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 generics and biosimilars 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 generics and biosimilars 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).