On 14 February 2019, the Committee of the Permanent Representatives of the Governments of the Member States (Coreper) endorsed a draft regulation which introduces an exception to the protection granted to a medicinal product by a supplementary protection certificate (SPC) for export purposes and/or stockpiling. Next step is submission to the European Parliament and Council for adoption.

The draft EU regulation

An SPC is a right that seeks to compensate innovative pharmaceutical companies for the patent time lost during the period required to obtain approval to market a novel drug. Under the exception introduced by the draft regulation, which amends Regulation 469/2009 concerning the supplementary protection certificate for medicinal products, EU-based manufacturers of generics and biosimilars will be entitled, during the term of the SPC, to manufacture a generic or biosimilar version of an SPC-protected medicinal product:

• either for the purpose of exporting to a non-EU market where patent protection of the original medicinal product has expired or never existed

• or for the purpose of creating a stock that will be put on the EU market after the SPC has expired; in this case, the exception can be relied on no earlier than 6 months prior to expiry of the SPC.

The export and stockpiling waiver will only apply where:

• the manufacturer has provided the information required by the draft regulation, to both the authorities of the Member Sate of production and to the SPC holder at least three months in advance prior to manufacturing; this information includes an indication of the purpose of the manufacturing (export, stockpiling or both) and an indication of the Member State where the manufacture or stockpiling is to take place; and

• the manufacturer has duly informed any person in a contractual relationship with it and involved in commercialization of the generic or biosimilar that the product is covered by the export and stockpiling waiver and that the placing on the market, import or re-import of the product could infringe the SPC where, and as long as, it applies.

Finally, in the case of products manufactured for the purpose of export to non-EU countries, the waiver shall only apply where the manufacturer has affixed to the packaging of the product a specific logo provided for by the regulation indicating clearly that it is only for export.

Until a given date (three years from the entry into force of the regulation), the regulation will affect only SPCs applied for on or after the date of its entry into force. Subsequently, the regulation will also affect SPCs applied for prior to its entry into force but which become effective afterwards.

Background to the new rules

The draft regulation aims to remove the competitive disadvantages faced by EU-based manufacturers of generics and biosimilars, compared to manufacturers established outside the EU, on global markets by allowing them to make in the EU medicinal products intended for export to third-country markets where protection does not exist or has expired, thereby helping them compete more effectively on those markets.

Indeed, as stated in Recital 4 to the draft regulation “the absence of any exception in Regulation (EC) No 469/2009 to the protection conferred by a supplementary protection certificate has had the unintended consequence of preventing makers of generics and biosimilars established in the Union to enter the Union market immediately after expiry of the SPC, given that they are not in a position to build up production capacity for export and for the purpose of entering the market of a Member State until the protection provided by the SPC has expired, by contrast with makers located in third countries where protection does not exist or has expired”.

Industry reaction 

The proposed regulation has been criticised by the innovative bioindustries sector. EuropaBio Secretary General, Joanna Dupont-Inglis, commented as follows:

The revision of the EU IP framework, to introduce a SPC manufacturing waiver, is a regrettable example of well-meant but, ultimately, counterproductive policy making, with far-reaching negative impacts on EU competitiveness. It is the small healthcare biotech companies, which are at the cutting edge of creating innovative technologies addressing patient’s unmet needs, that will be hardest hit. These companies, seeking treatments for some of our most devastating and difficult to tackle diseases, take the highest financial risks and rely heavily on investors’ money, often without making any profits for years. They are, therefore, critically dependent on a robust and predictable IP framework.”.

Similar concerns were voiced by the European Federation of Pharmaceutical Industries, that notes that “[t]he proposed SPC manufacturing waiver’s impact on innovative companies and R&D investment has not been properly assessed by the legislator. Moreover, there is data suggesting that it is doubtful the waiver will manage to achieve its intended purpose: support European generic and biosimilar manufacturers to compete on a level playing-field outside of the EU.

On the other hand, Medicines for Europe, which represents the pharmaceutical companies supplying the largest share of medicines across Europe and is the voice of the generic, biosimilar and value-added industries, while regretting that the manufacturing waiver includes “unnecessary and redundant notification requirements” considers that “the SPC manufacturing waiver will contribute to better patient access, to create manufacturing opportunity and jobs and to increase Europe’s capacity to manufacture and supply its own medicines. Medicines for Europe thanks the EU for addressing many of its proposals for a comprehensive waiver including the possibility to manufacture for export and day 1 launch and a balanced date of applicability”.

Next legislative steps 

The draft will now be submitted for formal adoption to the European Parliament and Council. The text is scheduled to be examined on first reading at the European Parliament’s plenary session to be held on 15 April 2019.