EU proposes SPC manufacturing waiver
The European Union is proposing a change to its regulations on supplementary protection certificates (SPCs) for medicines. The change will allow medicines which are protected by SPCs in EU countries to be manufactured in the EU for export to non-EU countries where the product is not under patent or SPC protection.
The change in the law is proposed to come into force in 2019 and is good news for the EU generics and biosimilars industry, but concerns have been raised as to how it may work in practice.
SPCs extend the term of patents for medicinal and plant protection products which require regulatory approval before they can be put on the market. SPCs expire 15 years from the date of the first marketing authorization in the EU, the term being capped at 5 years from the expiry date of the basic patent. The value of SPCs to the innovator pharmaceutical industry is immense, as the term of the SPC is typically when the product achieves its peak sales.
SPCs were introduced in the EU in the early 1990s, and since then many other countries, including the US, Japan, South Korea, Russia and Australia, have adopted similar legislation to provide patent term extension for pharmaceutical products. However, this has not been adopted worldwide: many major countries, including China and India, still do not have any form of patent term extension. Canada introduced SPCs in September 2017, but the term of Canadian SPCs is capped at two years from the expiry date of the basic patent.
The EU considered this difference put EU generics and biosimilars manufacturers at a disadvantage compared with competitors outside the EU, on two grounds.
- SPCs prevent manufacturing the protected product inside the EU, even for export to countries where SPC protection for the product does not exist or has expired.
- SPCs were considered to delay the entry of EU manufacturers into the EU market, as they cannot build up EU production capacity until the SPCs have expired.
Neither of these restrictions apply to manufacturers located in non-EU countries with no SPCs or expired SPCs. There was concern that this disparity may cause some pharmaceutical manufacturing to relocate outside the EU.
The European Commission has reacted to these concerns by proposing a change to the medicines SPC Regulation.
Importantly, the law on eligibility for SPCs and the term of SPC protection will remain unchanged.
However, the proposed change will exempt from SPC protection acts of making the product for the exclusive purpose of export to third countries; or any related act that is strictly necessary for that making or for the actual export itself. The proposed change does not affect SPCs for plant protection products, so the manufacturing exemption will not apply to these products.
To ensure that SPC-protected medicines manufactured in the EU for the purposes of export are not diverted back into the EU market, the proposal is accompanied by a series of safeguards to avoid this and ensure transparency.
Companies intending to start manufacturing for export purposes will be obliged to give the regulatory authority in the member state of manufacture at least 28 days’ prior notification, and the information contained in that notification will be made public.
The manufacturer will also be required to affix the logo shown below to the packaging of SPC-protected products for export outside the EU. Finally, manufacturers will be required to inform third party contractors that the product is subject to SPC protection and that any marketing inside or re-import into the EU will infringe the SPC.
The proposed changes have raised concerns with the innovator pharmaceutical industry, in particular as to how a breach of any of the conditions would be enforced. There are no provisions in the amended Regulation for the EU or member states to take action against companies which breach the exemption, meaning that the burden will likely fall on the SPC holder to sue such companies for infringement. Obtaining evidence of a breach may be difficult in countries which have limited disclosure for litigation.
Importantly, the proposed exemption will only affect SPCs granted on or after the change to the new Regulation comes into force.
In view of this, many SPC applicants are attempting to accelerate examination of their SPC portfolios throughout the EU, so they are granted before the changes come into force. Although this may be difficult in the UK in view of the backlog of SPC applications before the UK IPO, we are working with SPC agents around the EU to accelerate examination where possible. Please contact your usual D Young & Co adviser if this would be of interest.