Brexit: Regulatory and IP Consequences for the pharmaceutical industry. Presentation to PTMG Nicola Dagg, March 2017

Transcription

1 Brexit: Regulatory and IP Consequences for the pharmaceutical industry Presentation to PTMG Nicola Dagg, March 2017 Allen & Overy 2017

2 Agenda 1 Recap on Brexit process / Timeline of key events 2 Article 50 litigation 3 Life sciences industry s stated priorities 4 Impact of withdrawal from the EU on trade marks and exhaustion of rights 5 Professional representation 6 Life sciences regulation 7 Key messages and next steps 8 Questions and discussion Allen & Overy

3 Brexit an historic moment 23 June 2016: 51.9% vote in referendum for UK to leave EU Youtube clip Allen & Overy

4 The European Union and other groupings explained European Union (EU) comprises 28 countries EU members apply common laws and regulations overseen by CJEU UK is not in the eurozone European Economic Area (EEA) includes Iceland, Norway, and Liechtenstein European Free Trade Association (EFTA) includes Iceland, Norway, Liechtenstein and Switzerland Turkey has a customs union with the EU Map from The Economist Allen & Overy

5 The Brexit process straightforward in theory EU Treaties anticipate ever-closer union but also expressly contemplate a Member State leaving The UK must serve a notice on the Council, triggering a 2-year withdrawal period under Art 50(2) timing of the notice is critical A withdrawal agreement is to be signed by Council (acting by qualified majority) and requires consent of the European Parliament (acting on a majority vote basis) If there is no agreement within two years (and no extension agreed) then the UK exits the EU and the Treaties cease to apply, conceivably without any replacement regime in place Any extension to the two-year period must be agreed by the Council unanimously Allen & Overy

6 But not straightforward in practice: Article 50 notice Legal challenge on whether Article 50 notice can be served by UK Government under prerogative powers or whether Parliamentary approval needed Referendum Act was silent on what happened after the vote referenda generally only advisory European Communities Act (ECA) 1972 introduced EU law into domestic law 3 Nov 2016: 3 senior judges ruled that the Crown s prerogative power cannot change domestic law need parliamentary approval to serve notice Media storm followed! Allen & Overy

7 Allen & Overy

8 Supreme Court confirmed ruling Expedited appeal to the Supreme Court. 11 justices. Judgment January 24, Government loses again (8:3). Service of Article 50 Notice must be approved by Parliament. Allen & Overy

9 Parliament now centre stage Allen & Overy

10 Parliamentary approval is needed to serve Art 50 notice Parliamentary Act requires readings, debates and votes in House of Commons and House of Lords. Government is proposing the most straightforward bill possible Passed through Commons without change. Lords considering amendments on guaranteeing rights of EU citizens and a meaningful vote on deal Might delay timetable for serving notice (previously March 2017). Government may also be forced to clarify its negotiating stance BUT unlikely to lead to a decision not to serve the Article 50 notice at all Allen & Overy

11 What type of Brexit does the UK want? July 2016: Brexit means Brexit, and we re going to make a success of it Jan 2017: What I am proposing cannot mean members of the single market We will take back control of our laws and put an end to the jurisdiction of the European Court Hard Brexit leaving the EU at all costs, including leaving the single market if necessary to achieve other aims Soft Brexit remaining in the single market, accepting certain aspects of EU law and regulation IP is low on the agenda Allen & Overy

12 Brexit timeline of key events for the pharma industry July 2016 OLS established the UK EU Life Sciences Transition Programme October 2016 Tory Party Conference Theresa May highlights the importance of life sciences to the UK economy February 2017 Parliamentary scrutiny of Brexit bill and publication of White Paper June 2016 LEAVE VOTE September 2016 Industry report to the UK EU Life Sciences Steering Group on negotiating priorities Japan expresses concerns over Brexit and life sciences sector November 2016 Autumn Statement, Reiterated HMG commitment to the life sciences sector HMG signalled intent to ratify the UPC Agreement January 2017 Jeremy Hunt evidence to Brexit Commons Select Committee - UK will seek regulatory equivalence between UK and EU HMG s 12 negotiating objectives for Brexit - included UK focus for science and innovation HMG s green paper on building a new industrial strategy science, research and innovation identified as 1 of 10 pillars - focus on commercialising the UK s world-leading science base Allen & Overy

13 What are the pharma industry s Brexit priorities? Allen & Overy

14 Industry s stated priorities for life sciences Innovation Commercial & Trade Regulation People Continued longterm access to European funding and collaboration programmes: Maintain access to Horizon 2020 and successor Continued participation in the EIB and EIF Free trade with the EU, ideally on terms equivalent to a full member of the EU customs union and EC VAT union Maintain access to the EU s FTAs with non-eu countries Free flow of capital between the EU and UK Supportive tax system to offset current uncertainty Alignment with the EU regulatory system Regulatory cooperation agreement so UK can be an active participant in European regulatory procedures and decisions Immigration system which facilitates ease of movement for skilled students, researchers and workers Ensure EU nationals can continue to work and study in the UK and show UK is an attractive environment for foreign workers Allen & Overy

