Brexit Implications on the Life Sciences Sector Holger Stratmann Attorney at Law, Partner 1 Life Science IP Seminar 2017
Separating Facts From Fiction Impact On Existing IP The Unknown Future What To Do Now 2 Life Science IP Seminar 2017
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FACTS US$25b in revenue generated by European biotechs in 2015 Almost US$10b in capital raised by European biotechs in 2015 2,259 biotech companies in Europe with over 72,000 employees 1,045 biotech companies in UK pharmaceutical market value in Europe approx. US$280b more than 700,000 people are employed in the European pharmaceutical industry UK is one of the largest recipients of research funding in the EU UK is European HQ location of choice for over a dozen global pharma/biotech companies 5 Life Science IP Seminar 2017
FACTS and have given reassurance that they will remain committed to the UK is in the midst of a huge 330 million project developing a new R&D hub and headquarters in Cambridge announced a 275 million investment in various UK sites to boost production and support delivery of its latest respiratory and large molecule biologic medicines 6 Life Science IP Seminar 2017
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IMPACT OF THE BREXIT ON EU TRADEMARKS EU Trademark regime is only available to EU Member States Existing EU Trademark registrations will continue to apply in the other EU Member States cease to apply in the UK likely that transitional provisions would be put in place to allow brand owners to convert part of their Union Trademarks to national UK registrations (possibly retaining their original priority dates) NEW EU Trademark registrations will NOT cover the UK 10 Life Science IP Seminar 2017
IMPACT OF THE BREXIT ON EU TRADEMARKS EU Trademark will lose its effect in the UK convert UK-part into national UK trademarks NEW filings will NOT cover the UK 11 Life Science IP Seminar 2017
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IMPACT OF THE BREXIT ON DESIGNS RCD regime is only available to EU Member States Existing RCDs will continue to apply in the other EU Member States cease to apply in the UK likely that transitional provisions would be put in place to allow design owners to convert part of their RCD to national UK registrations (possibly retaining their original priority dates) NEW RCDs will NOT cover the UK 13 Life Science IP Seminar 2017
IMPACT OF THE BREXIT ON DESIGNS RCD will lose its effect in the UK convert UK-part into national UK designs NEW filings will NOT cover the UK 14 Life Science IP Seminar 2017
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IMPACT OF THE BREXIT ON EUROPEAN PATENTS (EPC) European Patent Convention: Multilateral treaty instituting the European Patent Organisation and providing an autonomous legal system according to which European patents are granted EU membership is NOT required for being part of the EPO system No substantial changes expected 16 Life Science IP Seminar 2017
IMPACT OF THE BREXIT ON EUROPEAN PATENTS (EPC) EPC Member States EU Member States 17 Life Science IP Seminar 2017
IMPACT OF THE BREXIT ON NATIONAL (UK) PATENT APPLICATIONS UK Applications currently, interpretation of the Biotech Directive (98/44/EC) by the CJEU is binding on the UK UKIPO brought its practice into line with CJEU rulings C -34/10 ( Brüstle ) and C-364/13 ( International Stem Cell Corporation ) on the patentability of human embryonic stem cells post-brexit, it will be the UK courts, rather than the CJEU, who will rule on such matters and therefore there could be divergence in UK and EU law 18 Life Science IP Seminar 2017
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IMPACT OF THE BREXIT ON SPC s SPCs are national rights granted by UKIPO SPCs can only be enforced in the UK EU laws will be converted into UK law subject to amendment, repeal or improvement by parliament likely that UK will retain the system for the maintenance and grant of SPCs (necessary) amendments may no longer be appropriate the use the date that a product is first authorized in the European Economic Area (EEA) to calculate the duration of an SPC may no longer be appropriate to require that a product be authorized in all EU Member States in order for the award of a six-month extension of the SPC term to apply 20 Life Science IP Seminar 2017
IMPACT OF THE BREXIT ON SPC s Pharmaceutical Products: Regulations (EC) No. 469/2009 (EC) No. 1901/2006 Plant Protection Regulation (EC) No. 1610/96 21 Life Science IP Seminar 2017
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IMPACT OF THE BREXIT ON TRADE SECRETS EU Trade Secrets Directive (2016/943) has come into force on July 5, 2016, setting minimum level of protection EU Member States have 2 years to implement it into national law UK may not implement, but already has strong trade secret protection 23 Life Science IP Seminar 2017
The Unknown Future 24 Life Science IP Seminar 2017
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THE NORWEGIAN MODEL Leave the EU, but remain a member of the European Economic Area (EEA) 26 Life Science IP Seminar 2017
