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EU Commission proposes amendment to Supplementary Protection Certificate

A Supplementary Protection Certificate (SPC) is an intellectual property right available in the European Union. It extends the rights of a basic patent granted in a field of medicine or plant protection for a period which can vary from one day to five years. SPCs may be extended by a further six-month period if the authorised medicine has been part of a ‘paediatric investigation plan’.

SPCs are currently regulated by a 2009 EC Regulation but the SPCs system was first introduced as early as 1992 to compensate for the loss of protection due to the too long time required to carry out the tests and clinical trials which are compulsory to obtain a marketing authorisation. Patents last for twenty years but are considered too short a protection in the medical industry to cover research and investments as it takes about ten years of research and investment before being awarded a market authorisation for a new medicine. Besides promoting innovation in medicinal products, SPCs have also prevented the relocation of the pharmaceutical industry outside the Union.

As part of its Resolution on the Single Market Strategy, the European Parliament is urging the Commission to introduce and implement before 2019 an SPC manufacturing waiver to boost the competitiveness of the European Generics and Biosimilar Industry in a global environment, as well as to maintain and create additional jobs and growth in the EU, without undermining the market exclusivity granted under the SPC regime in protected markets.

Issued after several studies, an impact assessment and a public consultation, the proposal aims at offsetting certain negative effects of SPCs on the manufacturers of generics and biosimilars based in the EU. The idea is to grant a so-called ‘manufacturing waiver’, which is a limitation to an SPC holder’s rights under the current 2009 Regulation. In practice, this mechanism will restore a level playing field by removing the competitive disadvantages currently faced by manufacturers of generics and biosimilars established in the EU vis-à-vis manufacturers located outside the EU.

Indeed, during the SPC period of protection in the EU, EU-based manufacturers of generics or biosimilars cannot manufacture the product for any purpose, including to export it outside the EU in patent-free jurisdictions, while manufacturers based outside the EU can. This places EU-based manufacturers at a disadvantage not only in global markets, but also in EU markets because they cannot start production until the protection provided by the certificate has expired. This is a serious problem in a competitive environment where it is crucial to be among the first few to enter the market and remain financially viable.

To address the issue, the proposal introduces a manufacturing waiver for exports. The mechanism will allow manufacturers based in the EU, to manufacture during the protection period of an SPC but for the exclusive purpose of exporting their products to non-EU markets where the product is not protected. Allowing to manufacture during the SPC protection period will also allow EU-based manufacturers, if they have a valid marketing authorisation, to get prepared to enter the EU market more rapidly. In turn, this will provide a wider choice of affordable medicines in the Union, which will also produce a positive effect on the national health budgets.

The Commission gives more details on which activity is covered or not covered by the exception. Acts included may be the supply and import of intermediary products as well as active ingredients for the purpose of making the medicinal product or the temporary storage, transport, packaging and advertising of the product for the exclusive purpose of exporting to third country destinations. However, the exception should not cover launching the product on, or re-importing the product to, the market in a Member State where this product is protected by a supplementary protection certificate. Thus, the Commission proposal restricts the scope of the exception to the export of the SPC-protected products outside the EU.

But designed as an exception, or limitation, to the principle of protection granted by the certificate, the proposal comes with several safeguard measures to ensure that the protection of generics and biosimilars protected by an SPC in the EU is still efficient and not affected by the exception. Thus, companies willing to manufacture for exports will have to notify the competent authorities, comply with due diligence requirements and with specific labelling requirements. These measures will make it easier to detect and fight any infringements and seek redress under existing Intellectual Property law.

In respect of the right to property enshrined in the Charter of Fundamental Rights of the EU, this exception mechanism will only apply to certificates granted after the entry into force of the Regulation proposed by the Commission.

For more information on Intellectual Property Rights please contact Dr Ian Gauci on igauci@gtgadvocates.com and Mr Samuel Gandin on sgandin@gtgadvocates.com

Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.