DHL December 2017

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Paul Ranson Consultant [email protected] Morgan Lewis, London

An industrial strategy for the life sciences sector in a post-Brexit world

Professor Sir John Bell’s industry-led industrial strategy for the UK’s life sciences sector was published on 30 August 2017 and puts forward proposals to be considered by the Government and used to work towards a sector deal between Government and the life sciences sector, particularly in light of the imminent changes to be brought about by Britain’s exit from the European Union. Paul Ranson, Consultant at Morgan Lewis, dissects Sir John Bell’s industrial strategy in the context of the UK’s departure from the European Union.

Introduction 2017 green paper ‘Building our Industrial Scheme1, the formation of Academic The concept of industrial strategies Strategy’ to come up with an industry- Health Science Networks2 (‘AHSNs’), in Britain will forever be linked to the led, multi-stakeholder vision and indeed the NICE Implementation Collaborative Labour governments of the 1970s with was the first to benefit from the launch (‘NIC’) and programmes such as the industrial rescue attempts losing billions of such an initiative. The strategy biomedical catalyst and catapults. of pounds for taxpayers. Apparently developed by Professor Sir John Bell killed of by Margaret Thatcher’s free and published on 30 August 2017 (the The 2017 Strategy market economic liberalism, they were ‘2017 Strategy’) was independent of The 2017 Strategy has six key resuscitated by Theresa May in a green the Government, but the Government themes - science, growth, NHS, paper in July last year in the immediate has encouraged the initiative and data, and skills and the Healthcare wake of the EU referendum, with May expressed its support particularly Advanced Research Programme: promising “a proper industrial strategy through Business Secretary Greg Clark to get the whole economy firing,” and Health Secretary Jeremy Hunt. • Science - Increased funding for basic although its supposed vagueness science and enhanced UK clinical elicited a somewhat lukewarm reception We have also arguably been here trial capabilities. The EU currently from some sections of industry. before with the 2011 ‘Strategy for UK provides opportunities for international Life Sciences.’ The proposed initiatives, research consortia to compete for Life sciences which employs more which have met with varying success, funding through programmes such than 235,000 people in the UK and included encouraging the use of as Horizon 2020, a rolling seven year has sales of some £64 billion last year, genomics, improved NHS management of programme with €80 billion to fund was one of the first five sectors that the clinical trials, a Clinical Practice Research research and innovation, a source Government requested in its January Datalink, the Earlier Access to Medicines the UK has vowed to replace.

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1. http://webarchive.nationalarchives.gov.uk/20100709153055/http://www.mhra.gov.uk/Howweregulate/Medicines/ MISGNewTechnologiesAdvisoryPanel/Earlieraccesstonewmedicinesintheuk/CON065736 2. https://www.england.nhs.uk/ourwork/part-rel/ahsn/

