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June 2018

On 28 May 2018, the European Commission published its proposal to introduce a manufacturing waiver for supplementary protection certificates (SPCs). The Commission's proposal comes out of a public consultation on SPCs and patent research exemptions (which we previously reported on here), in which it is also considering the creation of a unitary SPC and scope of the Bolar exemption.

Introduction of an SPC manufacturing exemption

Currently, EU manufacturers of generics and biosimilars cannot, during the SPC term of a product in the EU, manufacturer for any purpose, including export outside the EU to countries where SPC protection has expired or does not exist, whilst manufacturers based in those non-EU countries are free to do so. The Commission considers that this competitive disadvantage creates a risk of delocalisation of manufacturing outside the EU and loss of investment opportunities.

The Commission's proposal would see the introduction of a manufacturing exemption to Article 4 of Regulation (EC) No. 469/2009 (the "SPC Regulation"), whereby EU-based manufacturers of generics and biosimilars may manufacture a product protected by an SPC, in the territory of a Member State during the SPC term, for the exclusive purpose of exporting their products to non-EU markets where patent or SPC protection has expired or never existed. The exemption would only apply to SPCs that have not yet been granted and only after a transitional period to accommodate pending SPC applications.

The Commission considers that the exemption will create investment and job opportunities in the manufacturing of generics and biosimilars in the EU, generating additional growth of at least €1 billion per year in net EU exports and would create up to 25,000 extra high-skilled jobs over 10 years. Further, the waiver will contribute to a more timely onset of competition in EU markets for medicines upon expiry of SPCs, as manufacturing capacity established for export purposes could then be used to enter the EU market as and from SPC expiry in the EU.

Safeguards to prevent circumvention of the exemption

The proposal would also see a series of safeguards introduced to ensure transparency and avoid the possible diversion onto the EU market of generics and biosimilars manufactured for export purposes during the SPC term. The safeguards include:

• An obligation for businesses to provide a notification to public authorities of their intention to commence manufacturing and the information contained in that notification would be made public. Such information would include the location of the premises, SPC number, authorisation details for the manufacture of the product, the intended start date for manufacturing and an indicative list of the intended third countries to which the product will be exported.
• An obligation on the manufacturer to inform its supply chain that the products in question are for export only, and that placing on the market, import or reimport of the products to the EU might infringe an SPC.
• Specific labelling requirements for the export of products outside the EU that are protected by an SPC.

The Commission considers that the combined effect of these measures will make it easier for both SPC holders and public authorities to detect and address infringements by existing means through the national courts, such as injunctive relief, or other control mechanisms including market surveillance and customs control.

The European Parliament has set a target implementation date of before 2019. Once adopted by the European Parliament and Council, it will be directly applicable in all EU Member States.

The UK Intellectual Property Office is seeking comments on the Commission's proposal by the end of June 2018, to assist inform working group discussions on the proposal between EU member states.

If you have any questions on this article or would like to propose a subject to be addressed by Synapse please contact us.

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