15 Key insights from recent government statements and actions 1 Brexit really does mean Brexit: recovering legal and regulatory sovereignty is a negotiating priority The UK (MHRA) will likely not remain formally part of EMA, but could potentially have mutual recognition between the EMA and the MHRA The UK is holding a number of Aces, i.e. MHRA, EMA, PRAC, UPC, science and research base, and promise/threat of deregulation that should all help secure a good deal for the sector on Brexit The Government s Green Paper on industrial strategy signals a Dragons Den approach to sector deals and is closely linked to the AAR strategy 5 Government and cross-industry partnership is the new black and critical to fixing what is increasingly perceived as a broken healthcare system Allen & Overy

16 Impact of Brexit on Trade Marks and exhaustion of rights Allen & Overy

17 UK legislators and judges must decide how closely they continue to shadow EU developments EU Regulations (eg EUTM Regulation) are directly applicable in the UK POST-BREXIT will be incorporated into UK law Great Repeal Bill EU Directives (eg TM Directive) are effective in UK after transposition into UK law POST-BREXIT will be effective if they have been transposed into UK law Expected that the TM Directive will be implemented before Brexit CJEU jurisprudence UK Courts can currently request CJEU opinions on EU law POST-BREXIT UK Courts will no longer be able to refer questions to the CJEU Status of pending preliminary references once Brexit happens is unclear Harmonisation: National law regarding trade marks is currently harmonised across the EU but, in time, the UK courts interpretation of the statutes is likely to deviate from the CJEU and courts from other Member States Allen & Overy

18 We will need transitional arrangements to ensure continued protection for EUTMs EUTMs will (almost certainly) no longer offer protection in the UK Rights holders will need to get counterpart UK rights if both UK- and EU-wide protection is needed. BUT protection is very unlikely to be lost transitional arrangements will be put in place to maintain protection and the same priority date Allen & Overy

19 There are various possible transitional models Jersey Montenegro Tuvalu Veto New legislation, which allows EUTMs to be enforced in the UK All EUTMs are automatically entered onto UK register on Brexit TM owners apply for EUTM to be entered onto UK register UKIPO examines all requests to transfer EUTM onto UK register and may refuse them Cheap and easy Easy Deals with clutter All UK marks valid Asymmetrical UK Courts enforce EUTMs but can t rule on their validity Register clutter e.g.no need for intention to use Risk and cost to rights owners Burden on IPO and cost to TM owner dealing with objections Which model do you think will work best? Allen & Overy

20 Exhaustion of TM rights Prior to the implementation of EUTMs (then CTMs) the UK had international exhaustion. International Conventions do not specifically state which regime to adopt Current fortress Europe approach focuses on protection of trade in the internal market TM rights in goods placed on the market in the EU with consent of the rights owner are exhausted EU Member States are prevented from adopting broader international exhaustion EU-wide exhaustion of TM rights promotes parallel imports and trade within the EU Post-Brexit, the UK will be free to choose its approach. European exhaustion may be maintained, or International exhaustion linked to global free trade - would encourage ex-eu parallel importation National exhaustion would protect UK industry but potentially isolate the UK Allen & Overy

21 Other jurisdictions deal with exhaustion in different ways Switzerland International exhaustion on copyright and trade marks Patents rights can be used to a limited extent to prevent grey market imports But recent decision by the Swiss court suggests avoiding international exhaustion is difficult United States International exhaustion on copyright But no international exhaustion for patents International exhaustion does seem to apply to trade marks unless the proprietor can show that the grey market goods are materially different Brazil General rule of national exhaustion for trade marks and patents Copyright law does not specifically deal with exhaustion Allen & Overy

22 Some countries have changed their exhaustion rules Hong Kong Previous law ambiguous on parallel imports New law introduced on British handover introduced concept of international exhaustion for TMs Hong Kong wanted to support free trade and global trade liberalisation Russia Has regional exhaustion for Eurasian Customs Union/ Economic Area but national exhaustion for other states Considering adopting international exhaustion to obtain access to cheaper parallel goods One alternative is international exhaustion for specific sectors: automobile spare parts, pharmaceuticals and cosmetics Kazakhstan Until 2012 Kazakh authorities interpreted applicable laws to allow parallel imports Adopted regional exhaustion when it entered into Eurasian Customs Union and Economic Area Allen & Overy

23 Most remedies for IP infringement will remain unchanged Remedies include injunctions (final and interlocutory), damages, account of profits, delivery up/destruction, injunctions against third party intermediaries, costs UK law already provides for the majority of remedies required by the IP Enforcement Directive Common law and the Senior Courts Act (Cartier v BSkyB) give the UK courts wide discretion to order remedies Most significant change will be that the UK will not longer have EUTM Courts and won t be able to grant a pan-european injunction in UK courts in respect of EUTM Prior to Brexit there will be no change. Post-Brexit the types of remedies will still be available but the question will be the extent to which they can be claimed in the UK Allen & Overy

