Are you prepared for Brexit?

Are you prepared for Brexit?

In the first in what is to become a regular comment feature, Peter J Ogrodnik, Professor of Medical Devices Design at Keele University, talks about the different scenarios facing the medical device industry due to Brexit

The UK Medical Devices industry is worth £22bn a year [1] and is supported by 3700 companies, more than 95 per cent of which are SMEs. As I write this article there are less than 50 days to Brexit and there are four identified potential scenarios (A general election only results in one of the four outcomes) concerning the UK’s departure from the European Union (EU), I have not attempted to offer any probabilities of which of the scenarios may prevail:

#1. Brexit is cancelled, by whatever means. Nothing happens at all, and the UK remains within the EU.

#2. Article 50 is extended to allow further negotiations.

#3. A withdrawal agreement is approved before 29 March 2019 and the UK moves into a transition period.

#4. The UK leaves the EU with no agreement (so called WTO rules option) on 29 March 2019.

Outcome 4 is the default as this was written into the withdrawal bill. However, despite current media speculation, all outcomes are possible; all will have a different effect on the UK medical devices industry. We shall examine each in turn.

#1 means the UK medical devices industry is unaffected; all remains the same.

#2 is similar to #1 until the extension period comes to an end, when either #3 or #4 will follow but with new deadlines.

Scenario #3 is an issue, as nobody knows at this stage if Parliament will approve the proposed withdrawal bill. I have had questions tabled in the Houses of Parliament and the relevant Secretaries of State’s offices have provided reassurances, as has a recent memo from the MHRA [2]; it has been confirmed that under the current proposed Withdrawal Agreement that during the transition period the MHRA will retain its status as a Competent Authority (CA) for the purposes of CE Marking, and hence so will the associated Notified Bodies (NBs). However, the transition period only delays the date at which the relationship changes and at this stage there is no visibility on what agreement may or may not be reached and how that will impact the UK’s medical device industry. Therefore, in this scenario Medical Device companies will not need to take any immediate action to ensure they are still able to trade using their current CE Mark. 

In scenario # 4 the UK becomes a third country, the MHRA loses its status as a Competent Authority for CE Marking, and as a consequence so do all MHRA licensed NBs: all associated CE marks become redundant overnight. The EU may give a period of leniency (as is expected for the airline industries) to allow time for UK-based companies to take the necessary steps to maintain regulatory conformance, but this has been neither confirmed nor guaranteed. 

In the event of #4 it will be necessary to establish a legal entity within the EU. This means the appointment of an Authorised Representative within one of the EU27 countries; undertaking a new registration with that country’s Competent Authority; and a transfer of CE mark to a new Notified Body, which will result in a change of CE number. Some NBs from the UK have already set up bases in EU27 countries (Holland and Malta, for example) to enable them to continue to provide services to their clients for CE Marking – but their clients will still need to secure an Authorised Representative to maintain their CE marks (but with a new CE number); and as you would expect there is already evidence that NB’s in some countries have exhausted capacity in terms of taking on new clients.

All medical device companies received several letters from the DoH and the NHS stating that it will continue to accept CE marked devices. However it has failed to confirm that it will accept devices, from UK-based companies, that “were” CE marked as of the exit date (29 March 2019). The MHRA have stated that existing certificates will be retain validity in the UK, but they have not stated for how long: to the expiry date, or to the next annual audit? So one has to assume UK companies will have to maintain their CE markings to sell to the NHS; and to continue selling to the export markets that currently accept the CE mark (such as the remaining EU 27, the Middle East, Asia and Australasia).

What can you do to prepare? Ignore scenario #1 as nothing changes, so there is nothing to do with respect to Brexit. For scenarios #2 and #3 there is no immediate requirement as any changes are pushed to a future date i.e at the end of the extension period for #2 and at the end of the transition period for #3. Although, it is worth bearing in mind that ultimately it may be necessary to make the same preparations needed under scenario #4, as nobody has any visibility on the final outcomes at the end of the extension or transition periods.

In the event of scenario #4 the following steps are needed. First you need to find out if your NB has secured its own status within an EU27 country: if not, you will need to appoint a new NB. At the same time, all UK-based companies must secure an Authorised Representative in one of the EU27 countries. Once that has been secured, registration with the relevant Competent Authority must be made. For higher classifications new CE mark certificates will need to be issued. This may or may not require a new NB depending on whether your NB has already secured its status within an EU27 country, but it will definitely require a change to packaging and labelling. As previously mentioned, this is already causing a backlog of applications in the system. In the meantime, in order to protect your customers within the EU27, you may wish to explore putting a pertinent level of legally CE marked stock in the supply chain so that you are able to fulfil delivery post 29 March. You would not be able to do this after the 29th as the status of stock within your own stores in the UK is unclear.

There is, at present, no ‘get out clause’; no ‘get out of jail free card’ to play; no ‘aces up the sleeve’ – it would appear the UK medical devices industry has been overlooked. There is a real risk of some devices being unobtainable from the usual UK sources requiring the NHS to source alternatives from beyond the UK’s shores: all to the detriment of its own home-grown industries, their employees, and their suppliers. In all recent press articles the media has forgotten that the UK is a major supplier of medical devices to both the NHS and the rest of the EU. There is a real risk that some procedures will be delayed because the supplier is from within the UK and the SMEs concerned may not be able to afford the necessary changes and will just, simply, cease to trade.

If you have not done anything about Brexit because you think that, for example, as a Class I or Custom Made device manufacturer, it does not affect you, then it is time you started to think about your plans – seriously.

Author:

Peter Ogrodnik is Professor of Medical Devices Design at Keele University and is author of Medical Devices Design (Elsevier / Academic Press). The contents of this article are the opinions of the author only and do not necessarily reflect those of Keele University, its employees, or its students.

References:

1. Grant Thornton (2018) UK Med-Tech & The NHS

2. MHRA further guidance note, to be found at https://bit.ly/2Rt2FFo (shortened URL)

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