Disputes Over SPC Waivers

Drug originators and off-patent medicine producers have been dissatisfied with a proposal (1) by the European Commission (EC) to amend European Union legislation to allow exemptions to extensions of patent rights through supplementary protection certificates (SPCs). SPCs were introduced in 1992 in the EU to give new medicines additional patent-like protection of up to five years to compensate drug-developing companies for stricter regulations requiring lengthy testing and clinical trials before the granting of marketing authorizations.

The EC proposed in late May 2018 that a SPC waiver should be introduced to enable EU-based manufacturers of generic drugs and biosimilars to take advantage of the rapidly growing global market for off-patent medicines (2). The waiver would enable companies to manufacture generic drugs or biosimilars before the SPCs on the originals had expired.

The EC’s own research (3) had shown that companies that had a stock of generic drugs or biosimilars available to enable them to be “first movers” at the time of the SPCs expiry gained a considerable share of the off-patent market. Not surprisingly, representatives of the research-based companies were unhappy with the EC’s proposals. The European Federation of Pharmaceutical Industries and Associations (EFPIA), the main lobbying group for drug originators, claimed that the EC’s initiative had undermined the EU’s framework of intellectual property (IP) incentives to encourage R&D in new drugs (4). 

“Europe has historically been the global engine room of drug development,” an EFPIA spokesperson told Pharmaceutical Technology Europe. “If it weakens its IP system for drugs development through measures like the SPC waiver, it is risking losing that position. The global environment for new drug development is becoming increasingly competitive with emerging economies such as China strengthening their IP structures.”

The generic-drugs and biosimilars sector was not satisfied either with the EC’s suggestion because it did not go far enough. “The legislative proposal will have a limited effect if the [EC’s proposed] text remains as it is,” a spokesperson for Medicines for Europe, Brussels, the leading trade association for generic drugs and biosimilars producers, told Pharmaceutical Technology Europe. 

Now the proposal (1) by the EC, which first mooted the need for an SPC waiver in 2015, will have to be approved by the Council of Ministers representing the EU’s 28 member states and members of the European Parliament (MEPs). A lobbying battle between the two wings of the European pharmaceutical sector over IP rights seems inevitable. However, the originator companies could be more content than the producers of generic drugs and biosimilars if the EC’s proposal is approved as it stands at the moment.

Medicines for Europe demands changes

Medicines for Europe claims that the text of the EC’s proposed amendment to the EU’s 2009 regulation on SPCs does “not serve the purpose for which SPC manufacturing waiver has been conceived” (5). This is because it allows production during the SPC period only for the purposes of exporting to non-EU countries. Also, the proposed manufacturing waiver applies only to newly granted SPCs rather than existing ones, Medicines for Europe pointed out in a position paper (5) published in June 2018. The association also complains about measures put forward by the EC to stop producers of off-patent drugs taking advantage of national differences in the application of SPCs to divert medicines from SPC-free EU markets into SPC-protected EU countries. As a result, Medicines for Europe is demanding changes to the EC’s proposed amendment. These changes would allow production of medicines during the SPC period so that generic-drug and biosimilar makers can stage an “EU day-one launch”-which enables their generic drug or biosimilar to be effectively introduced immediately in an EU market when an SPC expires. It also wants the manufacturing waiver to be applicable to all existing SPCs, and is urging the EC to withdraw its anti-diversion measures (5). 

“Without these three key elements, the SPC manufacturing waiver would be practically impossible to use,” the association says. It would provide no benefits to patients, healthcare budgets of EU members states, nor the EU generic drugs and biosimilars industry, it claims (5). To be complete and comprehensive, an SPC waiver needs to allow both exports to non-EU countries and day-one launches in the EU when SPCs expire, the association says (5). Otherwise, the waiver would not deal with the two main competitive disadvantages suffered by the European generic-drugs and biosimilars sector as a result of the EU’s SPC legislation, Medicines for Europe contends.

A comprehensive waiver would increase investment in the EU by producers of generic drugs and biosimilars. “Why should a European company produce in the EU for a non-EU market and in a non-EU territory for the EU?” the association asks (5). A full waiver would also stimulate investment in biosimilars projects by originator companies that have been putting money into R&D and production facilities for biosimilars outside the EU to be able to carry out day-one launches inside the Union. 

Medicines for Europe also argues that a comprehensive waiver is consistent with the Bolar exemptions first introduced in EU legislation in 2001. The Bolar exemptions permit production of SPC-protected medicines for research and testing purposes to provide data for marketing authorization applications.

Ensuring access for generic drugs and biosimilars

The EC acknowledges in its own impact assessment (3) on the proposed SPC waiver that the Bolar exemption was intended to ensure that “a generic [drug] could enter the market as soon as possible after the [SPC] expiry.” Also, according to the assessment, “the absence of an SPC manufacturing waiver, in practical terms, results in unduly extending SPC protection beyond its legal term, [which] is detrimental to the day-one entry of generic drugs/biosimilars onto the EU market.”

On the other hand, the EC’s wish to restrict the SPC waiver only to new SPCs is seen by Medicines for Europe as being out of line with Bolar exemptions because they also applied to existing patents. “Why should the EU approach be different in the case of the SPC manufacturing waiver?” it asks.

Because the restriction would mean that the waiver only applies to SPCs granted after the amendment comes into force, the first exemptions would not be implemented for 10 to 15 years. All the benefits of having a waiver in place in 2020 when a huge “patent cliff” of SPC expiries is due to take place would be lost. These SPC expiries account for most of the economic benefits of the waiver calculated by the European Commission-25,000 additional direct jobs, €9.5 billion (US$11 billion) net sales for the EU pharma industry and €3.1 billion (US$3.6 billion) in EU medicines spending.

In an explanatory memorandum (6) on its proposed amendment, the EC concedes that “over €90 billion of the first generation of the blockbuster biologics will become open to biosimilar competition by 2020, [which] will create huge additional opportunities for growth and jobs.”

The impact of anti-diversion measures

Medicines for Europe contends that anti-diversion measures- such as special labelling, disclosure of commencement of production and names of API and excipient manufacturers, as well as the provision of a list of export countries-would breach commercial confidentiality and are unnecessary because there was no evidence of any risk of diversion happening. Already, at any one time, an average of approximately eight member states have SPC-free products on their markets while the rest of the EU’s 28-member states would have SPC-protected medicines available. Yet no evidence has been provided of products entering SPC-protected countries from free ones, Medicines for Europe claims (5). 

Also, next year’s implementation of a regulation under the Falsified Medicines Directive (FMD) requiring the bar-coded unique identification of individual medicine packs would enable the operation of a track-and-trace system, which would prevent the introduction of any illicit medicines on the market, the association argues. Nonetheless, for the EC and the research-based pharmaceutical sector, the anti-diversion measures are an important part of the plan to restrict SPC manufacturing waivers to exports outside the EU. They are a means for ensuring that medicines manufactured under the export waiver do not find their way back into the EU. 

“It is really important that the SPC waiver doesn’t infringe the IP rights of European drug innovators even further by being extended to cover medicines on the EU market itself,” says the EFPIA spokesman. “The waiver has always been about giving EU generic drugs and biosimilars producers greater competitiveness in non-EU export markets not in EU countries.”

A three-month public consultation (7) completed in January 2018 on the idea of an SPC waiver, which included pharmaceutical companies and trade associations, healthcare professionals, and EU governments, showed that most generic-drug and bioisimilar producers support the introduction of a waiver. Among drug originators, there was broad, but not overwhelming, opposition to an EU manufacturing waiver with three quarters of respondents in the sector believing that EU generic drugs and biosimilars manufacturers did not have competitiveness problems with producers in non-EU countries (7). None of the EU government authorities or ministries taking part in the consultation opposed the introduction of an SPC waiver, with some expressing support for it. One member state strongly favoured a waiver both for exporting purposes and for launching products in EU markets.

“The position of the originators on the waiver may not be fully understood by some governments at the moment, so we’ll have to continue to make sure they are aware of our side of the argument,” says the EFPIA spokesperson. 

With the European Parliament, lobbying by both groups within the industry could be more challenging. MEPs have demonstrated on a number of occasions some support for the SPC waiver, but this backing could soon decline. An election for a new Parliament is taking place in May 2019, after which its attitude to a waiver could change.

References

1. European Commission, “Proposal for a Regulation of the European Parliament and of the Council amending Regulation 469/2009 concerning the supplementary protection certificate for medicinal products,” COM/2018/317 final-2018/0161 (Brussels, 28 May 2018).
2. European Commission, “Pharmaceuticals: Commission Refines Intellectual Property Rules,” Press Release, 28 May 2018. 
3. European Commission, “Impact Assessment-Proposal for a Regulation of the European Parliament and of the Council amending Regulation 469/2009 concerning the supplementary protection certificate for medicinal products” (Brussels, 28 May 2018).
4. EFPIA, “EFPIA Statement on Commission’s Proposal to Introduce an SPC Manufacturing Waiver, Weakening Europe’s Knowledge Base” (Brussels, 28 May 2018).
5. Medicines for Europe, “Position Paper-An Assessment of the SPC Manufacturing Waiver Proposal” (Brussels, June 2018).
6. European Commission, “Explanatory Memorandum-Proposal for a Regulation of the European Parliament and of the Council amending Regulation 469/2009 concerning the supplementary protection certificate for medicinal products” (Brussels, 28 May 2018).
7. European Commission, “Summary of the replies to the public consultation on Supplementary Protection Certificates and patent research exemption for sectors whose products are subject to regulated market authorisations” (Brussels, 28 May 2018).

Article Details

Pharmaceutical Technology Europe
Vol. 30, No. 9
September 2018
Pages: 6, 8

Citation

When referring to this article, please cite it as S. Milmo, “Disputes Over SPC Waivers," Pharmaceutical Technology Europe (9) 2018.