biosimilars are medicines that seek to compete with originator biologic
products. Biologics contain active substances derived from biological
sources and are often large, complex molecules such as antibodies.
Biosimilars are often referred to as ‘the next big thing’ in the pharma space.
Therefore, it may not have come as a surprise that soon after Brexit, the
MHRA updated its guidance on comparative clinical efficacy testing for
biosimilars. Under its guidance, biosimilar manufacturers may no longer
need to conduct a clinical efficacy study. Instead, it may only be necessary
to show that the product has comparable safety and efficacy, including
immunogenicity, to the reference product based on nonclinical studies and
pharmacokinetics (PK) trial data.
The removal of this hurdle is significant. Comparative clinical efficacy
studies are time-intensive and costly. The removal of this hurdle will assist
companies with getting products to patients faster. This change makes the
UK an outlier from other prominent regulators, including the EMA. It helps
to make the UK a more attractive jurisdiction for these products.
It seems that other jurisdictions may not be far behind. The WHO is now
requesting views on whether other regulators should follow suit, so the EU
and UK may one day again be aligned on this point.
Marketing authorisation assessments
While the UK has started to diverge from EU law, this is not a one-way
street. Where the UK has retained EU law, it is also possible that the EU will
depart from the UK.
In May last year, the General Court of the EU handed down its decision
in Case T-611/18 (Pharmaceutical Works Polpharma S.A. v EMA), which
concerned the product ‘DMF’ (Tecfidera).
The history to this case is long and complex but, in short, Polpharma
submitted a marketing authorisation application for a generic DMF product,
prior to the expiry of the data exclusivity period for the reference ‘Tecfidera’
product, which consisted of DMF. The EMA refused to validate Polpharma’s
application on the basis that data exclusivity had not expired. Polpharma
Vol. 19, No. 4, April 2022 | REGULATORY RAPPORTEUR | 25
ARTICLE THE UK POST-BREXIT
Table 1 Pros and cons of various types of rights exhaustion
Types of rights exhaustions Pros
UK+ regime Access to goods from a broad
geographic area, which results in the
increased availability of goods, as well
as cost savings
National regime Supply chain resilience: removes the
risk of supply shortages that have
previously been caused by parallel
trade. Rights holders have more control
over the distribution of their goods and
can segment international markets,
which may result in the introduction of
goods specific to the UK’s needs
Increased investment: rights holders
retain more control over the distribution
of their goods, and consequently IP
rights are viewed as stronger, which
may result in more innovation/
investment into new products
International regime Access to a larger international market
of suppliers, resulting in increased
choice, competition and lower prices
Mixed regime Flexibility: additional protection can
be provided to encourage the growth
of specific sectors. The benefits would
depend on the type of mixed regime
challenged this decision before the EU courts. Polpharma contended that
Tecfidera was not entitled to the claimed data exclusivity, since it should
fall within the earlier global marketing authorisation of Fumaderm, which
comprised DMF and another compound ‘MEF’.
Since the General Court decision, the CHMP has concluded that MEF
does not play a therapeutic role within Fumaderm. Consequently, Tecfidera
was not entitled to its own regulatory protection.
The importance of this case is twofold.
Firstly, the General Court’s decision may lead to a change in the way
regulators assess whether a product falls within an earlier global marketing
authorisation. The Court clarified that when considering whether there was
a relevant difference between Fumaderm and Tecfidera, it was necessary
to assess the role that MEF played within the earlier product, and not the
26 | REGULATORY RAPPORTEUR | Vol. 19, No. 4, April 2022
Cons
Divergence in regulations: future divergence in regulations
may result in products that have been manufactured according
to different regulatory requirements freely flowing into the
UK market and being sold under the same brand. The risk
of consumer confusion and patient safety may result in a
significant burden on UK brand owners, to carefully monitor
all parallel imports of their products into the UK and ensure
that the imported product in question can appropriately be
marketed under the UK brand
Reduction in consumer choice as parallel imports from outside
the UK would not be permitted. A limitation on choice may also
result in an increase to consumer prices
Non-compliance with the Northern Ireland Protocol: the
Protocol requires goods to flow freely into Northern Ireland
from the Republic of Ireland, which would not be possible with
a national regime
Reduced investment: rights holders have less control over the
distribution of their goods and so IP rights may be considered
weaker, which may deter innovation and investment.
