The Brexit Challenge: Truth or Dare?

As the month February moves on, we see a storm in the news on the Brexit challenges and opportunities. European Commission and UK negotiation teams are sending letters to stakeholders, newspapers start engaging in the debate on real impact to industry and society, and Medtech stakeholders start talking and publishing beyond the generic words they used until last month. Do we still have time to sit back and relax? Or do we agree with Raphael Hogarth in yesterday’s Times that it will soon be too late to salvage the Brexit trade talks”?

From a perspective of the Medtech industry, the decisions we make on placing products on the market are typically based on risk management. But that is product risk management. For the debate and discussion, we now have to engage in, we would need the business risk management approach. Mostly for companies in UK that might need an authorized representative for the future, with the associated changes to all labeling, and even more so for companies anywhere in the world that utilize a UK-based notified body. The issue of the EU representative might most easily be solved. The key uncertainty lies with the 5 affected notified bodies. They are working on alternative certification solutions in Ireland, Belgium, Sweden and The Netherlands as one can learn in the news. However, with the designation process of notified bodies being a time-consuming effort with Joint Assessments and further follow up, the race is against the Brexit clock. And that exactly is what industry is starting to get anxious about.

If we follow the assessment of the newspaper The Guardian in their background documentation on Brexit, for the scenario thinking that might form the basis of a company’s risk management discussion, 4 broad outcomes are potentially named:

  • UK stays in the EU Customs Union, defeating most of the intentions behind Brexit, but allowing Notified Bodies to continue. The UK Brexit team this week dismissed this as primary outcome;
  • UK would follow the EFTA like agreement, or similar, allowing Notified Bodies to continue. Downside is that influence on legislative development will be small for UK, and still, the European Court of Justice would preside over matters;
  • UK would have a Canada like agreement. In such a case, the Brexit goals might more easily be reached, but it would mean that no Notified Bodies will be left in UK;
  • UK would follow WHO trade rules, which are Canada minus, clearly not leave room for Notified Bodies.

Of course, these are just some scenarios, and the ultimate outcome might well be different from any of them. But for the risk assessment, it might fly. Only when UK stays close to the EU in the top two scenarios, will there be room for continued UK-based Notified Body services. In the latter two scenarios’, and in case a seamless transition is not managed, there is the need for manufacturers to change Notified Bodies, either to the newly formed sister organization of their Notified Body, or to the existing sister organization that needs to have its scope extended to accept all the product groups certified by their big UK sister. And the EU Commission letter to stakeholders (11 January) is clear that the day after the Brexit day, manufacturers will lose market access in EU unless they have a new certificate from an EU-27 Notified Body. And that is what brings us the uncertainty, the realistic risk of being left without a certificate during the transfer. And as that happens just in the year before the MDR transition is finishing, the debate needs to be held now.

D-day, as UK Notified Body BSI’s CEO Howard Kerr refers to in his recent interview with The Guardian, is still 14 months away. And for some directives, he might be right that there still are a few months left before manufacturers need to decide on their strategy. But with the stress and strain in the MedTech system preparing for the massive MDR transition, in a time where the number of Notified Bodies is drastically being reduced, and Notified Body scopes being tripped and rationalized, time for discussion is almost up.

In the upcoming risk assessment, the timing is the key element. With 14 months to go in the darkest scenario, realizing that a transfer to another Notified Body might easily take up the best part of a year, or potentially longer, the undisturbed continuation of business is getting challenged. For a few weeks disruption in market access, one can save up the stock in Europe and bridge the gap, but that would be a last resort. If the transfer is deemed necessary, there is not much time left for delays.

The letter from the UK Brexit team to UK industry (26 January) is focusing on hope and intent. Messages on what they will bring to the negotiation table, and what they hope to achieve in a longer transition period. In case they are successful, the time for transfer might be enhanced until late 2020. Same assessment to be made, same decisions to be taken and actions to be initiated, but the time pressure would be slightly reduced. If we decide to act soon that is, as when we let it slip, the pressure would start building again.

Both sides of the negotiation table want more clarity in the next month. Clarity so the industry can make up its mind. And as that takes time, preparations for the big decisions need to start now. The debate goes on, but time for the risk assessment and the action plan is here and now. And whilst we may hope that a grey or even bright scenario will be the overall outcome of the Brexit debates, risk management needs to include all scenarios as input in its assessment.

As with most challenges, we are faced with the choice to answer truthfully to the query or take a daring action. The choice is yours, but the time to choose is now.


Are you ready to take the challenge, or would it help you to discuss your risk assessment and Notified Body approach?

Gert

 

Gert W. Bos
Post date: February 06, 2018
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