Healthcare and The Brexit Trade Deal

In this article we highlight some of the key issues facing those operating in the healthcare sector as the UK and EU begin the next chapter of their trading relationship

24 February 2021

Overview

The UK-EU Trade and Co-operation Agreement (the 'TCA') was announced on Christmas Eve last year, providing the basis for UK-EU trade from 31 December 2020. The UK has also negotiated trade agreements with 60 countries outside of the EU, substantially reproducing the terms of the trading agreements that applied while the UK was in the European Union. These roll over agreements came into effect on 1 January 2021 (in some cases under provisional or bridging arrangements).

The UK is free to negotiate further trade deals with countries outside of the EU. To this end, the UK is in ongoing negotiations with six countries, and has signed agreements with Canada, Jordan, and Mexico which are expected to take effect in early 2021. The UK has also signed mutual recognition agreements with Australia, New Zealand, and the United States of America, meaning that there is reciprocal recognition of each party’s product conformity assessments.

The UK's new trade arrangements provide a number of opportunities. Crucially, the principle of direct effect which requires UK courts to enforce rights provided in EU treaties has been significantly curtailed - any domestic UK legislation passed post-Brexit will take precedence over an EU laws.

The attention of the UK Government in recent months has been diverted to the immediate response to COVID-19, but proposed reforms are beginning to emerge that will shape the regulatory landscape following our departure from the EU's legislative framework.

However, whilst the deal provides a degree of much needed certainty, it also poses a number of new questions and challenges that those operating in the healthcare sector must face.

This brief note highlights some of the challenges that the new deal presents to for health and social care providers. 

People

Finding skilled workers is a perennial challenge for recruiters across the sector. The lack of sufficient nurses has received much public attention (and has been met with well-publicised government pledges), but the picture is similar across health and social care. Parliamentary briefings indicated a vacancy rate of 8 per cent across NHS and adult social care in early 2020. 

From 1 January 2021 anyone from outside the UK and Ireland (including all EU nationals) will require immigration permission if they want to work in the UK, and a new points based immigration system will apply. Since the Brexit referendum the proportion of staff from EEA and non-EEA nations working in the NHS workforce (particularly in nursing) has changed – the number of nurses from EEA countries working in the NHS has been in decline, and an increasing number of these roles have been filled by applicants from countries outside the EEA.

The UK's new immigration rules include exceptions and fast track processes for certain roles in health and social care. These can be complex to navigate and organisations across the sector have had to review their procedures, practices and recruitment plans.

Our employment team have produced this video, discussing some points to consider when employing EEA and overseas nationals. To help you consider how best to tackle these issues Huw Cooke, a Senior Associate in our employment team, would be happy to arrange a meeting to provide an overview of the new system free of charge. This conversation would likely cover:

  • what the changes mean for recruiting individuals from outside of the UK/Ireland
  • the EU Settlement Scheme
  • the main routes for overseas recruitment
  • Right to Work checks
  • the implications for employers and key actions you can take.

If you would like to discuss these issues, please contact Huw to arrange a time to speak.

Healthcare procurement

For the time being, the Public Contracts Regulations 2015 ('PCR') and the light touch regime that applies for the procurement of health and social care services will continue to apply as before 1 January.

This means that CCGs, Trusts and local authorities with healthcare commissioning responsibilities must continue to tender for new services as they have done previously. One obvious change however, is that new tender opportunities will now be published on the UK 'Find a Tender Service' rather than in the Official Journal of the EU, which we reported on in December

However, these rules will change. The Cabinet Office have moved quickly to consult on post-Brexit procurement reforms, in its Green Paper on 15 December 2020, entitled 'Transforming Public Procurement'. It intends to simplify procurement procedures and change the way in which bidders may challenge the procurement decisions of Commissioners.

However, these rules are only likely to apply as and when Commissioners are required to conduct a formal procurement procedure – as the newly published Department for Health and Social Care ('DHSC') White Paper ('Integration and Innovation: working together to improve health and social care for all', of 11 February) and subsequent revision of the Health and Social Care Act 2012 will give local Commissioners greater flexibility to determine how to award contracts. This involves the repeal of section 75 of the Health and Social Care Act 2012 and the Procurement, Patient Choice and Competition Regulations 2013, and the replacement of them with a new 'NHS Provider Selection Regime', which is also being consulted on here.

Commissioners will be bound by a new duty to ensure that 'services are arranged in the best interests of patients, tax payers and the population'. The decision of whether or not to conduct formal procurements will be taken according to five key criteria:

  • (Quality (safety and effectiveness)
  • Value
  • Integration and Collaboration
  • Access, inequality and choice
  • Service sustainability and social value).

These reforms are not strictly Brexit-driven, but form part a key part of how healthcare commissioning will evolve. We will report separately on these proposals in more detail soon.

What is clear is that the way in which healthcare providers access opportunities to provide NHS and other public healthcare services will evolve and require new approaches.

For more information and future updates on the Green Paper, please see our Procurement blog, and for updates on the DHSC White Paper and subsequent reforms, our Healthcare blog.

Competition

The immediate impact of the deal itself on competition law is minimal. UK laws enshrines EU competition principles and to date there have been no amendments proposed to the relevant UK legislation.

