European Commission proposes export manufacturing waiver for SPCs

The European Commission has published today a proposal for a Regulation amending Regulation (EC) No 469/2009 concerning the supplementary protection certificate (SPC) for medicinal products. The proposal introduces a so-called "export manufacturing waiver", an exception to the SPC system in relation to exports to third countries (outside the EU). Due to the waiver, EU-based companies will be entitled to manufacture a generic or biosimilar version of an SPC-protected medicine during the term of the certificate if it is exclusively intended for export to a non-EU market where protection has expired or never existed. The proposal is accompanied by a press release and an FAQs document.

This important development follows a long debate opposing the innovative pharmaceutical industry and generic/biosimilar manufacturers on the impact of intellectual property on access, medicines prices and jobs in the EU. In its press release, the Commission underlines that intellectual property rights are a key driver for innovation and insists how this “balanced, proportionate and well-calibrated” initiative only provides for a “limited exception” to the rights currently exercised by SPC holders. SPCs will continue to extend patent rights in the EU for a maximum of five years, and SPC protected medicines will retain their full market exclusivity in the EU.

The proposal provides a number of safeguards which, according to the Commission, will ensure transparency and prevent SPC-infringing products from entering EU Member State markets:

• Notification requirement: Companies manufacturing SPC protected medicines for export will be required to notify the competent authorities, and the information contained in that notification will be made public.
• Due diligence requirement: There will be a requirement on the manufacturer to inform its supply chain that the products in question are only for export.
• Labelling obligation: Any export of SPC-protected products outside the EU will be subject to compliance with a specific labelling requirement, involving affixing a logo.

The proposal still needs be adopted by the European Parliament and the Council. Once adopted, the Regulation will be directly applicable in all EU Member States, though the legislative change should only apply to SPCs that are granted after the entry into force of the Regulation.

The innovative pharmaceutical industry - rightfully - remains concerned about the possible impact of the proposal as changing any part of the carefully constructed framework (aimed at restoring some of the patent life that is lost during research and regulatory processes) may destabilise the incentives system in Europe.  Indeed, today the European Commission also published an analysis of the incentives, rewards and SPC framework led by Copenhagen Economics, which amongst others concludes that the effective protection period for medicines decreased from 15 years to 13 years between 1996 and 2016, and that “a reduction of the effective protection period will negatively affect the investments in research and development in the EU [but also] outside the EU." The study further concludes that "one cannot exploit the regulation around protection to get the best of both worlds; more innovative medicinal products and faster generic entry to push down prices. A first best policy path seems to be one where the trade off is circumvented. It would be ideal to secure a sufficient period of protection and reduce uncertainties associated with developing medicinal products in order to incentivise innovation, while finding other ways of curbing high prices."

Watch this space for further updates on the incentives review.