Counterfeit medicines: international exhaustion of rights
regime would potentially open the door to a far higher number
of counterfeit medicines in the UK. Jurisdictions with less
effective regulatory controls than the UK are susceptible to
counterfeit medicines, which could then find their way into
legitimate supply chains in the UK, if parallel traders source
product from such countries
Damage to reputation: see above
Divergence in regulations: see above
Restriction to competition: additional protection to certain
sectors may inhibit competition between suppliers, which may
impact quality and/or price
Confusion: additional complexity may result in confusion
for businesses who will need to understand the relevant
exhaustion regime for the product/ sector in question. This
may require an enhanced understanding of IP rights, an
increased cost of identifying rights holders and a heightened
risk of litigation
activity of it independently. Therefore, regulatory agencies across the EU
must now follow this approach in their assessments. The MHRA is not
required to do the same.
Secondly, the decision may indicate a development in the way in
which the European Courts may intervene in a regulatory agency’s refusal
to validate a generic marketing authorisation application. In this case, the
General Court annulled the EMA’s decision not to validate the Polpharma
application and ordered the CHMP to reassess the scientific data available to
it. This represents the EU Courts’ view that a global marketing authorisation
is a dynamic concept. It remains to be seen what approach the UK will take
in situations such as these; whether the EU will stand out as a jurisdiction in
which wrongly subsisting regulatory exclusivities can be challenged.
www.topra.org

Referral to CJEU from Finland: SPC (Article 3(c))
Another example of the EU law developing faster than the UK is in the
context of SPCs.
In November 2021, the Finnish Market Court referred a question to
the CJEU for a preliminary ruling on the interpretation of Article 3(c) of
EU Regulation No. 469/2009, concerning the supplementary protection
certificate (SPC) for medicinal products. The case at issue before the
Finnish Market Court concerned invalidation proceedings brought by Teva
against the SPC for Jaumet®. The SPC holder is Merck Sharp & Dohme. The
question specifically concerned whether a second SPC for a combination
of active ingredients can be granted to the holder of an earlier SPC, which
relates to one of the active ingredients, where both SPCs are based on the
same basic patent.
The decision of the CJEU will not be binding on the UK. Therefore, it is
possible that, when its decision is handed down, the position in the UK
regarding this question will differ from the rest of the EU.
What does the future hold?
The pharmaceutical industry is a major part of the UK economy. Brexit
has provided the UK with an opportunity to step back and shape its own
policies with a view to becoming a front runner in this space, and a go-to
destination for innovation.
It is expected that the UK regulatory framework will diverge from the
EU and big leaps (such as in the context of biosimilars, as discussed
above) may sometimes be desirable. However, divergence should also be
considered with caution, as there is a risk that if the UK drastically diverges
from other key jurisdictions, it may actually fall behind.
A key factor in the future of the life sciences industry in post-Brexit Britain
www.topra.org
THE UK POST-BREXIT ARTICLE
will be the trade deals that have been struck with Australia, Canada, Japan
and the trans-Pacific Group. In its negotiations of future trade deals, such as
with the US, which is ongoing, it will be important to identify opportunities
for regulatory cooperation with valuable partners. This is with a view to
securing the UK as a key player in the pharmaceutical space and achieving
international competitiveness. Some examples of regulatory cooperation
have already been seen through the MHRA joining the Access Consortium
and Project Orbis. We expect that this is only the beginning.
Although big changes may seem appealing, the ABPI has stressed that
the UK needs to “strike a balance between forging its own path as a sovereign
regulator whilst ensuring strategic partnerships with other leading regulators,
including the European Medicines Agency (EMA), are nurtured”.5
References
1. Agreement on the withdrawal of the United Kingdom of Great Britain and Northern
Ireland from the European Union and the European Atomic Energy Community2019/C
384 I/01
2. HM Government 2021. Northern Ireland Protocol: the way forward (online). Available
from: https://assets.publishing.service.gov.uk/government/uploads/system/
uploads/attachment_data/file/1008451/CCS207_CCS0721914902-005_Northern_
Ireland_Protocol_Web_Accessible__1_.pdf [Accessed 28 January 2022].
3. ibid, para 61, p20
4. Intellectual Property Office 2022. Consultation document on the UK’s future regime
for exhaustion of IP rights (online). Available from: https://www.gov.uk/government/
consultations/uks-future-exhaustion-of-intellectual-property-rights-regime/the-uks-
future-regime-for-the-exhaustion-of-ip-rights [Accessed 28 January 2022].
5. ABPI. (2021). ABPI Vision Paper: UK medicines regulatory policy and global influence
in a post-pandemic world. (online). Available from: https://www.abpi.org.uk/media/
gqrj24qp/abpi-regulatory-policy-vision-paper-report_final.pdf [Accessed 28 January
2022].
Vol. 19, No. 4, April 2022 | REGULATORY RAPPORTEUR | 27