A Supplementary Protection Certificate (SPC) is an intellectual
property (IP) right that extends patent protection for medicinal
products in the EU by a maximum of five years. As medicinal
products are required to undergo extensive testing and clinical
trials in order to obtain regulatory marketing approval before they
can be sold, drug companies are often not able to exploit their
pharmaceutical inventions despite having granted European patents
in force. The aim of SPCs is therefore to compensate drug companies
for this loss of effective patent protection.
According to the European Commission, the global pharmaceutical
market "represents over €1000 billion annually, with
the most rapid growth in emerging countries" and
"80% of medicines dispensed worldwide are generics or
biosimilars"1. As an SPC prevents EU-based
manufacturers from manufacturing a particular medicinal product for
any purpose, including export, the European Commission is of the
opinion that SPCs put EU-based manufacturers of generics and
biosimilar products at a disadvantage when compared with
counterparts based outside the EU. For this reason, the European
Commission has proposed introducing an "export manufacturing
waiver" to SPCs (see here). The European Parliament and Council will
need to adopt the proposal in order for it to be directly
applicable in all EU member states.
Under the waiver, EU-based companies would be entitled to
manufacture a generic or biosimilar version of an SPC-protected
medicine during the term of the SPC, if done exclusively for the
purpose of exporting to a non-EU market where protection has
expired or never existed. The European Commission's aim is
to remove any competitive disadvantages currently faced by EU-based
manufacturers wanting to export, but also to allow the same
manufacturers to be ready to enter the EU market as soon as the SPC
expires. The European Commission is keen to point out that the
waiver will not represent a weakening of the SPC system, as
SPC-protected medicines will retain their full market exclusivity
in the EU during the SPC term.
Furthermore, introduction of the waiver would be accompanied by a
series of safeguards, namely:
- Manufacturers intending to make use of the waiver will be required to notify the competent authorities in the relevant member state;
- Manufacturers will be required to inform their supply chains that the medicinal products are for export; and
- Exports of SPC-protected medicines out of the EU must comply with specific labelling requirements.
The "export manufacturing waiver" is intended to
balance the need to ensure that Europe is an attractive location
for innovative pharmaceutical companies with the need to allow
EU-based generic and biosimilar manufacturers to compete in global
markets. The European Commission appears to recognise that patent
proprietors and SPC holders may view the proposal as the start of
an erosion of IP rights, and the proposal therefore stresses the
importance of having strong IP protection.
If the proposal is adopted, innovators working in the
pharmaceutical field will therefore need to be prepared for
EU-based generic and biosimilar manufacturers to begin
manufacturing for overseas markets and then be ready to begin
supply in Europe using the same supply chain as soon as the
relevant SPC expires. Possible things for innovators to consider
include:
- Monitoring generic supply chains closely to ensure there has been no stockpiling of goods destined for the EU before expiry of the SPC, which is still prohibited;
- Re-evaluating the merits of process patents in force during the SPC period that may be used to impact generic/biosimilar manufacture during the SPC term; and
- Considering the use of utility model protection in key European manufacturing countries, where this is available, as a less expensive way to protect manufacturing related innovations. Utility models often have the advantage of a lower patentability threshold but have a reduced term so their tactical use will depend on specific circumstances (NB: utility models are IP rights that often have a lower patentability threshold, however, they have a shorter term of protection and so this option may not always be available or appropriate).
Footnote
1European Commission SPC Fact Sheet (see here)
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