However, the DHSC White Paper indicates that reform will take place (independent from Brexit) to allow NHS bodies 'to be free to make decisions on how it organises itself without the involvement of the Competition and Markets Authority'. DHSC are of the view that 'it has become clear that the CMA is not the right body to review NHS mergers' and propose to:

  • remove the CMA function to review mergers involving NHS foundation trusts. The CMA’s jurisdiction in relation to transactions involving non-NHS bodies (for example, between an NHS Trust/FT and private enterprise) and other health matters (such as drug pricing) would be unchanged
  • remove NHS Improvement’s specific competition functions and its general duty to prevent anti-competitive behaviour
  • remove the need for NHS England to refer contested licence conditions or National Tariff provisions to the CMA.

Data protection

The trade deal agreed between the UK and the EU contains interim provisions in relation to data transfers between the UK and EEA member states. The EU has agreed to permit data flows to continue from the EU to the UK for no longer than six months, until a formal adequacy decision has been made by the EU regarding the UK’s data protection legislative regime. Similarly, the UK has decided that the EEA has (on a transitional basis at least) a data protection framework in place that is adequate to permit transfers of personal data from the UK.

This interim arrangement, until the EU passes an adequacy decision in respect of the UK, means that UK-based businesses can continue to transfer data to customers and suppliers in the EU and, likewise, that EU-based businesses can continue to share data with entities in the UK. The ability to continue to transfer data also applies to public bodies and law enforcement agencies.

However, this is contingent upon the UK government not exercising certain powers under the Data Protection Act 2018, such as approving certification mechanisms or providers or passing an adequacy decision in respect of any third countries. If the UK government exercises any of these powers or amends the UK data protection regime (other than to align with EU law), then the interim arrangements permitting flows of data between the EU and UK will end immediately.

The ICO has welcomed these interim arrangements, with the commissioner, Elizabeth Denham, describing them as 'the best possible outcome for UK organisations processing personal data from the EU. This means that organisations can be confident in the free flow of personal data from 1 January, without having to make any changes to their data protection practices.'

However, the ICO continues to recommend that, during this grace period, businesses carry on working to identify any requirements to put in place alternative transfer mechanisms in respect of EU-UK data flows to protect against any disruption to the flow of UK-EU data, or in case the EU does not grant the UK an adequacy decision.

Businesses should also note that the interim arrangements set out in the UK-EU trade deal do not relieve organisations in either the UK or the EU of their obligation to appoint an authorised representative where they provide services to or monitor behaviour of individuals in the EU or UK respectively.

Supply chain and regulation of medical products

Imports and exports between the UK and EU will now be subject to new checks, customs declarations and paperwork.

A very significant proportion of medical supplies enter the UK via EU ports, and healthcare providers must ensure that their stocks of supplies and supply chains are resilient to the challenges that the new regime will bring.

Perhaps more significantly in the long term, the Medicines and Healthcare products Regulatory Agency (MHRA) is now the independent regulator for medical products for the UK, operating a separate regime from the European Medicines Agency. There are a number of factors that will encourage the regulatory regimes in the UK and EU to seek continued alignment:

  • the trade deal confirms that the UK and EEA shall each recognise the other's good practice in the manufacture of medicine (though this does not include the conformity assessment regime) and contains a number of measures designed to discourage the parties from diverging (e.g. both sides must carry out a full impact assessment before conducting any change to technical regulations and provide a report to the other party);
  • the Northern Ireland Protocol states that standards applicable in Northern Ireland will not diverge from those in the Republic of Ireland. In turn the UK Internal Market Act enshrines the principle that goods produced or imported to the UK should be capable of supply across the England, Wales, Scotland and Northern Ireland. Whilst there will be customs checks at Northern Irish ports, it is likely that the standards that officials will be applying at those ports will be the same as for the rest of the UK.

There remains the possibility that over time legislation is amended and the regulatory approaches in the UK and the EU begin to diverge. The combined challenges of the pandemic and the pressure on vaccines may catalyse this change.

Providing care to EU citizens in the UK (and vice versa)

The position regarding reciprocal, state provided, health care is now a more complex picture.

For short-term visitors from the EU, the UK will continue to provide eligible healthcare to EU citizens with a valid European Health Insurance Card. In kind, UK nationals visiting the EU on a short term basis will receive eligible health care as the bearer of new Global Health Insurance Cards.[1]

EU nationals who were legally resident in the UK before the end of the transition period will continue to be eligible for NHS treatment, and NHS providers will continue to recover the cost of their treatment in line with existing measures. EEA citizens who move to the UK after 1 January 2021 for more than six months will need to pay an Immigration Health Surcharge (as well as obtaining a visa) to access NHS Services. The approach for EU citizens working or studying in the UK for less than six months remains to be confirmed.

The position for UK nationals moving to EEA states after 1 January 2021 is the most complex of all as the position will be different for each member state.

If you have any questions about what we have discussed in this article please contact one of the following: 

[1] Note that UK citizens will not be eligible for care in states that are only EEA member states rather than full EU members, being Iceland, Liechtenstein, Norway and Switzerland. 

Key contact

Patrick Parkin

Patrick Parkin Partner

  • Healthcare
  • Procurement and State Aid
  • Commercial

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