In a potential boost for the EU generics/biosimilars industry the EU Commission has adopted a proposal to introduce an ‘export manufacturing waiver’ into the EU Supplementary Protection Certificates (SPCs) regime. The waiver would allow generics and biosimilars to be manufactured within the EU during the term of the SPC without the consent of the SPC owner, purely for export to countries where patent protection never existed or has expired. Currently, such manufacture would infringe the SPC.
The UK Intellectual Property Office has now called for views on the proposal with preliminary comments requested by end of June 2018.
Better access to global markets
The Commission’s object is to put EU generics/biosimilar manufacturers on an equal footing with manufacturers operating in global markets with shorter patent protection and to reduce incentives for companies to remove manufacturing from the EU to avoid the SPC. Potentially important markets include China, India, Brazil and Russia, which have no SPC protection.
SPCs were first introduced in the EU in 1992. They prolong patent protection for authorised medicines for up to five years to compensate originator pharmaceutical companies for the long periods of testing and clinical trials during which the patented medicine cannot be marketed.
In consultations most SPC owners have opposed the waiver, arguing, among other things, that it would erode patent rights, discourage R&D investment in the EU and reduce their sales outside the EU. The Commission’s view is, however, that the measure is made necessary by the increasing importance of generics/biosimilars in the market, estimating that by 2020 generics and biosimilars will represent 80% of all medicines by volume. The Commission comments that SPC protection for a significant number of medicines will begin to expire from 2020 creating a new ‘patent cliff’ and the waiver will enable European industry to take better advantage of the new marketing opportunities opening up for generics and biosimilars. There have been various campaigns in the industry by generic and biosimilar organisations in support of the SPC waiver, which have referred to supporting data indicating that the implementation of the waiver would bring significant additional revenue in export sales and create a high number of skilled jobs.
The proposal, which would apply only to SPCs granted after it comes into force, contains safeguards to try to prevent medicines manufactured for export seeping into EU markets including transparency provisions and labelling requirements, but some commentators have questioned the effectiveness of these.
‘Day 1’ launch
The proposal as currently drafted is limited to manufacture for export and does not allow manufacturers to stock up ready for entry into the EU market immediately on expiry of the SPC. This is a contentious issue on which we are likely to see significant lobbying in the coming months, particularly given the importance of ‘first mover’ advantage in this context - i.e. that generally only the first few generics/biosimilars to enter the market would be expected to achieve substantial market share.
The proposal now goes to the European Parliament for scrutiny. The final text must be approved by both the European Parliament and the Council of Ministers before becoming law.
The progress of the proposal can be followed on the Parliament’s Legislative Observatory – COM (2018)317.