THE NORWEGIAN MODEL Situation UK remains part of EEA and keeps the 4 freedoms of people, capital, goods and services Potential Implications UK would need to contribute to the EU budget and comply with EU social, employment and production regulation Impact on Life Science Companies would allow the UK to retain access to the EU market and participate in trials EU authorized medical products would have to be nationally authorized in the UK alternatively the UK may wish to enact legislation which gives automatic effect to EU marketing authorisation decisions. 27 Life Science IP Seminar 2017
THE SWISS MODEL Leave the EU, re-join the European Free Trade Association (EFTA), but stay outside the EEA 28 Life Science IP Seminar 2017
THE SWISS MODEL Situation UK enters into a bilateral integration treaty with the EU Potential Implications UK would have access to some areas of the Single Market, at the cost of adopting the relevant EU regulations Impact on Life Science Companies UK would need to approve medicines and grant clinical trial authorizations etc., separately from the EU (and the EEA) UK would recognize the quality of pharmaceuticals manufactured in the EU and vice versa, thus ensuring quicker market access 29 Life Science IP Seminar 2017
THE TURKISH MODEL Leave the EU, but join an EU customs union 30 Life Science IP Seminar 2017
THE TURKISH MODEL Situation giving only partial access to the EU single market Potential Implications it is not an economically favourable option Impact on Life Science Companies no positive impact 31 Life Science IP Seminar 2017
THE CANADIAN MODEL Leave the EU, but negotiate individual trade terms to retain at least some access to the single market 32 Life Science IP Seminar 2017
THE CANADIAN MODEL Situation UK negotiates a Free Trade Agreement (FTA) with the EU Potential Implications tariff-free trade between the UK and the EU gives access to the single market for goods without all of the obligations that come with the Swiss and Norway models, such as contributing to the EU budget or signing up to free movement Impact on Life Science Companies depending on what agreement is reached UK may want to negotiate as complete market access as possible depending on the concessions demanded by the EU, extensive market access may be feasible or not 33 Life Science IP Seminar 2017
THE UK MODEL?? Leave the EU, and fall back on World Trade Organization (WTO) trade terms 34 Life Science IP Seminar 2017
THE UK MODEL Situation UK does not establish any new trade agreements with the EU Potential Implications only WTO terms apply UK goods and services would be treated in the same ways as those of third countries like Hong Kong or Singapure Impact on Life Science Companies scenario presumes a complete separation of the UK system for pharmaceutical regulation from that of the EU under a Most Favoured Nation (MFN) status, a 0% tariff would apply to the UK on pharmaceuticals there could be tariff implications component parts and broader goods used there could be scope to agree mutual recognition of GMP inspections, subject to negotiations and the willingness of the EU 35 Life Science IP Seminar 2017
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PARALLEL IMPORTATION Parallel Importation is a Big Issue for Pharmaceutical Companies pricing and reimbursement of medicines are not harmonized and falls under the exclusive competence of EU Member States third parties are free to buy up branded medicines in an EU Member State where the price is typically low, and gain significant profit by selling in a more expensive EU Member State, by undercutting pharmaceutical companies prices EU Operates a Principle of Exhaustion of Rights IP rights holders cannot use their IP rights to prevent free movement of goods within the EEA in circumstances where a product has been placed on the market by the IP right holder or with his consent 37 Life Science IP Seminar 2017
PARALLEL IMPORTATION Current Situation UK recognizes the doctrine of regional exhaustion of rights within the European Economic Area (EEA) goods which are initially placed for sale in one Member State of the EEA may then be transported to the UK for sale without infringing UK trademark or patent rights Post-Brexit UK will leave the EU however, it is not presently clear whether UK will also exit the EEA 38 Life Science IP Seminar 2017
PARALLEL IMPORTATION If the UK Remains Part of the EEA EU exhaustion of rights continues to apply free movement of goods will be preserved If UK Leaves EEA EU exhaustion of rights rules will cease pharmaceutical companies may be able to assert their IP rights to stop parallel importation into the UK however, UK could legislate so that the position remains the same (as is currently), with the relevant territory being the EEA and the UK 39 Life Science IP Seminar 2017
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MARKETING AUTHORIZATION Medicinal products must obtain a marketing authorization (MA) from an appropriate regulatory body before they can be sold in the UK Currently three routes for getting marketing authorization in the UK: Centralized Procedure (Directive 2001/83/EC) making one application to the European Medicines Agency (EMA) (a single marketing authorization is obtained) Decentralized Procedure (Directive 2001/83/EC) making multiple applications to each individual EU member state where marketing authorization is sought (separate national authorizations are obtained); 41 Life Science IP Seminar 2017
