Beefed-Up SPC Manufacturing Waiver Gains Traction In European Parliament

A proposal to allow generics firms to manufacture versions of supplementary protection certificate-protected medicines in preparation for EU launch immediately on SPC expiry is making progress through the European parliamentary process, to the delight of the generics industry – and the dismay of originator companies.

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Plans are underway to allow generic manufacturing in the EU during the SPC period

A second European Parliament committee has supported legislative changes that generics companies say would unlock “huge” job opportunities and healthcare savings on “blockbuster” medicines whose supplementary protection certificates (SPCs) are due to expire in the EU over the coming years.

The parliament’s international trade committee (INTA) gave its backing to a proposal from the European Commission that would introduce a waiver allowing the manufacture of generic versions of drugs still protected by an SPC for export to countries where the originator is not protected by an SPC.

But in an opinion adopted on Dec. 3, the committee went further and amended the proposal to allow “Day 1 launch,” meaning that generics firms could produce and stockpile versions of SPC-protected drugs ready for marketing in Europe immediately upon expiry of the SPC.

The current SPC Regulation prohibits the manufacture in the EU of a generic or biosimilar drug during the originator's SPC validity period, even if the product is intended exclusively for export to a country where the protection period has already expired. Production in preparation for EU launch the day after SPC expiry is also banned.

Adrian van den Hoven, director general of the generics industry body Medicines for Europe, welcomed the INTA amendment and the work done by the committee’s rapporteur, MEP Lola Sanchez Caldentey.

He also praised the committee for “not caving in to vested interests and foreign pressure by voting for a comprehensive SPC manufacturing waiver.” Medicines for Europe claimed recently that these vested interests – “including the originator pharmaceutical industry” both in and outside the EU – were putting pressure on member states in the Council of the EU to “neuter” the commission’s draft regulation.

It said this had already led the Austrian presidency of the EU to propose expressly excluding the idea of Day 1 launch from the draft legislation, and that there was a risk that “disproportionate influence" on the council would “hamper the progress of an effective, usable SPC manufacturing waiver and maintain the status quo.” (Also see "EU Policymakers Under Industry Pressure To 'Neuter' SPC Waiver Plan" - Pink Sheet, 16 Oct, 2018.) Generics firms argue that the current situation forces them to locate their manufacturing outside the EU, and that a waiver would boost generic production in Europe.

But the originator industry is strongly opposed to the whole idea of an SPC waiver. The European Federation of Pharmaceutical Industries and Associations claims it would weaken Europe’s knowledge-based economy, reduce IP rights, jeopardize patients’ access to innovative treatments, and lead to a flight of investment from Europe.

Nonetheless, the proposal is progressing largely unscathed through parliament, and the Day 1 amendment also seems to be gaining traction, having already been approved by the environment and public health committee (ENVI) in its Nov. 27 opinion.

“The best option in terms of uniformity would be immediate application of the waiver to all existing SPCs” – Adrian van den Hoven, Medicines for Europe

Medicines for Europe said the trade committee also introduced a proposal to improve the uniform application of the waiver legislation across the EU. Van den Hoven pointed out that EU law normally has to be applied uniformly in all EU member states, particularly where regulations are concerned, because these are directly applicable in national law.

Under the commission’s original proposal, which was published in May, the waiver would apply only to newly granted SPCs. However, the INTA’s proposal is that it should be applied to all SPCs whose term begins from the date that the amended regulation is implemented – i.e., SPCs whose related patent expires after this date.

Given that patent expiries are “slightly more uniform” than the granting of SPCs, this proposal is “a bit more coherent from a legal perspective” than that of the commission or “the options under discussion in the Council which would delay the implementation of the measure but also mean that it would effectively be in force at different times in different countries depending on the date of grant of the SPC,” van den Hoven told the Pink Sheet.

“The best option in terms of uniformity would be immediate application of the waiver to all existing SPCs, which is basically how all other intellectual property measures (like the Bolar exemption or the SPC Regulation itself, which were both directly applicable to existing patents) have been implemented in the past by the EU, he said.

“For some strange reason, the discussion around the waiver is to do this without uniformity. In fact, this is the first time that I have seen the Commission propose a ‘non-uniform’ measure as it is one of the fundamental legal principles of the internal market.”

No Commercially Sensitive Information

Apart from the Day 1 proposal, the INTA also introduced an amendment on notification requirements that Medicines for Europe says would ensure commercially sensitive information was not disclosed to competitors.

While it would require the generic company to send a warning letter to the SPC holder stating its intention to use the waiver, the INTA opinion “states that the information sent to the IP offices should be kept strictly confidential and establishes conditions under which the SPC holder can request a court to order disclosure of such information,” van den Hoven observed. “This is to ensure that there is no abuse or misuse by the SPC holder of the information notified to the IP offices.”

Next Steps

The next step in the process is a vote in the legal affairs committee (JURI), the lead committee for the SPC waiver proposal. This is expected at the end of January 2019.

Asked what influence he thought the ENVI and INTA amendments would have on the JURI’s deliberations, van den Hoven said: “We believe it would be difficult for JURI to disregard the ENVI and the INTA opinions, especially because they adopted similar positions on several elements of the proposal (i.e., Day 1 and notification).” Moreover, the INTA had sent “a clear message on applicability, which is that the European industry is not left alone and forced to delocalise for the opportunities opening up as of 2020.”

If negotiations go smoothly in the trilogue discussions between commission, council and parliament between February and March, a vote in the plenary session of parliament should take place in March, van den Hoven said.

“An SPC manufacturing waiver sends a damaging signal to global life science investors that Europe is weakening its IP framework” – EFPIA director general Nathalie Moll

Meanwhile, EFPIA’s director general, Nathalie Moll, has said that introducing an SPC waiver would send the wrong message to investors, particularly amid the uncertainties already being caused by the UK’s impending departure from the EU.

Writing in a blog at the end of November, she said there was “no doubt that the Commission proposal to introduce an SPC manufacturing waiver sends a damaging signal to global life science investors that Europe is weakening its IP framework… at a time of uncertainty caused by Brexit and shifting political paradigms across the continent.”

By contrast, Moll said, “global competitors are building their life science sectors offerings and developing their IP systems. For those of us passionate about research and development in Europe, our fear is that sending the message that Europe is weakening IP at a time of uncertainty with increased competition from the US and China has the potential to represent a perfect storm of disinvestment in R&D in Europe.”

Studies project that implementation of the waiver could result in the loss of 4,500-7,000 jobs in the research-based industry and a further 20,000-30,000 jobs in companies working with R&D-based companies, Moll claimed, adding that it would also result in a loss of up to €1.85bn in export sales and a fall in R&D investment of €215-360m.

“From the adoption of the ENVI committee’s compromise amendments earlier this week to speculation in the media on the likely direction of the Council on the SPC waiver, there is no doubt that investors will be looking to see if and how Europe values the knowledge-based economy,” Moll declared. “If the proposal goes ahead, then there will be intense scrutiny of its implementation to assess if there is any further erosion of IP rights in Europe.”

She said that investors would therefore want to see:

• Legal certainty and clarity on the scope of the proposal.

• “No additional infringement of IP rights" by allowing stockpiling of generic or biosimilar medicines still under an SPC patent extension.

• A “robust system of notification of the innovator company regarding who is doing what, where, and for which export markets.”

• “And critically, no application of the waiver to existing property rights or we risk moving the goal posts for life science investors that have committed to Europe under the existing framework of IP incentives. The waiver should not apply to any existing SPCs.”

From the editors of Scrip Regulatory Affairs.