As a pan-European company, we’re firmly in favour of the UK staying in the European Union. With only a short time to go to the Brexit vote, and with polls wavering around the 50:50 mark, Janice Morton looks at how leaving the EU could potentially affect UK medical device companies.
For many global investors looking to fund UK medical device companies, unrestricted access to the EU’s €100 billion medtech market is an important incentive. ‘As part of the EU we have full access to the single market, which makes it easier and cheaper for UK companies to sell their products in Europe,’ says Keiron Sparrowhawk, CEO of health technology specialist MyCognition. ‘Leaving the EU is likely to create economic instability, restrict our markets, and reduce investment [by 16 to 26 per cent by 2020, according to one estimate] and jobs in the sector. Stability is key to enabling businesses to grow and thrive.’ While it is possible that the UK could negotiate a new trade deal with the EU – this could be a lengthy and costly process.
UK universities are reliant on EU money for around 16 per cent of their total research budgets, and a ‘Brexit could threaten up to £8.5 billion in EU funding for UK science over the next four years’, according to Labour MP Stella Creasy. Being outside the EU doesn’t necessarily preclude involvement in its research programmes, however. Non-member countries, such as Switzerland and Norway, have paid to participate in various funding initiatives but then found themselves ‘deprioritised’ when it comes to gaining access to major European scientific facilities. This ‘buying-in option’ presumes, of course, that the other EU governments would grant the UK similar privileges – which isn’t a given. While the Leave campaign argues that this shortfall in research funding could be made up from the UK’s EU budget payments, many scientists feel that that this money would be swallowed up in the costs of ‘Brexiting’.
Funding from and partnerships with scientific institutions in other EU countries has enabled the UK to pursue larger, more ambitious research programmes. Opting out of the EU could seriously impinge on the UK’s ability to collaborate, as Sir Paul Nurse, head of London’s Francis Crick Institute, acknowledges: ‘Being in the EU gives us access to ideas, people and investment… all of which, history has shown us, drives science.’ Although access to collaborative scientific programmes is possible from outside the EU, it can cost – financially and in compliance with certain EU principles. When a Swiss referendum vote infringed on an EU free movement accord, Swiss scientists lost access to the Horizon 2020 programme for some time, seriously reducing their contribution to joint research projects.
According to Steve Jones, patent attorney at legal firm AdamsonJones, Brexiting would make ‘no difference to existing UK patents (whether obtained through the UK or European patent offices), which would remain in force’; for future patents, though, applicants would still have to choose whether to obtain protection through the UKIPO or the EPO. However, if the UK is still a member state when the long-awaited unitary EU patent system comes into being, then its patents will take effect in the UK. If the UK exits, it is hard to see how those unitary patents could continue to have any legal effect in this country, and a means of converting unitary patents into UK national patents would need to be set up.
The UK benefits greatly from the free movement of scientists and the wider pool of talent being a member state offers, with around 20% of the UK academic community being made up of EU nationals. While it’s unlikely that they would have to apply for visas or leave in the event of Brexit, or that EU grants already awarded would be withdrawn, pro-Europe campaigners feel that being outside the EU could make attracting funding and scientific talent to the UK more difficult and bureaucratic.
The UK has a long history of scientific breakthroughs and research successes, and in today’s world of Open Science, collaboration is key. ‘Loss of the influence gained through being a EU member state could cause challenges for UK medical device companies looking to expand outside of Europe,’ adds Keiron Sparrowhawk. ‘EU membership has been important in attracting investment and world-leading researchers to the UK, while Brexit could isolate the country’s scientists and reduce its influence in the global medtech arena.’
Although the harmonisation of medical device regulations across the EU has taken decades to achieve and brought cost and time benefits, it is also a major target for Brexit proponents, with some directives, such as the Clinical Trials Directive (CTD), being deemed ‘costly, bureaucratic and uncompetitive’. While it’s true that in its original form, the CTD was flawed and resulted in UK applications for clinical trials dropping off, improved clinical trial rules are set to be introduced in Europe in 2017, which will, according to Jane Summerfield of law firm Hogan Lovells, streamline the regulatory burden for researchers and enable multi-site trials to be conducted in several EU countries with a single application. If the UK left the EU, and had a separate trial application process, it is likely that this would result in additional cost and bureaucracy, and damage to the UK’s clinical trials market. Maybe it’s better to change things from the inside and a have a say?
But what do others involved in the medical devices field think? Clinica Medtech Intelligence – the source of news and analysis for the medical devices and diagnostics industries – believes that: ‘A Brexit could quell the UK’s voice in the EU medtech regulatory debate.’ Meanwhile, in its analysis of the subject, international legal firm Hogan Lowells, says: ‘The life sciences industry is one of the UK’s leading manufacturing sectors. It is also one of the most highly regulated sectors, and the current UK legal framework governing medicines and medical devices derives from EU legislation. Subject to the transitional arrangements put in place, Brexit could result in disruption to supply chains, additional quality control testing, new export charges, and uncertainty regarding elements of the regulatory regime going forward, such as the validity of crucial EU regulatory authorisations.’
Professor Lord Darzi of Denham, Director of the Institute of Global Health Innovation, Imperial College London recently told the Telegraph: ‘Huge amounts of investment in research and innovation are being put at risk. The European Union is a scientific superpower; and we are its leading light.’ And 50 leaders of the British biopharmaceutical industry including AstraZeneca’s CEO, Pascal Soriot, and GlaxoSmithKline Pharmaceuticals R&D President, Patrick Vallance, wrote a letter to the Financial Times, expressing their concern about the potential break. ‘Over a generation, regulators and legislators have built up an integrated European regulatory framework for clinical research and development of new, innovative medicines. It is corner-stoned in the UK, and has significant UK input,’ they wrote. ‘If the UK were to leave the EU, it would risk unpicking all of that successful work. It would affect regulatory frameworks, the leadership role of the UK’s Medicines Healthcare Products Regulatory Agency (MHRA) and the National Institute for Health and Care Excellence (NICE) in the EU… and most importantly patient access to medicines.’
Finding anyone in the medtech world willing to commit to the pro-Brexit viewpoint has been tricky – many are cautious and taking a ‘wait and see’ stance. The nearest we’ve come is Jarl Severn, Managing Director of medical device manufacturer Owen Mumford, who said that a weaker pound (a probable result of Brexit) would help exports outside the EU – but its effect on exports and imports to and from the EU would be ‘a bit of a seesaw and rollercoaster ride for all concerned’.
All in all, there are simply too many variables involved to be able to accurately predict what a post-Brexit world would be like for UK medical device companies – just as it is impossible to say exactly what the wider economic and logistical fallout would be. But whether the vote is to remain, or to leave and renegotiate a new relationship with the EU, there will be considerable changes, albeit not straight away – and UK medical device companies will need to be ready to respond and adapt to these. Roll on 24th June!
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