Radical changes in the SPC system in the EU: SPC export and stockpiling exception soon a reality

The European Commission has for some time discussed the Supplementary Protection Certificate Regulation (SPC), its application and interpretation. Interesting aspects of how the legal framework on SPCs works in the EU were discussed in the Max Planck report, released in May 2018, "Study on the legal aspects of supplementary protection certificates in the EU" (here).

During an extraordinary meeting of the European Parliament’s Committee on Legal Affairs, scheduled for today,  February 26th, the Committee will (as it seems) vote on the provisional agreement reached in the trilogue negotiations (you may watch the announcement of the results of the trilogue negotiations here). Assuming that the provisional agreement will be confirmed, this will allow the European Parliament to adopt the agreement in plenum. With the upcoming EU elections in May 2019, one could expect that the Proposal will be voted by the Parliament already in April 2019.

The goal of the Proposal for a  new Regulation is to adapt the SPC Regulation to the  modern needs of the pharmaceutical marketplace (taking into consideration the needs of generics and the biosimilars industry) while at the same time preserving the rights of the certificate-holder.

The proposed new Regulation (read here) has, as its main objective, the creation of a level playing field between Union-based, and third country makers, of pharmaceuticals.  This would be accomplished by restricting the protection conferred by an SPC to allow making for the exclusive purpose of export to third countries, and any related acts in the Union, strictly necessary for making or for the actual export itself. These acts would of course otherwise require the consent of a certificate holder.

Such acts could include the possession, supply, offering to supply, import, using or synthesis of an active ingredient for the purposes of making a medicinal product containing that product, or temporary storage of the product or advertising for the exclusive purpose of export to third country destinations. The exception will also apply to related acts performed by third parties who are in a contractual relationship with the maker.

Stockpilling and Export exception? Sounds attractive....

Stockpiling (the process of manufacturing and storing pharmaceuticals in order to be able to sell directly after the expiry of a patent or SPC), in contrast to  manufacturing for export, will be allowed only during the final six months of the SPC lifetime.

A limited exception

According to the proposal, the exception will not cover placing, on the market in the Member State, in which a certificate is in force, the product, or a medicinal product containing that product. Nor should the exception cover reimportation of the product into the market of a Member State in which a certificate is in force.

Moreover, it should not cover any act or activity for the purpose of import of products or medicinal products into the Union merely for the purposes of repackaging and re-exporting.  Further, the exception will not cover any storage of the product for any purposes other than those set out in this Regulation. By providing a series of limitations, the exceptions are expected not to conflict with the normal exploitation of the product in the Member State where the certificate is in force.

Apart from the limitations to the exception itself, the Proposal includes an arduous information obligation for the maker (either the producer of the stockpiled pharmaceuticals or the producer of the “to be exported” pharmaceuticals). Namely, the maker should provide certain information to the authority that granted the certificate in the Member State where the making is to take place. The information should be provided before the making commences in that Member State, or before any related act prior to that making, whichever is the earlier.

Should making take place in more than one Member State, a notification  would be required in each of them In the interests of transparency, the authority  would be required to publish, as soon as possible, the information it receives, together with the date of notification of that information. Member States would be allowed to require that notifications, and updates to notifications, be subject to the payment of a one-off fee. This fee should be set at a level, which does not exceed the administrative cost of processing notifications and updates.

The rights of the certificate holder

The maker should also inform the certificate holder, through appropriate and documented means, of the intention to make a product or medicinal product under the scope of the exception. In order to safeguard the rights of the certificate holders, the exception will apply to certificates that are applied for on or after the day of the entry into force of the Regulation. In fact, the exception is to apply from 1 July 2022.

Such application of the exception should allow the holder of a granted certificate, which has not yet 

taken effect by the date of the entry into force of the Regulation, a reasonable period of transition to adapt.

Reaction from the industry

As expected, the generics and biosimilars industry (see, for instance, the lobby group Medicines for Europe press release here) welcomes the Proposal to the new SPC Regulation. Nevertheless they have at the same time expressed  regret that it includes too many safeguards for the certificate holders, something that could in fact hinder its  implementation.