Pharmaceutical Regulation, the Court of Justice, and the Hunt/Starmer Exchange: Some Brief Thoughts

10 Jul 2017

A recent letter to the Financial Times from the Secretaries of State for Health and Business (Jeremy Hunt and Greg Clark), and the reply from the Shadow Brexit and Health Secretaries (Sir Keir Starmer QC and John Ashworth), drew attention to the importance of pharmaceutical regulation after Brexit.

As Mr Hunt and Mr Clark accept, there are many reasons why the UK, and the UK pharmaceutical industry in particular, will want to maintain deep co-ordination with the EU/EEA regulatory regime (much of which was originally based on UK law).  An obvious reason is that the additional costs of submitting drugs for authorisation under two separate regimes rather than one are very high.  Another reason is that, as the European Medicines Agency (EMA) has pointed out, the EU requires that pharma companies maintain key operations and staff (such as QPPVs – officials responsible for regulatory compliance) within the EEA – these are things the UK will not want to lose.  A less obvious, but potentially life-and-death, reason is that there is some evidence that new drugs arrive later in smaller regulatory regimes such as Canada, as pharmaceutical companies focus first on getting approval in the big regimes (the EU and US).

Medicines regulation raises complex legal as well as scientific issues. So, even if scientific and administrative cooperation remains deep, as Mr Hunt and Mr Clark propose, any arrangement with the EU that keeps the UK sufficiently connected to the EU regime to allow the EU to treat the UK as being in the regime for regulatory purposes, thereby avoiding double regulation, will require that the UK continue to apply, and also be recognised by the EU as applying, EU law. Much of that law is found in complex and developing ECJ jurisprudence: it is no accident that the UK courts have, in this area, frequently used the preliminary ruling procedure under Article 267 TFEU to ask the Court of Justice of the EU (CJEU) to answer the very difficult legal questions that frequently arise (a recent case before Mrs Justice Whipple in the High Court, here, gives a flavour). Further, the Commission is able to take infraction proceedings before the CJEU under Article 258 TFEU if a Member State’s interpretation of the law differs from those of the EMA or other states.

So, even if the text of UK law in this area remains unchanged after Brexit, and even if there is intense scientific and administrative cooperation, there will need to be a robust legal mechanism, acceptable to the EU, to prevent UK courts from diverging from CJEU case-law.  Given the difficulty and complexity of this law, divergence is otherwise all too likely.

Mr Hunt and Mr Clark do not deal with this issue: but, as Sir Keir and Mr Ashworth point out, the CJEU “red line” apparently drawn by the Government is problematic here.  That is because it removes the existing legal mechanisms, set out above, that ensure continued consistency of interpretation.

What, then, is the answer?  One answer in theory would be some form of agreement by which the EU and UK would grant more or less automatic approval to drugs approved under the other’s regime and allow, for example, QPPVs for one side to be based in the other – a mutual recognition agreement (“MRA”).  An MRA would tolerate regulatory divergence.  But negotiation of any such MRA would be complicated by the fact that pharmaceutical regulation is both politically sensitive (with public memories of disasters such as Thalidomide) and commercially very important: and, moreover, it is not clear what the EU, as by far the bigger player, would gain from such an MRA with the UK.

That means that the only realistic approach for the foreseeable future is one that keeps the UK regime tied to that of the EU.  As explained above, that means a robust legal mechanism to keep the tie in place.

If the UK joined the EEA, there would be no difficulty: the EFTA Court plays the same role as the CJEU, following the CJEU case-law (and sometimes leading the way).  But, on the assumption that the EEA is off the table, my suggestion would be that the Government should, in order to maintain regulatory consistency, propose that in this area the UK courts would be able to refer legal questions to the EFTA Court, sitting with a UK judge.  An alternative mechanism would be for a new EU/UK court to have jurisdiction to give rulings in this area: but since the EFTA Court already exists, it would seem unnecessary to invent a further court just for this purpose.

Further, though the UK would not have a vote on legislative development of the EU regime, an arrangement of this type would be able to secure its continued ability to contribute to guidance (a very important aspect of the regime, as Whipple J’s judgment referred to above makes clear).

The approach sketched out here may well be appropriate for other regulatory regimes: but given the profound UK interests at stake, it would be particularly appropriate in pharmaceutical regulation.