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• Growth - Improved national growth Conversely it acknowledges the seemed to provoke an early Government and infrastructure through a tax limited attraction of the UK as a market reaction when it finally did respond to environment that supports growth that makes up just 3% of the global the AAR just a few weeks later, “broadly” and encourages investment to pharma market and the NHS being the accepting the AAR proposals. The manufacture and export. There single payer, one that is strapped for response promises from April 2018 a new is much debate on the extent to cash. Significantly the 2017 Strategy Accelerated Access Pathway, a fast-track which Brexit should be exploited states that “The issues of pricing route into the NHS for ‘breakthrough’ to push for a low tax economy. were explicitly not included in the selected medicines and technologies • NHS - Greater NHS collaboration scope of the report” and for many in selected by the ‘Accelerated Access through the Accelerated Access Review the life sciences sector, especially Collaborative,’ which would benefit from with streamlined national routes to those involved in the development of a support package to accelerate clinical market, particularly for digital products high technology products, that is the development through a more frequent which would most benefit the NHS. proverbial ‘elephant in the room.’ and creative use of existing procedures • Data - Improved use of data through and a fast-track route through the NHS’s regional innovation hubs that Moreover, the 2017 Strategy approval and reimbursement processes. would provide data across regions acknowledges that the UK has never of three to five million people. scaled a company to mid-size, in While the news has been welcomed • Skills - Ensuring that the sector has contrast with the US’s successes such in pharma and biotech circles it is access to a pool of talented people to as Biogen and Amgen and notes the clear that the £86 million in funding is support its aims through a strong skills UK’s loss of some manufacturing sites, intended mainly for small-to-medium strategy. The potential loss of talent such as Pfizer’s Sandwich plant. sized enterprises in the digital health would require an immigration policy field with products able to help the that ensures that non-UK staf can The 2017 Strategy and the Accelerated NHS budget go further, and to help the come to, and remain in, the UK, enables Access Review 15 regional Academic Health Science intra company transfers, and responds The challenge will be whether the Networks (‘AHSNs’) in the task of to employer needs. It also suggests the funding and support will be there to “encouraging grassroots adoption and creation of a high-level recruitment fund implement this vision. The first test may uptake of new medical technologies.” that would pay the real cost of bringing be the 2017 Strategy recommendation Only £6 million will support medtech, successful scientists from abroad to that the findings of the Accelerated diagnostics and pharmaceutical work in major UK university institutions. Access Review (‘AAR’), chaired by Sir products. Moreover, this attempt to • The Healthcare Advanced Research Hugh Taylor, which was published just encourage innovation in the NHS is only Program (‘HARP’) - A programme over a year ago in October 2016, be the latest of some half dozen eforts through which industry, the NHS and implemented. The AAR proposed: over the last decade or so including other stakeholders can collaborate on Innovation Health and Wealth (2012). long-term transformative UK-based • optimising use of existing Additionally, the budget constraints projects or ‘moon shots’ such as and emerging regulatory imposed by the Pharmaceutical Price artificial intelligence, genomics, the approval pathways; Regulation Scheme (‘PPRS’), the National early detection of diseases such as • generation and use of patient Institute for Health and Care Excellence cancer and cognitive diseases and data to establish and define the (‘NICE’) and NHS England (through understanding the biology of healthy benefits of innovations; and the Strategic Commercial Unit) on new ageing, initiatives that could help create • a much more streamlined approach to products will be unafected as will the entirely new industries in healthcare. new product reimbursement including Budget Impact Test under which NHS conditional licensing and new tools England can negotiate with companies The 2017 Strategy celebrates some for pricing individual products. whose products have been approved by of the strengths of the UK including NICE, but could have an annual cost to the promise of the ‘Golden Triangle’ The 2017 Strategy insists that the the NHS of more than £20 million a year. between Oxford, Cambridge and Government should implement the London, the productivity of the UK’s R&D AAR, emphasising the need for closer The 2017 Strategy and capability, the 10% efective corporate collaboration between industry and the post-Brexit regulation tax rates for patented products once National Health Service, seeking to shift The 2017 Strategy also briefly addresses the patent box had been factored in the relationship from being “essentially regulatory issues and acknowledges and the potential of the NHS one-stop- confrontational to one where they can the impact on the future of regulation shop for collection of real world data. work constructively together.” This in the life sciences sector of the UK

8 DIGITAL HEALTH LEGAL Whilst the Government acknowledges the key Brexit challenges of skills access and friction free EU/UK regulation, whilst it can control the former, the latter depends wholly on a good trade deal.

