What will Brexit mean for medical device companies?

By Ronald Boumans, Emergo Group

In a stunning referendum on June 23, UK voters decided to leave the European Union (EU). This historic vote has many medical device companies – inside and outside the UK – wondering what the future holds for the regulation of devices and IVDs sold in the country.

The UK’s top medical device regulator – the MHRA – issued this statement, in which they say that they expect to keep doing their work as usual.

Under the current regulatory framework, companies selling medical devices in the UK must abide by Europe’s medical device, IVD or active implantable Directives. UK based Notified Bodies also have to follow the Directives, and there are UK-based Authorized Representatives that provide access to the European market to non-EU manufacturers. The UK along with 27 other EU countries (plus Norway, Iceland, Liechtenstein and Switzerland) all have these Directives transposed into national law.

What has changed now?

At this time, nothing has changed with regard to the regulation of devices and IVDs. The British people have voted in favor of leaving the EU. Now the British government has to consider this recommendation. Prime Minister David Cameron has resigned, as he didn’t want to swim against the tide. There will be a successor soon, but it is not clear whether this person is elected by the members of the Conservative Party voting for a new party leader, or if this will be the result of new general elections. One thing is certain: until the final breakup British legislation remains fully aligned with European rules and CE Marked products can move freely across the Channel. What might happen next can be summarized in the four options below.

What happens when the UK leaves?

The consequences regarding medical devices and IVDs must be seen in a wider perspective. CE Marking of devices is directly linked to the concept of the European single market with its free movement of goods and people. In order to create a level playing field in this single market, all Member States (countries) have to accept European legislation in their territory. The two main arguments in favor of leaving concerned legislation that was coming from a supranational entity and the free movement of people within the Union. As we see it, the UK has four options upon exit from the EU:

1. Become part of the EEA or EFTA, similar to e.g. Norway or Switzerland. In both cases the free movement of goods will remain under the CE Marking of the applicable categories of products, although there likely will be some limitation to the free movement of people. Notified Bodies and Authorized Representatives can keep working from the UK. This also implies that many European rules will also be imposed on British citizens, while at the same time the UK cannot vote on these rules;
2. Set up a mutual recognition agreement for medical devices only, where CE Marked devices can be freely distributed in the UK. This requires fewer European rules to be accepted and British industry may need an Authorized Representative to distribute its devices on the European market and vice versa. Depending on the conditions agreed this option may also allow for Notified Bodies and Authorized Representatives to continue operating from within the UK, although there may be some extra barriers compared to the first option.
3. Trade with Europe under a special agreement. This could best be compared with the current situation between the USA and Europe, where there are certain rules that help manufacturers placing these devices on the other market.
4. Trade with Europe under the general World Trade Organization (WTO) arrangement. This is the option where the British citizen will see the lowest level of non-UK legislation, but it also means that market entry requires extra work and costs. It does not seem attractive to either party.

Which to choose?

Emergo sees options 1 and 2 as the most palatable to the medical device industry, because options 3 and 4 will essentially place British industry outside Europe. The two first options are probably also what most parties involved in this process would prefer, although this may not be what the British people thought they were voting for. Should option 1 or 2 be chosen, it can be expected that the transition to the MDR in the UK will be in sync with the rest of Europe. Regardless of which option is chosen, the impact for medical device industry and related institutions such as NBs, including also the MHRA’s high standing in Europe, will be negative. This may also be the case for investments in industry, although Switzerland illustrates the opposite. Many companies with production facilities may favor Ireland even more strongly than they already do.

Under option 2 the MHRA would still be able to impose a few specific “UK only” rules if desired, but the basic process of obtaining and maintaining UK approval would be identical to what is required for the mainland Europe. Australia (having a mutual recognition agreement with the EU) maintains a similar regulatory framework.

When?

That brings up a big question: When will the United Kingdom actually leave the EU? Nobody knows yet. More will probably be known in October when the UK installs a new PM, who will have to decide to invoke Article 50 (PDF) of the Lisbon Treaty. This is the procedure by which a Member State can leave the EU and it has a steep two year time frame to agree on the conditions and future relationships. It has been speculated that the British will try to delay invoking Article 50 to gain extra time for negotiations. It appears the other EU Member States have slammed the door on that option by agreeing that they will not start negotiations before the Article 50 procedure has started.  However, some specialists on European legislation are now suggesting that the two years’ timeframe may be expanded to 5 or even 10 years, so the Brexit date is pure speculation at this point.

Until the breakup becomes final, the UK is subject to EU medical device laws and regulations. This includes any changes in the legislation. Under options 1 or 2 there should be no major problems as the changes in legislation will have their own dynamics similar to what will happen in all the other Member States. Should the UK have chosen options 2 or 3, it could be possible that the formal separation will happen around the date of enforcement of the new EU MDR (expected beginning of 2020). They will then have to apply EU legislation until the date they officially leave the EU. It is likely there will be arrangements made for the transition of the industry regarding CE Marking.

The path forward for medical device companies

It is obvious that as the UK transitions to new leadership in October 2016, the hard work of negotiating the exit from the EU will begin. At this point, the European block may have made up its mind about how to deal with this situation.

It is important to remember that despite having a thriving local device industry, the UK is still highly dependent on medical device imports. Ensuring the ongoing flow of medical technology into the UK is paramount for economic and patient care reasons. The MHRA and UK Government will surely figure out a plan for continuing the flow of vital medical technology in and out of the country but at this point questions vastly outnumber answers.

Ronald Boumans, MsC is Senior Regulatory Consultant at Emergo‘s office in The Hague. He previously served as Inspector of Medical Technology at the Dutch Healthcare Inspectorate, and his areas of expertise include European medical device legislation, Competent Authority supervision, and CE Marking requirements.

The opinions expressed in this blog post are the author’s only and do not necessarily reflect those of MassDevice.com or its employees.

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