24 Professional representation Allen & Overy

25 Hurdles to overcome regarding representation of UK TM practitioners before EUIPO and CJEU 1 Current requirements to act before the EUIPO: (i) qualification in a Member State of the EEA; AND (ii) a place of business in a Member State of the EEA. DO NOT need to be the same Member State 2 If the UK leaves the EEA, UK-based TM practitioners (solicitors and TM attorneys) are likely to be unable to represent clients before the EUIPO 3 4 Non-EEA companies (no real and effective commercial establishment in the EEA) are currently required to be represented before the EUIPO by a professional representative (other than for filing EUTM). UK companies won t be able to prosecute EUTMs direct with EUIPO inhouse BUT can designate EU via WIPO Only lawyers authorised to practise before a Court of an EEA Member State may represent or assist a party before the CJEU (ECJ and General Court) Allen & Overy

26 Business as usual: There are ongoing efforts and contingency plans to ensure continued representation for UK-based practitioners 1 CITMA and CIPA have a clear commitment to ensure the continuance of rights or representatives from UK at the EUIPO discussing with IPO and MOJ Options being considered include: grandfathering for UK qualified representatives to act before the EUIPO/ CJEU or a bilateral agreement whereby EU nationals can act in the UK if UK professionals can act in the EU Law Society have submitted a report to the Department for Exiting the EU and the MoJ which raised the issue of rights of representation Representatives can be based in any EEA state and many firms have offices in the EU outside of the UK If qualification is obtained in another EEA member state and he/she has a place of business anywhere in the EEA, may be able to act before EUIPO 5 If qualification is obtained in another EEA member state, might be able to continue to act before CJEU Allen & Overy

27 Life sciences regulation Allen & Overy

28 Regulation much ado about nothing? No regulatory cliff post Brexit Life sciences steeped in reciprocity and cooperation Regulation largely voluntary and industry led Access to medicines debates already forcing regulatory reform Allen & Overy

29 The regulatory outcome will ultimately depend on the eventual terms of exit (agreed or not) Brexit Transition Post Brexit Transition EU pharmaceutical acquis Regulatory pathways Status quo largely preserved EU law still applied Continued membership of EMA Expect disruption to pre-existing MAs/applications for MAs held/made by UK company whilst new process implemented No application of EU law Grandfathering of pre-existing law and regulation Breadth and depth of new UK laws, regulations, and protocols unclear, but redesign will be required Parallel UK regulatory regime Beefed up MHRA Agreement on esubmission Greater cooperation and convergence internationally Clinical trials Continued involvement in EU clinical trials regime UK company can continue as sponsor and apply for EU funding Parallel UK clinical trial regime Agreement on EudraCT and EurdraPharm PV/patient safety Manufacturing, import, distribution Expect disruption to a UK-based QPPV Continued participation in EU pharmacovigilance system Expect disruption to a UK-based QP Expect disruption to pharmaceutical supply chain whilst new trade arrangements implemented EU law still applied, in particular Good Manufacturing and Distribution Practice UK-based QPPV relocated to EEA country Parallel UK pharmacovigilance legislation and system Agreement on EudraVigilance UK-based QP relocated to EEA country Multi-lateral mutual recognition arrangement for GMP inspection and batch certification Agreement on EudraGMP Allen & Overy

30 Pricing and reimbursement disruption is already happening EU law does not affect national policies on price setting and the organisation of social security and insurance schemes P&R will remain a sovereign issue post-brexit and NICE will continue to advise the NHS on funding new treatments UK representation on Article 10 Transparency Committee may stop, NICE may leave the EUnetHTA, and UK may not join in new EU pricing proposals Widespread concern that new Health Service Medical Supplies (Costs) Bill will exacerbate the regulatory burden on all companies (wherever located) supplying the NHS, over and above the perceived increased regulatory burden post Brexit Brexit coincides with the expiry of the current PPRS in 2019, a rising tide of antitrust enforcement in the UK and abroad against excessive pricing/regulatory abuse, and political intervention in the UK and US, all of which is bearing down on the industry Allen & Overy

31 Key messages and issues Things to remember Include Brexit in your usual business continuity, risk, and crisis management processes Brexit really does mean Brexit Legal requirement Art 50 cannot be triggered without an Act of Parliament UK will remain bound by EU law until at least expiry of A50, after which certain laws will continue in effect Risks to consider Get started on a Brexit risk/impact assessment Recommendation Stay tuned to your trade bodies Make your voice heard at meetings and in consultations Point of view Uncertainty the new normal and will remain so throughout negotiations and beyond Industry generally well positioned, with no obvious regulatory or other cliff Urgent Assemble a cross-functional Brexit contingency planning team Contact us if you get stuck or concerned Allen & Overy

32 Next Steps in Brexit German election (August- October 2017) 2019 Two year negotiation period under Article 50 ends (March 2019) French election (April/May 2017) UK election (before 7 May 2020) Article 50 notification (March 2017?) 2017 Allen & Overy

33 Questions? These are presentation slides only. The information within these slides does not constitute definitive advice and should not be used as the basis for giving definitive advice without checking the primary sources Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP s affiliated undertakings Allen & Overy LT: