Brexit Update

Since the UK voted to leave the European Union (EU), LabCorp and its drug development business unit, Covance, have been closely monitoring the situation and evaluating the potential impact on the pharmaceutical industry in Europe and the UK. We have been ready since the initial Brexit deadline of 29 March 2019 to provide our clients with continuing services, regardless of the ultimate results of the negotiations between the UK and the EU.

Despite agreement in June 2020 to intensify talks on the future relationship agreement(s), the prospect of a "no deal" scenario at the end of 2020 when the transition period ends remains real. Accordingly, we will continue to adapt our plans as necessary. In line with our mission to improve health and improve lives, LabCorp / Covance supports the industry-wide position that it is crucial to maintain access to safe and effective medicines for patients in both the UK and EU27.

Background

The United Kingdom (UK) Parliament, the European Council and the European Parliament adopted the Withdrawal Agreement, effective as of 1 February 2020. This puts in place a transition period during which the UK will continue to have rights and obligations as part of the European Union (EU) internal market until 31 December 2020.

The Withdrawal Agreement allowed for the extension of the transition period once before 1 July 2020, however, the UK legislated against any extension and officially informed the EU27 of its intent not to seek extension.

brexit blue european union EU flag on broken wall and half great britain flag

The UK has published a draft free trade agreement it proposes to negotiate with the EU. The EU has earmarked certain issues that must be resolved prior to advancing negotiations on sectoral elements. These include governance and creation of a level playing field as a condition of access to the EU internal market. The UK rejects the EU approach, arguing that the EU’s demands seek a degree of regulatory alignment not required for the EU’s other trading partners. 

While little progress on the future relationship agreements has been made to date, in June 2020, the EU27 and UK agreed to intensify negotiations. The possibility of a "no deal" scenario at the end of the year remains.

If there is no trade agreement in place, the UK and EU27 will trade with one another on World Trade Organisation terms.

What changes during the transition period?

  • During the transition period, the EU generally will treat the UK as if it were a Member State, with the exception that the UK may not participate in EU institutions or governance structures. EU law remains applicable in the UK. In effect, this means that the UK must apply all EU rules, including any changes made during the transition period, but no longer has a voice in setting the rules.

  • The UK remains in the EU Customs Union and in the Single Market with all four freedoms, i.e. free movement of people, goods, services and capital, and all EU policies.

  • At the same time, as the UK has left the EU, it now has the ability to negotiate with other trading partners and pursue free trade and other arrangements. It also will consider legislative changes it may wish to make following the end of the transition period. This means that the UK will be preparing, in some instances, to diverge from EU law.

Key Brexit Milestones:

  • End of summer 2020:  UK goal for conclusion of negotiations
  • Mid-October 2020:  EU deadline for an agreement to allow for approval by the UK, European Council and Member States by year end
  • 31 December 2020: End of the transition period, unless extended. EU regulations will no longer apply to the UK. If the future relationship agreement between the UK and EU is not successfully concluded, trade between the UK and EU would be on WTO terms and Withdrawal Package terms relative to Northern Ireland would become applicable. 

Our Priorities and Preperation

Going forward, our key priorities are:

  • Uninterrupted movement of time-sensitive clinical trial kits and biological samples and minimal disruption for other goods moving between the UK and the EU27, achieved by customs and regulatory facilitations.

  • Retaining EU27 nationals working in the UK and UK employees at EU27 facilities, and ongoing access to international talent.

  • Alignment of UK and EU law and/or mutual recognition, equivalence, or other cooperation agreements to enable continuing UK-EU collaboration on research and drug development.

  • Securing tax incentives to support future research and development in the UK.

  • Ongoing ability to rely on EU27-UK intra-company temporary transfers to cover peaks and flows of work.

Since June 2017, we have developed and deployed contingency plans, including full implementation readiness prior to the original March 2019 Brexit date. We have continued to refine these plans, and are well prepared regardless of the outcome of negotiations surrounding the future UK-EU trade agreement.

We have obtained Authorised Economic Operator (AEO) certification for our Harrogate (UK) and York (UK) sites to help reduce the risk of delays at the post-Brexit border (AEO status is an internationally recognized quality mark indicating secure international supply chains, and efficient and compliant customs controls and procedures).

We have worked closely with industry associations, including the Association of the British Pharmaceutical Industry (ABPI), the European Federation of the Pharmaceutical Industry and Associations (EFPIA) and the Association of Clinical Research Organizations (ACRO), as well as engaging in direct outreach, to advocate for the best possible Brexit outcome for our clients and business.  

LabCorp / Covance continue to closely track potential legislative or regulatory changes in the region and remain confident that we will be prepared for any UK regulatory scenario and UK-EU trade relationship. 


Read about our preparation for Brexit.

For specific information related to your development project, please contact us at CovanceBrexit @ Covance.com.