SPC waiver likely to extend to stockpiling
Senior professional support lawyer Paul England and Matthew Royle, partner in the life sciences team at international law firm Taylor Wessing discuss what the introduction of a manufacturing waiver to the supplementary protection certificate legislation means for manufacturers.
Back in May 2018, the European Commission published its proposal to introduce a manufacturing waiver to the supplementary protection certificate (SPC) legislation. The purpose of the waiver at that time was to allow EU-based manufacturers of generics and biosimilars to manufacture a product, protected by an SPC, in the territory of a Member State for the purpose of exporting to non-EU markets where patent or SPC protection has expired or never existed. The Commission had calculated that the non-EU market access created by the waiver would attract investment and job opportunities in the manufacturing of generics and biosimilars in the EU.
In fact, its estimates put figures on additional growth generation at least €1 billion per year in net EU exports and up to 25,000 extra high-skilled jobs over 10 years. The Commission also anticipated that the proposed waiver would contribute to a timelier onset of competition in EU markets for medicines upon expiry of SPCs, on the basis that manufacturing capacity established for export purposes could then be used to enter the EU market. At that time, however, it had not proposed that the exemption should extend to stockpiling for this purpose.
Move forward to the 'trialogue' negotiation between Council and Parliament (with assistance from the Commission) in January 2019. Here, a single draft text was agreed, including a measure allowing a stockpiling period of six months for the purpose of marketing in the EU member states after SPC expiry. Opinion is strongly divided on this issue: generic manufacturers are typically in favour of the waiver, because they consider it a fair measure which is necessary to be able to prepare for launch and be ready on the EU market on the first day of expiry; and, originator companies holding SPCs are against it, because they consider it an unjustified springboard to launch inside EU member states.
Although stockpiling has been the most contentious addition to the original proposal, trialogue negotiations also focused on a series of safeguards, designed to ensure transparency and avoid the possible diversion onto the EU market of generics and biosimilars manufactured for export purposes during the SPC term (see box 1). Combined, these measures are intended to make it easier for both SPC holders and public authorities to detect and address infringements. These include measures that will be less popular for generic companies, such as the notification they must give to SPC holders and the information they must supply.
Box 1: Safeguarding measures:
- An obligation for generics businesses to provide a notification to public authorities of their intention to commence manufacturing and in which member state. Such information would include the location of the premises, SPC number, authorisation details for the manufacture of the product and an indicative list of the intended third countries to which the product will be exported. Notification must take place no less than three months in advance of the making or other activity relevant to the waiver.
- A notification must also be made to the SPC holder including: the name and address of the manufacturer; the relevant SPC number; an indication of whether the making is for the purpose of export, for the purpose of storing, or for the purpose of both export and storing; the member state where the making and, if applicable, the storing is to take place; and, the reference number of the marketing authorisation or equivalent in each third country of export. Notification must take place no less than three months in advance of the making or other activity relevant to the waiver.
- 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.
- Labelling requirements for the export of products outside the EU have also been agreed. These will require an export logo to be attached to the outer packaging of the product or of the medicinal product containing that product and, where feasible, to its immediate packaging.
The agreed text also provides transitional arrangements to soften the impact of introducing these waivers on SPC holders for two categories of SPC (see Box 2). In addition, those SPCs that entered into effect before the date of entry into force of the waivers will not be subject to them at all.
Box 2: The two categories of SPC to which the waiver would apply.
- Certificates that are applied for on or after the entry into force of the waiver.
- As from 1 July 2022*, those SPCs applied for before the waiver comes into force and which enter into effect on or after that date of entry into force.
The European Parliament is now expected to adopt the agreed text, by April 2019, potentially bringing the waivers into force in the summer of 2019. Given Brexit, this raises the question of whether the waivers will come into effect in the UK. This depends on whether the UK agrees to the draft withdrawal agreement for exiting the EU that the Prime Minister has negotiated. If not, and if the Brexit date of 29 March is maintained, the waiver will come into force after Brexit and not take effect in UK law. In this case, the UK may decide to implement its own, domestic version, of the waiver. But it will not be compelled to do so. If there is agreement to the Withdrawal Agreement, or Article 50 is extended beyond the date at which it comes into force, the waiver will also take effect in the UK.
*Note that this date will be replaced with a date that is three years after the waiver actually comes into force. The transitional arrangements provide SPC holders with a period of time to prepare for the waiver but also a long-stop date after which it will apply to new SPCs.