UK Spring Budget – Streamlining regulation and plans for growth in life sciences

As part of last week’s Spring Budget, the UK Chancellor, Jeremy Hunt, announced increased funding of £10 million for the Medicines and Healthcare Products Regulatory Agency (the MHRA) over the next two years. This funding seeks to support the MHRA in facilitating faster routes for UK-developed medical products to obtain approval and launch on the market where “trusted regulatory partners” have already granted approval outside the UK.

Plans in the Spring Budget also indicate a prioritisation of the commercial development of lab space and supporting R&D through driving investment. For example, by providing higher rates of relief to loss-making R&D SMEs from April 2023. These proposals, intended to support business investment and innovation, together with increased MHRA funding, are designed to improve the attractiveness of investing in the UK’s life sciences industry and boosting its growth.

Streamlined regulatory practice

For treatments developed in the UK, the aim is for the MHRA to develop a shortened process to expedite approvals of “cutting-edge treatments” in priority areas, such as cancer vaccines and AI-based therapeutics for mental health. The industry could therefore capitalise on the success associated with the rapid approval of Covid-19 vaccines and, according to the Chancellor, “ensure the UK becomes a global centre” in medical development.

This funding will also support the MHRA in the creation of an “international recognition framework” for medical products that are approved outside the UK. The MHRA plans to establish the first recognition routes with the USA’s Federal Drug Administration and Japan’s Pharmaceuticals and Medical Devices Agency. The approved regulators will then become “trusted regulatory partners” of the MHRA which the government hopes “will allow rapid near automatic sign off for medicines and technologies”. This is expected to be well-received by the industry which is currently subject to increased regulatory hurdles in applying for separate approvals in the UK following Brexit.

In its press release the MHRA welcomed the additional funding. It is anticipated that it will implement the proposals from 2024.

Investment into R&D and lab space

In a win for smaller R&D intensive businesses, a higher rate of R&D relief for loss-making SMEs will be introduced from April 2023. SMEs for which qualifying R&D expenditure makes up at least 40% of its total expenditure will be able to claim a higher payable credit rate of 14.5% for qualifying R&D expenditure (rather than the lower rate of 10% which would otherwise apply). Eligible loss-making companies will therefore be able to claim 27p back for every £1 of R&D investment.

Further, the Budget proposes that boosting the supply of commercial development, in particular lab space, is key to supporting the R&D needs in life sciences sectors. The Budget indicates that plans to support growth in these developments will come “in due course” and will build on the recent National Planning Policy Framework consultation.

Potential Impact

Although the Budget has promising proposals in both regulation and investment, there is sparse detail on the improved MHRA processes or when concrete plans are to be expected from the government. There is promise that priorities addressed by the Spring Budget could make the UK a more attractive market to launch medical products, but there are further questions raised on how the UK framework will deviate from the EU. This is especially apparent when UK approval could become “near automatic” on approval from foreign regulators – is this in practice a form of “white labelling” and will this in practice dilute the power, efficacy and independence of the MHRA in approving medicines? Nonetheless, the advantages to the availability of medicine are obvious, and manufacturers will be relieved that one dossier will do two jobs/support two applications for marketing applications.

While this budget is a step in the right direction, the life sciences industry will still be waiting, possibly until the Autumn Statement, for further announcements on substantial plans for growth in the sector. Similarly, questions also remain on whether UK companies will be able to rely on membership of the EU Horizon funding programme in the near future; there is strong industry and academic support for this, and there were indications after the Windsor Agreement statement that the door was open.

Written by
Sally Shorthose
Sally Shorthose
As one of Bird & Bird's most experienced intellectual property partners, specialising in transactional IP matters, I offer a wealth of knowledge to businesses at the cutting edge of research, development and technology, in a variety of sectors for which IP is of prime importance.
Nick Gorensweigh
Nick Gorensweigh
I am a Trainee Solicitor at Bird & Bird's London office.
Sophie Vo
Sophie Vo
I am an Associate in the Intellectual Property Group in London with a particular focus on the life sciences and healthcare sectors. I have experience in a broad range of both contentious and non-contentious matters for pharmaceutical, medical device and healthcare clients.

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