Crunch time for the SPC manufacturing waiver

SPC protection is an important element of the IP protection available to life sciences businesses. Providing up to five years of extra patent protection for pharmaceutical products, an SPC can make a huge difference to the profitability of a new medicine. Often coming at a point in the product’s life cycle when it has an established market position and sales are at a peak, each extra month in the life of an SPC can have a substantial impact on the bottom line.

That’s why many in the pharmaceutical industry see the EU’s proposed SPC manufacturing waiver (more on this in an earlier blog) as a substantial watering down of protection for research-based companies. Research by industry grouping EFPIA shows the rule change could lead to annual losses of up to €4.71 billion to the global innovative biopharmaceutical industry.

Given the EU’s normally strong support for innovative and creative industries, many see this change as surprising. So why is it being introduced? The main driver seems to be concern over international competitiveness for European generics and biosimilars producers. In a press release reporting on progress towards finalising the new law, the EU Council explains its position:

"The draft regulation is expected to remove the competitive disadvantages faced by EU-based manufacturers of generics and biosimilars vis-à-vis manufacturers established outside the EU in global markets, but also in day-1 EU markets by building up production capacity,"

EFPIA has been opposed to the changes throughout. It has called for EU law-makers to trim back elements of the proposal, focusing particularly on the following issues:

  • The waiver should not permit stockpiling in advance of SPC expiry, with a view to achieving an immediate launch on EU markets. Instead, it should apply only to products destined for export out of the EU.
  • Existing SPCs and pending applications should not be affected by the change.
  • There should be a transparent, timely and fair notification system so that SPC owners are aware of intended manufacture under the waiver.
  • EU markets should be protected from re-importation of products through measure such as robust labelling.

The EU Parliament’s Legal Affairs Committee recognised some of these concerns with proposed amendments last October. But a new set of changes published in January look much less favourable to SPC owners. The revised text would now permit manufacturers to building up manufacturing capacity and stockpile product for two years prior to SPC expiry, in order to achieve Day 1 entry on the EU market immediately after expiry of the SPC.

Proposed alterations to the transitional provisions will also be unwelcome to the research-based industry. These would mean that SPCs will be in scope if they are applied for after the new law takes effect. It would also apply to existing SPCs where the underlying patent will expire by the end of 2020, earlier than 2023 as had been suggested.

These new proposals contrast with the EU Council’s position agreed earlier in January, which were closer to meting the concerns of industry. 

The legislation is moving through the process quickly as EU institutions aim to wrap up current projects ahead of EU Parliamentary elections in May – you can track its progress here.

It is unclear at this stage whether the changes would affect the UK. They could be introduced into UK law automatically under the Withdrawal Act, but only if  the EU-UK Withdrawal Agreement is settled in time for Brexit, and the SPC manufacturing waiver comes into force during the planned transition period.

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