A decent proposal? What the manufacturing exemption for SPCs means
Earlier this year, the European Commission proposed the introduction of a manufacturing exemption for SPCs. Here, Alexander Kritharidis, associate in the Life Sciences sector group at Taylor Wessing, London, who is specialising in patents law, goes into more detail…
In May, the European Commission published its proposal to introduce a manufacturing waiver for supplementary protection certificates (SPCs). The commission’s proposal comes out of its public consultation on SPCs and patent research exemptions, in which it is also considering the creation of a European SPC title and updating the scope of the Bolar exemption, an exemption to patent infringement for activities conducted for the purpose of obtaining regulatory approval for medicinal products.
The EU has a strong intellectual property rights framework in place that sustains a multitude of industries’ innovative capabilities. To improve the current system further and remove a competitive disadvantage faced by EU manufacturers, the commission has tabled a targeted amendment, a so-called ‘export manufacturing waiver’ to SPCs.
The consultation around this amendment is part of the commission’s single market strategy, in which it is looking for ways to improve the patent system in Europe, particularly for pharmaceutical and other industries whose products are subject to marketing authorisations.
Introduction of an exemption
Currently, EU manufacturers of generics and biosimilars cannot, during the SPC term of a product in the EU, manufacture these products for any purpose, including export outside the EU to countries where SPC protection has expired or does not exist, whilst manufacturers based in those non-EU countries are free to do so. The commission considers that this competitive disadvantage creates a risk of delocalisation of manufacturing outside the EU and loss of investment opportunities.
The commission’s proposal would see the introduction of a manufacturing exemption to Article 4 of Regulation (EC) No. 469/2009 (the ‘SPC Regulation’), whereby EU-based manufacturers of generics and biosimilars may manufacture a product protected by an SPC, in the territory of a member state during the SPC term, for the exclusive purpose of exporting their products to non-EU markets where patent or SPC protection has expired or never existed. The exemption would only apply to SPCs that have not yet been granted and only after a transitional period to accommodate pending SPC applications.
Safeguards to prevent circumvention of the exemption
The proposal would also see a series of safeguards introduced to ensure transparency and avoid the possible diversion onto the EU market of generics and biosimilars manufactured for export purposes during the SPC term. The safeguards include:
- An obligation for businesses to provide a notification to public authorities of their intention to commence manufacturing and the information contained in that notification would be made public.
- An obligation on the manufacturer to inform its supply chain that the products in question are for export only, and that placing on the market, import or reimport of the products to the EU might infringe an SPC.
- Specific labelling requirements for the export of products outside the EU that are protected by an SPC.
The commission considers that the combined effect of these safeguards will make it easier for both SPC holders and public authorities to detect and address infringements by existing means through the national courts or other control mechanisms including market surveillance and customs control.
The European parliament has set a target implementation date of before 2019. Once adopted by the European parliament and council, it will be directly applicable in all EU member states.
The commission considers that the manufacturing exemption will create investment and job opportunities in the manufacturing of generics and biosimilars in the EU, generating additional growth of at least €1 billion per year in net EU exports and would create up to 25,000 extra high-skilled jobs over 10 years. The waiver will also contribute to a more timely onset of competition in EU markets for medicines upon expiry of SPCs, as manufacturing capacity established for export purposes could then be used to enter the EU.