Manufacturing waiver weakens SPCs | In Principle

Regulation (EU) 2019/933 of the European Parliament and of the Council of 20 May 2019 amending Regulation (EC) No 469/2009 concerning the supplementary protection certificate for medicinal products entered into force on 1 July 2019. The regulation introduced a “manufacturing waiver” excluding certain acts by drug manufacturers in the EU from the protection awarded under supplementary protection certificates.

Supplementary protection

The aim of the supplementary protection certificate (SPC) is to extend the patent protection for drugs. The additional period (a maximum of 5 years) is intended to compensate the holder for shortening of the opportunity for actual exploitation of the market exclusivity provided by the patent. This is because after filing a patent application for a medicinal product, but before introducing it onto the market, the holder of the patent often must still conduct costly and painstaking studies to verify the efficacy of the drug and allow the holder to complete the procedures for obtaining marketing authorisation for the new drug.

The protection awarded by SPCs falls within the scope of the protection awarded by the underlying patent, but is limited to a specific type of product: a medicinal product covered by marketing authorisation. The holder of an SPC may oppose, among other things, manufacturing, offering for sale, marketing, or import for these purposes of a protected product.

New approach to SPCs

This change introduces a breakthrough in the protection awarded to the holder of an SPC. The waiver allows manufacturers, under certain circumstances, to make, store or export medicinal products even though an SPC remains in force for the product. This applies to two situations:

• Making a medicinal product for export to markets outside the EU where the medicinal product does not enjoy patent protection
• Making a medicinal product for the purpose of stockpiling it, so that it is possible to offer a generic or biosimilar product in the EU promptly, even on day one, as soon as the protection of the SPC expires—in which case the waiver permits making of the product only within the last six months before expiration of the SPC.

Protection of SPC holders

A number of provisions of the regulation are designed to ensure transparency in the actions taken pursuant to the manufacturing waiver. The point is to ensure that the SPC holder is not deprived of effective enforcement of its protection if the manufacturer’s actions exceed the scope of the waiver.

The maker of medicinal products is required to notify the SPC holder as well as the patent office of the member state for the place of production of its intention to commence manufacturing of the protected medicinal product. The notice must be given “no later than three months before the start date of the making in that Member State, or no later than three months before the first related act, prior to that making, that would otherwise be prohibited by the protection conferred by a certificate, whichever is the earlier”. To this end, the maker should use the standard notification form annexed to the regulation, indicating among other things the maker, the purpose and place of the making, and the number of the SPC in question. The patent office must publish such information as soon as possible, along with the date it received the notice.

In the case of a medicinal product manufactured for the purpose of export to third countries, the maker is also required to place on the outer packaging (e.g. cardboard box), and if possible also on the immediate packaging (e.g. blister pack or bottle), the logo specified in the regulation indicating that the product is intended for export outside the EU:

The regulation also introduces a requirement for the maker to “ensure, through appropriate and documented means, that any person in a contractual relationship with the maker” performing acts covered by the exception “is fully informed and aware” that the acts are performed within the exception provided in the regulation and that the placing on the market, import or re-import of a product intended for export from the EU, or premature marketing of a product made for the purpose of marketing it in the EU after expiration of the SPC, could violate the law.

Doubts

The regulation is the result of many months of work intended to reach a compromise reconciling the interests of producers of innovative drugs and makers of generic and biosimilar versions. While making a breakthrough in the protection of industrial property rights, the EU lawmakers provided for means to protect rightholders against abuses. Whether the solution adopted will meet this task remains to be seen, but during the drafting of the regulation it was accused of a range of ambiguities which were not removed from the final text of the regulation.

First, the information that must be provided to the SPC holder and the relevant patent office is allegedly too vague. The notice only identifies the maker, which could overlook the entity that is actually manufacturing the drug or storing it under contract with the “maker.” The lack of this information may make it hard to verify whether the acts of these entities comply with the waiver.

Second, some acts covered by the waiver were not defined in the regulations, for example “any related act that is strictly necessary for the making … or for the actual storing” of the product. This could raise doubts on what falls within the bounds of the waiver and what constitutes an infringement of the SPC.

Third, doubts are raised by the requirement to ensure that “any person in a contractual relationship with the maker who performs acts” covered by the waiver “is fully informed and aware” that the acts are taken pursuant to the waiver. Despite calls for such provisions, the maker is not required to monitor the actions of such entities or to assume responsibility for their actions if the scope of the waiver is exceeded.

Fourth, it is stressed that the logo indicating that the product is intended for export from the EU must be placed on the outer packaging, but on the inner packaging only when possible. Makers of generics and biosimilars could shield themselves with this limitation by placing the EU Export logo only on the outer packaging, after which it would be easy to repackage the product made for export in order to offer it on the EU market. This could encourage attempts to circumvent the limitation allowing reliance on the manufacturing waiver with respect to stockpiles of drugs for the needs of the EU market only within the last 6 months of the SPC period.

Grace period
The effects of the regulation, at least at the beginning, will be mitigated by the exemptions and grace periods included in the regulation. The manufacturing waiver will apply without restrictions only with respect to SPCs applied for on or after 1 July 2019. It will not apply at all to SPCs that took effect before 1 July 2019.

But because the SPC takes effect only upon expiration of the underlying patent (often long after filing of the application for the SPC), it is provided in the regulation that the manufacturing waiver will also apply to SPCs applied for before 1 July 2019 but only entering into effect on or after that date. In that situation, the regulation provides for a grace period, and the manufacturing waiver with respect to such SPCs applies from 2 July 2022.

Consequences

As stated in the preamble, the aim of the regulation is to increase the competitiveness of EU-based makers of generic and biosimilar drugs. It should also facilitate the rapid release of generics and biosimilars on the EU market, which in turn should increase competition, lower prices, and make drugs more affordable.

According to the findings in the reports prepared at the legislative phase, the amendment of the SPC regulations may generate huge benefits for the European pharmaceutical market. The figures mentioned included EUR 9.5 billion in additional net sales and 25,000 more jobs, including EUR 254.3 million in net sales and 2,000 new jobs connected with the production of active ingredients. Anticipated positive impacts for the entire healthcare system were also stressed, with projected savings for the European healthcare system of EUR 3.1 billion. These savings are supposed to be generated among other things by faster entry onto EU markets of generics and biosimilars from EU manufacturers.

Norbert Walasek, adwokat, Intellectual Property practice, Wardyński & Partners