EU Commission proposes softening of SPC law to assist EU-based manufacturers

30 May 2018

The European Commission has proposed a "targeted adjustment" to intellectual property law with a view to reducing the restrictions on EU-based manufacturers of pharmaceuticals seeking to compete in global markets.

The Commission's proposal would create an 'export manufacturing waiver' to supplementary protection certificates.

A 'Supplementary Protection Certificate' (SPC) is a form of intellectual property right that extends patent protection in respect of pharmaceutical or plant protection products in qualifying circumstances. An SPC extends the term of its 'basic patent' by up to five years, the exact term of any particular SPC being determined by reference to the time taken for the grant of first marketing authorisation in the European Economic Area. SPC law is a complex mix of patent law, which derives from international treaty and national laws, and EU regulatory law.



Why has the Commission made a proposal?

The difficulty for EU-based manufacturers is that patent law, and by extension SPC law, prohibits, among other things, acts of manufacture, import and export which would infringe a patent in force in a relevant territory.

This prevents EU-based manufacturers from making products that would infringe a patent in the country of manufacture even if that manufacture is solely for the purpose of exporting them to a country without relevant patent protection.

Accordingly, pharmaceutical manufacturers based in the EU are at a disadvantage compared with those located in parts of the world with less stringent intellectual property protection, which can be in a position to import commercial quantities of product on the day of patent or SPC expiry.

Why would the impact of the Commission's proposal, if adopted in this form, be limited?

The Commission's proposal therefore seeks to level the playing field in the global pharmaceuticals market. However, it has some inherent limitations:

First, it would create a carve-out from infringement for the term of protection of an SPC but not in respect of the term of patent protection preceding the term of the SPC. During the term of the 'basic patent', EU-based manufacturers would remain at a disadvantage to manufacturers located in parts of the world with less stringent patent protection.

Second, different aspects of a medicinal product may be protected by multiple patent filings made at different stages in the originator's development process. During the term of SPC protection, which by definition is after the expiry of the 'basic patent' relied upon, other relevant patents may remain in force in any particular EU Member State. The Commission's proposal would not touch any remaining patent "thicket" in Europe.

Third, current patent law prevents EU-based manufacturers from building up production capacity ahead of SPC (or patent) expiry in Europe, leading to delay in EU launch of generic, biosimilar and otherwise infringing products beyond the date of SPC (or patent) expiry. This problem can be particularly acute for biosimilars. The new proposal is confined to facilitating the manufacture of medicines for export, so does not cover the build-up of production capacity for EU-destined medicines ahead of SPC (or patent) expiry. However savvy manufacturers already producing commercial quantities for export might be better placed to turn production activities towards EU-destined products.

Why, then, is the Commission's proposal not more radical?

The answer has many components. One is that it is the Commission's intent that Europe should remain at the forefront of pharmaceutical research and strong intellectual property protection promotes innovation and creativity. Another is that patent infringement is an area of law that remains a matter of national law, not EU law - indeed, the proposed Unitary patent regime would not alter this.

Nevertheless, the Commission's proposal signals an appreciation of concern regarding the landscape for pharmaceutical manufacturing in Europe. It will be welcomed by manufacturers of generics and biosimilars but also by innovators who currently might otherwise infringe patents for production methods or other processing patents.


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