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 The biotech company headquartered outside Oxford is one of thousands
of manufacturers, from aerospace engineers to makers of plastic
moldings, facing an uncertain future as Britain's departure from the
European Union leaves a potential regulatory vacuum in its wake.
While London plans a mammoth cut-and-paste job to convert EU law
into domestic legislation, dubbed the Great Repeal Bill, this will
not answer the question of what happens to the work of EU agencies
that have legal powers to regulate industry.
Some manufacturers are already seeking to write into supplier
contracts a clause asserting who should shoulder the burden of
additional costs if Britain creates its own regulators, duplicating
the work required to trade in the UK and Europe.
"We will do clinical trials in the UK, but the question is what will
be the process for getting UK approval?" Summit's Chief Executive
Glyn Edwards told Reuters.
"The big issue is really for UK patients. If there isn't some kind
of mutual recognition and participation in the EU system for drugs,
then the focus will be on getting first approval in Europe because
the market there is so large."
Officials say relations between regulatory bodies after Britain
leaves the EU is a matter for Brexit negotiations in the run-up to
the divorce scheduled for March 2019.
The minister in charge of Prime Minister Theresa May's "Brexit
department", David Davis, told parliament at the end of March the
government would build relationships with its European partners that
enable it to maintain common standards. He refused to go into
details about how this would work, however.
May has called a snap election for June 8, hoping to strengthen her
hand with a bigger parliamentary majority so she can secure what she
calls the best deal for Britain in the Brexit talks.
One option might be to agree special relationships with certain EU
regulatory systems, either on a transitional or long-term basis.
Currently, for example, drugmakers in the European Economic Area, or
single market, can tap the entire market of 500 million potential
patients with a single EU marketing approval. The single market
includes Iceland, Liechtenstein and Norway as well as the EU.
May has ruled out Britain being a part of the single market,
however, and the rest of the EU may in any case baulk at allowing
London to use its regulatory machinery after it leaves.
Further, EU agencies are beholden to the European Court of Justice,
whose jurisdiction Britain is determined to escape.
"The issue of how quickly these things can be clarified is really
important," said Andrew Bonfield, finance director of National Grid
and chairman of the 100 Group, representing finance heads of FTSE
100 companies and some big private firms.
"People need to know how they are going to operate," he told
Reuters. "I cannot see a solution which would enable the UK to be
under EU regulation if we are talking about a proper exit from the
EU."
Opposition Labour lawmaker Chris Leslie believes it would be
difficult for Britain to be a "rule taker" from EU agencies in the
long term, since regulation could be used as a tool to gain an edge
over rivals.
"Different groups will press for variance to get a short-term
competitive advantage over European competitors," he said.
Escaping the "yoke" of EU regulation, or "taking back control", was
one of the reasons campaigners gave to vote in favor of Brexit in
the June 2016 referendum.
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TINY MARKET
In the case of drugs, leaving the nearly 900-person European
Medicines Agency, which is set to move from its current base in
London, would mean Britain would need a stand-alone UK regulator to
decide if drugs are fit for use.
Since companies must pay fees to have new drugs assessed and
separate filings involve extra work, the cost of accessing a British
market that accounts for only 2-3 percent of global sales would
likely delay the introduction of new medicines into the UK.
Industry figures who have met the government to discuss the issue
say they do not expect UK rules to diverge enormously from EU ones
after Brexit, but they are concerned about the lack of clarity about
what they will look like.
It is a particular worry for small, resource-limited businesses like
Summit, which was founded in 2003 as a spin-out from the University
of Oxford and has a staff of 45.
Ultimately, Summit might even relocate. The company already has a
U.S. office and it will almost certainly set up an organization in
continental Europe to be within the EU zone.
"Brexit tilts the balance less in favor of remaining based
corporately in the UK," Edwards said.
Other industries have similar questions. The chemicals and plastics
industry has invested heavily to meet strict EU rules on safety and
environmental standards, known as REACH, and could now face new UK
regulations.
Tim Thomas, a policy director at manufacturing and engineering trade
body the EEF, said companies were concerned.
"Businesses are, understandably, asking questions about future
regulation and regulators, as future changes will need to be built
into commercial arrangements," he said. "Different regimes are
likely to bring with them new costs and burdens."
Aerospace firms fear losing oversight from the European Aviation
Safety Agency, which endorses product quality, while airlines warn
of disruption if Britain is cut out of Europe's single aviation
market.
The need to create a British regulatory system will require
legislation, piling up an already daunting workload for lawmakers
now further delayed by the June election.
"It will take a phenomenal amount of parliamentary time and this new
parliament (after the election) will be much, much more busy than
anything we've seen in the last two years," said Leslie.
"There are a whole array of areas that lots of people haven't quite
got their heads around yet."
(Editing by Guy Faulconbridge and Sonya Hepinstall)
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