The European Commission Proposed Amendment to Pharmaceutical Patent Rights

Last May 2018, the European Commission proposed to amend Regulation (EC) no. 469/2009 on complementary protection certificates (CPC). If adopted, such amendment will affect European patent rights in the pharmaceutical sector. More specifically, the Commission proposed the introduction of Supplementary Protection Certificates (SPCs) to boost investment in the development and manufacture of biosimilars and generics (“the Proposal”).

Medicinal products can be marketed in Europe after obtaining an authorization from the competent administrative authority (in Italy, AIFA). Since such authorization generally requires a previous long and complex clinical control of a product in order to test its safety, as well as the protection provided by a patent might be generally insufficient, high investments on innovative drugs’ research are strongly discouraged.

A SPC is an intellectual property right that grants an extension of up to 5 years on a 20-year patent term for an innovative pharmaceutical. The goal of this certificate is to compensate for the loss of patent protection that occurs during the development and clinical tests of a generic or biosimilar. According to the Commission, although the CPC is intended to reward investment in innovation, the current regulation disadvantages manufacturers of generic and biosimilar medicines based in the EU.

According to the Proposal, when in 2017, the EC launched a public consultation on SPCs, comments demonstrated broad support for the proposed waiver; the EC’s proposal notes that biosimilar and generic products will represent 80% of all medicines worldwide by volume in the year 2020, and CPCs prevent EU-based manufacturers from producing any generics or biosimilars for a covered drug (protected by an already granted CPC) – even if such manufacture would be exclusively for export to another market – during the protection period. “This problem puts EU-based industry at a disadvantage,” explains the Proposal, because manufacturers in non-EU countries do not face the same restrictions. The current framework, indeed, allows the holder of a CPC to effectively oppose, until its expiration, the production and storage of generic or biosimilar products by EU companies, even if they are designed for markets outside the EU where patent protection does not exist. As a result, these companies are attracted to relocate in such non-EU countries where CPCs do not exist, such as China, India, Brazil or Russia, or where the protection conferred by the CPCs is weaker or shorter, such as Canada and Israel.

The Proposal suggests a sort of “manufacturing waiver”. This waiver allows EU-based companies to produce a generic or biosimilar version of a medicinal product protected by a CPC (active ingredients and pharmaceutical raw materials) exclusively for export to the market of a third country where the protection has expired or is never existed. This should: 1) exclude the risk of receiving an opposition from the holder of CPC; 2) provide the pharmaceutical industry with sufficient incentives to develop innovative products within the European Union, and to prevent companies from relocating to other; and 3) lead a significant growth in the revenues from exports of these products in non-EU countries, according to the Commission’s estimates.

On the other hand, the Proposal provides certain safeguards to protect CPCs holders against possible misuses of the waiver. In particular, a company located within the European Union interested in using the waiver should notify the patent office of each Member State of such intention 28 days before the production starts. Such notice must contain detailed information about the products, the start date of production, the production site and the destination countries, which would be published by each receiving office within 15 days of receipt of the notice.

The Proposal will be now discussed by both the European Parliament and the Council. Internal consultations have already been begun by some national governments. The waiver, however, will not apply to the CPCs already issued at the time that the Proposal will be possibly adopted, while for pending CPC applications a transitional regime will be specifically adopted.[1]

[1] Industry feedback on the Proposal was mixed with the generic-drug and biosimilar industry supporting the measures and the innovator-drug industry opposing it. In all, the EC received 63 comments from generic/biosimilar developers and 72 comments from the holders of SPCs during the public consultation period from October 2017 to January 2018. Medicines for Europe, which represents generic-drug and biosimilar developers in Europe, supported the measure: “Medicines for Europe commends the European Commission for proposing an SPC manufacturing waiver which will have a positive impact on the export of European generic and biosimilar medicines, particularly for small and medium enterprises (SMEs),” said the association in a May 28, 2017 statement. The European Federation of Pharmaceutical Industries and Associations (EFPIA), which represents the innovator-drug industry in Europe, is opposed to the manufacturing waiver for exports: “EFPIA, the organization representing 40 of the biggest investors in life-science research and development, is deeply concerned with the European Commission’s proposal to open the SPC legislation with a view to introducing a manufacturing waiver,” said the association in a May 28, 2017 statement”. EFPIA has a very real concern that this proposal to de-value the IP [intellectual property] and incentives framework will be detrimental to patient access to innovative medicines and lead to a greater percentage of the R&D of those treatments moving to other parts of the world that value and are strengthening the knowledge-based economy.”

Compliments of AEM Carnelutti, a member of the EACCNY