leaving the European Union. As the UK UK seeks to continue to operate in this field.” The national Industrial has announced that it does not intend to within this wider framework. Strategy just published on 27 November remain in the European Economic Area confirms what is termed a ‘Sector Deal’ (‘EEA’) or be part of the European Free IP and Brexit with the life sciences sector which the Trade Association (‘EFTA’), the efects The 2017 Strategy does not particularly Government indicates is to be built on on the life sciences sector are likely to address free movement and intellectual the 2017 Strategy. We await specifics be substantial. This is because the UK property (‘IP’) and it is hoped, as the of what the ‘deal’ will comprise. would no longer keep access to many of nature of the UK’s departure becomes the benefits of the EU system, such as clear, that these issues will be clarified. However, the uncertainty surrounding the centralised procedure for marketing The UK’s departure from the EEA means Brexit pervades despite the 2017 authorisations, the EU portal for clinical that EU exhaustion of rights rules will Strategy including the degree of trials and the pharmacovigilance database. cease and it is unclear what the UK preparation and knowledge of central Government will replace them with. Government in relation to the future of Assuming an outcome other than a ‘hard the industry outside the EU. There are Brexit,’ the 2017 Strategy reflects the Moreover with an industry as dependent three life sciences reports within the industry’s hope that such a deal allows on IP rights, in particular patent rights, 58 sector analyses of the economic the UK and the Medicines and Healthcare as the pharmaceutical and life sciences impact of EU withdrawal which the Products Regulatory Agency (‘MHRA’), industry, Brexit causes considerable Government initially refused to using its strong global reputation for uncertainty regarding the geographical publish, with the Government arguing innovation and leadership in the field of validity of patents. Additionally, the that disclosure of the studies would regulation, to seek to continue to work EU is close to creating a ‘Unitary undermine the UK’s negotiating position. closely with the European Medicines Patent’ (‘UP’) and a ‘Unitary Patent Agency (‘EMA’), now to be situated in Court’ (‘UPC’) which ofers patent However, critics claim the information Amsterdam. For medicines licensing, protection across the EU. The UK has is being hidden out of fear the findings continued involvement of the MHRA in been committed to implementing might embarrass the Government over a the review of dossiers and joint scientific the UPC agreement, but with Brexit lack of planning - the Government finally deliberations would enable patients approaching it is possible that the UPC agreed to their publication at the end of across the UK and EU to benefit from the system will proceed without the UK. November, but at the time of writing the UK’s high quality regulatory expertise. concern is that only redacted versions There is further doubt as to how the have been released and the Exiting The UK could make a ‘sovereign protection aforded to patentees by the European Union Select Committee decision’ based on the shared Supplementary Protection Certificates is vigorously pursuing full disclosure. information, should it not wish to seek (‘SPCs’) would be treated under UK law. Whilst the Government acknowledges to be part of the EU voting system. This These extensions to patent protection the key Brexit challenges of skills access would be the preferred solution given of up to five years are available in and friction free EU/UK regulation, the impracticability, attractiveness and various forms in many countries (e.g. whilst it can control the former, the latter cost of a wholly free-standing system. the US and Japan). It is possible that the depends wholly on a good trade deal. In addition it points to the benefits of EU Repeal Bill will preserve any SPCs scale in areas such as pharmacovigilance that have been previously applied for Additionally, any attempt to attract and clinical trials where greater patient and equivalent regulations may then life sciences investment into the numbers will improve the evidence be enacted by the UK Government for UK has to be considered against for decision making. Similarly, given future SPCs but it is unclear what the what has been described as the recent agreements across the FDA nature of these will be and how far SPC currently “essentially confrontational” and EMA for mutual recognition of rights will extend in the UK in the future. Department of Health/NHS England manufacturing inspections, the UK interactions with the industry, driven should continue to share expertise and Conclusions by tight reimbursement and pricing collaborate with the EMA system as in Sir John indicated that he was confident policies and the need for a change the past, and seek to share in these that most of the recommendations in to a more constructive relationship. mutual recognition agreements. the 2017 Strategy will be accepted, and Hopefully such a change will form part Medical device assessment through Greg Clark has stated that “We will be of the promised life sciences ‘deal.’ CE marking currently works across engaging with Sir John in the coming a wider than EU footprint so it is months to work towards a sector deal similarly recommended that the that helps us seize the opportunities

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