SPC export waiver: a long road ahead

On hearing that the European Commission had on 28 May 2018 adopted a proposal for a Regulation to amend Regulation (EC) 469/2009 concerning the supplementary protection certificate (SPC) for medicinal products, many practitioners might have been forgiven for imagining that such proposal sought to deal with what are to them are the most pressing issues with the SPC Regulation—perhaps by seeking to introduce a unitary SPC to accompany the proposed unitary patent, or perhaps by addressing some of the confusion surrounding certain aspects of the SPC Regulation that has led to so many references to the Court of Justice but has resulted in so little clear guidance from that body.

But such practitioners would be disappointed. Instead the proposal seeks to introduce, for medicinal product SPCs granted after its entry into force, what the Commission terms a “manufacturing waiver” to the SPC Regulation, which term is accordingly used in this article, although it is in reality a type of defence. The aim of the proposal is that such waiver apply only to manufacture for export.

The proposal would achieve this by inserting a proviso into article 4 of the Regulation, which at present provides that “within the limits of the protection conferred by the basic patent, the protection conferred by [an SPC] shall extend only to the product covered by the authorisation to place the corresponding medicinal product on the market and for any use of the product as a medicinal product that has been authorised before the expiry of the SPC.”

By such proviso such SPC “shall not confer protection against a particular act against which the basic patent conferred protection if, with respect to that particular act, the following conditions are met: (a) the act comprises: (i) making for the exclusive purpose of export to third countries; or (ii) any related act that is strictly necessary for that making or for the actual export itself.”

The proposal goes on to set out various requirements that a party seeking to rely on the waiver must meet, including the nature of the information it must provide to the relevant patent office (which must then be published), how it must label the product, and what it must tell those in its supply chain and with which it is in a contractual relationship who perform any “related acts” to which the waiver applies, including warning them that the placing on the market, import or re-import of the product might infringe the SPC.

Relating to TRIPS

Although it is clear from the TRIPS Agreement Dispute Resolution Panel's determination in 2000 in the challenge (by the EU) to Canada's manufacturing and stockpiling defence to patent infringement that such defences during patent term are contrary to TRIPS, the Commission takes the view that SPCs, extending as they do beyond the patent term as mandated by TRIPS, are not so constrained, although some commentators have challenged this.

The Commission's stated justification for seeking to introduce a “manufacturing waiver”, as set out in Recital 5 of the proposal, is that the present situation “puts manufacturers of generics and biosimilars established in the EU at a significant competitive disadvantage compared with manufacturers based in third countries that offer less or no protection.”

Although the Commission trailed various types of proposal for a waiver in its “Public Consultation on SPCs and Patent Research Exemptions for Sectors whose Products are subject to Marketing Authorisations” of 12 October 2017, the results of which it also published on 28 May 2018, the proposal can be traced back to resolutions on 7 May 2015 and 21 April 2016 by the Committee on the Internal Market and Consumer Protection of the European Parliament, and before that to lobbying activities on behalf of generic and biosimilar companies.

Although the European association for such companies, Medicines for Europe, has welcomed the proposal, it does not consider that it goes far enough, and in its response of 28 May 2018 it calls for the waiver to be extended beyond manufacture for export to manufacture and stockpiling for sale within the EU immediately on SPC expiry.

Criticism

On the other side of the industry the European Federation of Pharmaceutical Industries and Associations (EFPIA) has strongly criticised the proposal in its present form, observing in its own response of May 28, 2018 that it “reduces IP rights and thereby jeopardises patient access to innovative treatments” and, having noted that “as an industry we invest more than €35 billion in R&D every year in Europe alone and employ over 700,000 people across the continent, of which 118,000 are employed in research and development”, goes on to say that the proposal “also sends a global signal that Europe is weakening its commitment to IP, putting this investment, these jobs, this opportunity for economic growth and the advancement of patient care in Europe at serious risk.”

EFPIA and its members can be expected not only to fight hard to resist the proposal in its present form but also to resist the attempts that will be made to further extend its scope.

But the legislative battle over the proposal is likely to be somewhat delayed. The current European Parliament is nearing the end of its term (as is the European Commission) and has more than enough controversial measures already before it, limiting its scope to move forward with another such as this, which is likely accordingly to come back before the new European Parliament once this is elected next year.

This will postdate Brexit in March 2019, thus leaving the UK with no say in the passage or otherwise of any such legislation. Whether any resulting legislation applies to the UK will depend on whether the UK and EU can agree the terms of the Withdrawal Agreement before Brexit, and if they do whether any such legislation enters into force before the end of the transitional period at the end of 2020 as provided for by the current draft of the Withdrawal Agreement.

If this measure passes, the UK will be under no obligation at the end of the post-Brexit transition period subsequently to retain it as part of the national SPC system it has committed to establish, giving the UK an early post-Brexit opportunity to show with which side of the industry it stands.

Trevor Cook is a partner at WilmerHale in New York, but previously worked in London. He can be contacted at: Trevor.Cook@wilmerhale.com