In a new draft exposure bill, the Israeli government has proposed amending the Israeli Patents Law by introducing SPC manufacturing and stockpiling waivers. The proposed amendments are intended to establish a level playing field between Israeli and foreign manufacturers of generics and biosimilars both in the local market and for export purposes.

A Supplementary Protection Certificate ("SPC"), also known as patent term extension ("PTE"), is available in Israel, in certain circumstances, to cover a pharmaceutical product or a medical device protected by a basic patent. In a nutshell, a basic patent is a patent that protects an active pharmaceutical ingredient (API), a process for manufacturing an API, its use or a pharmaceutical product containing an API, or a medical device for which regulatory approval is required in Israel. A SPC is available only for the first regulatory approval allowing use of an API in a pharmaceutical product in Israel.

Essentially, the Patents Law provides that, subject to the following, a SPC order shall remain valid for a period equal to the shortest extension afforded to the reference patent in a "Recognized Country" (which term is defined to mean Italy, the UK, Germany, Spain, France and the US). Nonetheless, the period of an extension SPC order cannot exceed five years beyond the twenty-year statutory patent term. In addition, the overall period of the basic patent and any SPC order therefor shall expire no later than fourteen years from the date marketing approval is first received in a Recognized Country. Moreover, the SPC order shall expire no later than the first date on which the extension period granted to the reference patent in a Recognized Country, in which marketing approval has been obtained, is due to expire, or the date of revocation of any reference patent, whichever is the earlier.

The Patents Law, in its current form, provides that the holder of a SPC may prevent any person from marketing, or manufacturing for the purpose of marketing, a medical device or a pharmaceutical product that contains an API, provided that the API, its manufacturing process or its use, or the pharmaceutical product or its manufacturing process, are claimed in the basic patent.

The new draft exposure bill specifically refers to Regulation (EU) 2019/933 of the European Parliament and of the Council of 20 May 2019 (“the EU Regulation”) which allows for certain activities to be carried out during the period of supplementary protection. As mentioned above, the draft exposure bill seeks to establish a level playing field between Israeli and foreign manufacturers of generics and biosimilars.

It has therefore been proposed to amend the Patents Law, by adding exceptions that would not be considered an infringement of the SPC. Within this context: (i) the manufacturing of a pharmaceutical product or a medical device, for the purpose of exporting same outside Israel; and (ii) the manufacturing of any such product, no earlier than six months prior to the expiry of the SPC, for the purpose of marketing in Israel following said expiry. In addition, any related act deemed necessary for such manufacturing purposes will similarly be allowed. However, the exception shall not apply to the importation of products into Israel for the mere purpose of repackaging, re-exporting or storing the imported product.

The amendment shall apply to SPCs for which application has been sought on the date of publication of the amending bill and thereafter. It is meant to apply, as of July 2, 2022, to both SPC applications that were pending on the date of publication of the amending bill as well as to SPCs that were granted prior to the date of publication of the amending bill, provided that the basic patent is still in force.

All in all, it is intended that the proposed amendment will increase competition in Israel in the pharmaceuticals industry, by enabling the Israeli law to align with the dynamic manufacturing and marketing terms and conditions prevailing in the international market, in particular the EU Regulation, following a revision to the then prevailing EU law that entered into force more than two years ago. Furthermore, the proposed amendment is also expected to increase the certainty when planning the State's budget in the field of pharmaceutical products and medical devices. The draft exposure bill, as published, thus has the potential of attaining these desired goals.

The information regarding the current law, the proposed amendment and the consequences thereof is concise and should not be regarded as a substitute for reviewing the documents referred to herein. This report is also not intended to serve as a legal opinion, and does not constitute legal advice of whatsoever nature, which may be required for each particular case.