SPC manufacturing and stockpiling waiver comes into force

Earlier this year, the European Parliament adopted legislation introducing a Supplementary Protection Certificate (SPC) manufacturing and stockpiling waiver (amending Regulation (EC) No 469/2009). The waiver comes into force today, 1 July 2019. The full text of the adopted legislation can be seen here. Controversially, the legislation provides a waiver not only for the manufacture of generics and biosimilars for export, but also provides a waiver for stockpiling for day-1 release following expiry of an SPC.

The SPC manufacturing waiver regulation was first proposed by the European Commission back in the summer of 2018 (IPKat post here). The waiver allows EU-based companies to manufacture a generic or biosimilar version of an SPC-protected drug, if done exclusively for exporting out of the EU to markets where IP protection for the drug has expired or never existed. In the words of an EU press release, the aim of the waiver is "to foster the competitiveness of EU producers of generic medicines and biosimilar products". Particularly, the aim is to respond to the growth of the generics and biosimilar industries by creating a level playing field between EU-based generic and biosimilar manufacturers and manufacturers based elsewhere in the world. The hope of the EU is that the waiver will remove the need for EU biosimilar and generic manufacturers to move out of the EU in order to take advantage of the global generic and biosimilar market.

"Stockpiling"

The SPC manufacturing and stockpiling waiver will apply during the last six months of the validity of the SPC. The manufacturer will have to inform the relevant patent office and the SPC owner about his intended activities 3 months before they begin making the product for export (Article 2(b)). The manufacturer will also have to indicate on the packaging of the product that the product is for export only, by affixing the new EU export only logo (Article 2(d)).

The legislation provides for a 3 year transitional period (down from the 5 year transitional period originally proposed). For the first 3 years the SPC manufacturing waiver will only apply to new SPCs filed on or after the day the legislation comes into force. SPCs that are not already in effect will not be affected. 3 years after the legislation comes into force (i.e. 1 July 2022), the waiver will apply to all new SPCs that come into effect, regardless of their filing date (Article 10(5)).

Controversially, the legislation includes a stockpiling provision (Article 5(2)(a)). According to this provision, the waiver permits the manufacturer to make a product covered by an SPC, within the period 6 months before the expiry of the SPC, for the purpose of storing the product within the EU. The purpose of the stockpile waiver is to enable generics and biosimilar manufacturers to launch the product in Europe on day-1 of the expiry of the SPC, with the aim of improving patient access to medicines.

The EU expects that the SPC waiver will  "generate, over the next 10 years, additional net annual export sales of well in excess of €1 billion, which could translate into 20 000 to 25 000 new jobs over that period" (EU press release). However, the SPC waiver has not been welcomed by the EU pharmaceutical originator companies and some member states, particularly those with a strong originator industry. The European Federation of Pharmaceutical Industries and Associations (EFPIA) has indicated its concern that the SPC waiver legislation "sends a signal to the world that Europe is weakening its commitment to IP incentives" (EFPIA press release).

New EU export logo

Some of the EU member states provided a written statement voicing their concerns with the legislation (see here). Denmark was of the opinion that the legislation does not strike the right balance, and runs the risk of "undermining the strong competitive position of the EU established innovative pharmaceutical industry". The Czech Republic and Malta put forward similar concerns. Belgium, France, Ireland, Portugal, Spain and the Netherlands suggested that "future legislative initiatives also include incentives to promote research and development" and should focus on strengthening the conditions necessary to allow for the enhancement of IP rights and innovation by the pharmaceutical sector.  Notably, the UK voted against the legislation. The legislation will come into force before the UK leaves the EU, given that the UK leave date is currently scheduled for Halloween, i.e. 31 October 2019.

The EU will carry out an evaluation of the impact of the legislation every 5 years (Article 21a), in order to assess whether the stated objectives have been achieved. In a nod to the controversy of the stockpiling provision "special account shall be taken of the effects of making for the purpose of storing" (i.e. stockpiling), and whether this provision has had the desired effect on public health. As with so many issues of IP in the pharmaceutical sector (and SPCs particularly), the controversy is set to continue.