MARKETING AUTHORIZATION Mutual Recognition Procedure a medicine is authorized in one EU member state and a later application is made for this authorization to be recognized in other member states (separate national authorizations are obtained) 42 Life Science IP Seminar 2017
MARKETING AUTHORIZATION Post-Brexit (new authorizations) Remain Part of the System UK could remain part of the system like Norway MAs issued by EMA will continue to be automatically valid in the UK UK would have no formal legislative or administrative role Operate Own National Authorization System Medicines & Health Products Regulatory Agency (MHRA) will inherit work from EMA MHRA will have to recruit and train additional staff; longer proceedings necessity to make separate applications for marketing authorizations in the EU and the UK 43 Life Science IP Seminar 2017
MARKETING AUTHORIZATION Post-Brexit (granted authorizations) marketing authorizations granted by the UK will be unaffected marketing authorizations granted in the EU under the centralized procedure prior to the exit will be recognized by the UK centralized marketing authorizations covering the EU held by UK companies will have to be transferred to companies established in EU countries unless mutual recognition agreements are put in place 44 Life Science IP Seminar 2017
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CLINICAL TRIALS Currently UK is the EU s most popular location for phase I trials UK ranks second, after Germany, for phase II trials UK is third, behind Germany and Spain, for phase III studies Post-Brexit pharmaceutical companies and medical technology suppliers may favor running trials in EU member states, as it will give them access to a larger market 46 Life Science IP Seminar 2017
CLINICAL TRIALS If the UK Remains Part of the EEA UK may continue to retain some benefits as the centralized marketing authorization procedure will continue to apply in return, drugs that have been approved in the UK will be approved across Europe as well If UK Leaves EEA there may be additional controls that would have to be negotiated, which could slow regulatory approvals 47 Life Science IP Seminar 2017
CLINICAL TRIALS 2018: EU Clinical Trials Regulation (EU No 536/2014) aiming to facilitate pan-european clinical trials will allow for central application and approval to conduct trials across the EU (a much larger and potentially more lucrative market of some 500 million potential patients compared with the UK s 60 million or so ) UK involvement in these trials will become more difficult and costly pharmaceutical companies may need to set up separate trials for the UK, leading to higher costs and more time consuming processes companies will not wish to incur the cost of trials in the UK when they already have won EU-wide approval however, mutual recognition arrangements may be arranged to minimize any such inefficiencies brought about by Brexit 48 Life Science IP Seminar 2017
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EMPLOYEES Currently UK based pharmaceutical industry directly employs around 73,000 people, of which 10,000 work in R&D multinational pharma companies with their base in the UK typically employ international teams the pharmaceutical and life sciences industries in the UK employ approximately 5,000 non-british EU citizens 50 Life Science IP Seminar 2017
EMPLOYEES Post-Brexit should the UK change its migration policy and restrict freedom of labor as part of its exit deal with the EU, this may impact both established companies and the core research base in the UK companies may consider relocating to other EU countries as this would facilitate the employment of EU nationals relocating to the EU could mean that UK employees would then face burdensome visa processes and costs as working for an UK based company might become less attractive for highly educated foreign employees, these employees may turn to companies in the EU 51 Life Science IP Seminar 2017
EMPLOYEES If the UK Remains Part of the EEA people will still be able to move freely across borders If UK Leaves EEA free movement of workers between the UK and the other EU member states would come to an end impact on the movement of scientists, life sciences companies staff and researchers across Europe it also poses questions regarding the status of EU citizens currently employed in the UK in the life sciences sector 52 Life Science IP Seminar 2017
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WHAT TO DO NOW? analyze the impact of separate approvals processes and labelling for the UK develop assessment criteria that can be used on a case -by-case basis if a separate UK approvals process is required, to make cost -efficient launch decisions analyze the impact of WTO tariffs on trade profitability and R&D efficiency, and conduct locational analysis to check if changes to supply chain would lead to savings (and be ready to implement at point of exit) 54 Life Science IP Seminar 2017
WHAT TO DO NOW? model the impact of the loss of the free movement of people gather information on the organizations national status of current UK and EU workforce and talent pool understand which existing EU R&D funding will be impacted and the possible consequences strengthen existing relationships and identify new potential collaborators 55 Life Science IP Seminar 2017
Thank you for your attention Holger Stratmann Attorney at Law Partner HStratmann@HoffmannEitle.com 56 Life Science IP Seminar 2017