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Manufacturing waiver for supplementary protection certificates proposed


Generic drugs companies will be free to manufacture new products for non-EU markets during the period that supplementary protection certificates (SPCs) are in force under proposed new EU laws.

Plans to introduce a manufacturing waiver for SPCs have been outlined by the European Commission. It said that without the measure "the viability of the manufacture of generics and biosimilars" in the EU "could be under threat".

SPCs serve to extend the life of patents owned by pharmaceutical manufacturers by up to a maximum of five years. 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.

SPCs 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.

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

The Commission said, though, that those existing rules place generic and biosimilar drug manufacturers based in the EU "at a significant competitive disadvantage compared with manufacturers based in third countries that offer less or no protection".

The new manufacturing waiver would enable manufacturing that would otherwise infringe an SPC to take place during the time the certificate applies to take place "for the exclusive purpose of export to third countries; or any related acts strictly necessary for making or for the actual export itself", according to the proposals.

Non-binding recitals accompanying the Commission's proposed new regulations offer detail on the scope of the new exception planned.

"[The manufacturing waiver] should cover the making of the product, including the product which corresponds to the medicinal product protected by a supplementary protection certificate in the territory of a member state, for the exclusive purpose of export to third countries, as well as any upstream or downstream acts by the maker or by third parties in a contractual relationship with the maker, where such acts would otherwise require the consent of the certificate-holder, and are strictly necessary for making for the purpose of export or for the actual export itself," the recitals said.

"For instance, such acts may include the supply and import of active ingredients for the purpose of making the medicinal product to which the product covered by the certificate corresponds, or temporary storage of the product or advertising for the exclusive purpose of export to third country destinations," it said.

"The exception should not cover placing the product made for the exclusive purpose of export on the market in the member state where a supplementary protection certificate is in force, either directly or indirectly after export, nor should it cover re-importation of the product to the market of a member state in which a certificate is in force. Moreover, it should not cover any act or activity for the purpose of import of medicinal products, or parts of medicinal products, into the Union merely for the purposes of repackaging and re-exporting," it said.

Generic and biosimilar drug manufacturers would face a number of new obligations under the planned reforms. They would be required to disclose their intended manufacturing operations to national drugs authorities, notify their supply chain that the drugs they are making are intended for the exclusive purpose of export outside of the EU, and label their drugs with a dedicated logo to mark out that they are intended for export to third countries and not for distribution in the EU.

The Commission previously consulted on the possible introduction of a manufacturing waiver last year. The reforms, if introduced, would be subject to review after five years, according to its proposals.

Dublin-based life sciences specialist Karen Gallagher of Pinsent Masons, the law firm behind Out-Law.com, said that the Commission’s proposal will have "a mixed reception" in Ireland.

She highlighted criticism already expressed by the Irish Pharmaceutical Healthcare Association, which represents the research-based pharmaceutical industry in Ireland. It has said that the proposed Regulation would be a "a setback for an industry centred on innovation" and that "focus should remain on creating the best conditions required for the discovery and delivery of new medicines and the attraction of fresh investments to Ireland".

Gallagher said: "Research-based pharmaceutical companies might take comfort from the fact that the proposal does contain a number of safeguards aimed at ensuring that products are not diverted on to the EU market, and that the proposed new law will not apply to existing SPCs, or pending applications. However, this does not address the concerns of those companies in relation to potential lost market share to generic competitors in export markets."

The plans will be welcomed by generic and biosimilar manufacturers based in Ireland, though, Gallagher said.

"If enacted, they will allow these companies to utilise their Irish manufacturing facilities for the purposes of producing products for non-EU markets," Gallagher said. "Such companies will also then be well positioned for an EU launch, subject to marketing authorisation approval, when the originator’s SPC expires in the EU. As the European Commission notes in its explanatory memorandum to the proposed Regulation, the additional administrative burden imposed on generic and biosimilar manufacturers in complying with notification and labelling requirements should be offset by these benefits."

Gallagher said that there are already rules in place in Ireland, like the UK and elsewhere in the EU, to enable generic drug manufacturers to engage in certain preparatory work for launch during the lifetime of patents under the so-called Bolar exemption.

She said: "For example, the Bolar exemption permits clinical studies and trials directed at obtaining a marketing authorisation in third countries. The introduction of an SPC manufacturing waiver in Ireland may be viewed by some as a natural extension of this broad policy approach."

Dr Julia Traumann, also a specialist in life sciences and patent law at Pinsent Masons in Munich, said German-based generics and biosimilar companies may have wanted the European Commission to go further with its proposals.

Traumann said: "In order to fully remove the competitive disadvantages EU-based manufacturer of generics and biosimilars currently face and to really strengthen the security of supply, generics and biosimilar companies would have hoped to have been enabled to produce medicines that are needed in Germany for supply the day after the end of all protection rights in Germany. The Commission's proposals create a situation whereby it is likely that medicines produced in Germany will be exported but that medicines sold the day after expiry of all protection rights in German pharmacies are manufactured abroad."

UK-based experts in life sciences regulation Catherine Drew and Charlotte Weekes said the new rules would still prevent generic and biosimilar manufacturers from stockpiling medicines pre-SPC expiry, for sale into EU markets once the SPC has expired. Further, the new notification and labelling requirements those companies would face in order to export products appear onerous and potentially expensive. With this in mind it is unclear if the proposal represents the 'win' for those manufacturers that it is presented as, they said.

Weekes said: "Whilst the proposal states that the waiver 'indirectly, favours their timely entry onto the EU market upon SPC expiry', I am not sure that the new waiver really can speed up the entry of EU manufactured generics and biosimilars to the EU market in this way. From the innovator perspective, they would argue that stockpiling in readiness for competitors to launch upon SPC expiry puts them at a disadvantage. They will still face competition on day one post-expiry, but it would be because non-EU manufacturers can manufacture and import."

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