IP rights waiver introduced for generics and biosimilars

The new supplementary protection certificate (SPC) waiver regulation provides the companies with qualified rights to manufacture and store new medicines that are based on originator products even where the originators benefit from an SPC.

There are two main circumstances in which the waiver will apply.

Firstly, it permits manufacturing and related activities that would otherwise cut across an SPC holder's rights where they are undertaken for the purpose of exporting the goods to patent-free territories outside of the EU.

The waiver will also allow producers of generics or biosimilars to store new products in the EU ready for release on the EU market upon the expiry of an SPC during the last six months that the SPC is valid.

The scope of the waiver will extend to all SPCs applied for before the new rules came into force but which become effective after 1 July 2019, only from 2 July 2022.

Generic and biosimilar manufacturers must conform to a series of notification and labelling requirements to be eligible for the waiver.

"The aim of the waiver was to increase manufacture in the EU leading to economic benefits," said patent law and life sciences expert Charlotte Weekes of Pinsent Masons, the law firm behind Out-Law. "The notification requirement was potentially seen as a compromise between intellectual property owners and generics/biosimilars companies’ interests but it will be interesting to see the reaction to it and whether the waiver is utilised. Rather than notify the required information to the SPC holder and for publication on national registers, some larger manufacturers may continue operating as they were before – manufacturing outside the EU – for 'day one' launch in the EU or supplying non-patented territories."

Intellectual property law expert Dr Julia Traumann also of Pinsent Masons said: "A generics or biosimilar producer intending to benefit from the manufacturing waiver has to notify not only the national patent office that granted the SPC in question, using a standardised form, but must also directly inform the SPC holder no later than three months before the intended start of manufacture or the first related act. The competent national patent office will be required to publish the notified information together with the date of notification as soon as possible. Moreover, the national patent offices will be allowed to charge a fee of such notifications."

"The information to be notified to the competent national patent office includes the name and address of the manufacturer; an indication whether the intended manufacture is for the purpose of export, storing, or both export and storing; the EU member state where the manufacture is to take place and, if applicable, the member state where the first related act prior to manufacture is to take place; the number of the SPC in question; and, in the case of export to third countries, the reference number of the marketing authorisation in each third country of export. Any subsequent changes to this information must also be notified," Traumann said.

"The new EU export logo must be affixed to the outer packaging and, where feasible, the immediate packaging of products made for the purpose of export to third countries outside the EU," she said.

SPCs serve to extend the life of patents owned by pharmaceutical manufacturers by up to a maximum of five years. They are provided for under an EU regulation which is directly applicable across the whole of the EU, although they have to be applied for separately in each EU country.

The rationale for SPCs is to compensate patent holders for the period of patent protection during which they are prevented from commercialising their products owing to the lengthy drug approval process. Patent protection lasts 20 years but it often takes drugs companies around a decade to develop new medicines and gain marketing authorisation.

Currently, generic and biosimilar drug manufacturers based in the EU cannot begin their manufacturing operations while rights are in force. This restriction applies even in relation to exporting outside the EU to patent-free territories.

The European Commission has said, though, that updating the existing rules to introduce the new waiver "will support Europe's pharmaceutical manufacturing base and Europe's pioneering role in research and development of biosimilars" and that it will spur at least €1 billion per year in net additional export sales and the creation of 25,000 jobs over 10 years.

MEPs formally endorsed the reforms in April. The Council of Ministers, which contains representatives of the national governments of each EU member state, then followed with its own adoption of the legislation in May. The new regulation, which will apply directly across the EU, was then published in the Official Journal of the EU on 11 June. A 20 day hiatus on entry into force of the new legislation was written into the regulation.