SPC manufacturing waiver for export (and stockpiling)

February 2019

On 28 May 2018, the European Commission published its proposal to introduce a SPC manufacturing waiver for export purposes (reported by Synapse, June 2018). The proposal would see the introduction of a manufacturing exemption to the SPC Regulation. The purpose of the waiver is to allow EU-based manufacturers of generics and biosimilars to manufacture a product, protected by an SPC, in the territory of a Member State for the purpose of exporting to non-EU markets where patent or SPC protection has expired or never existed.

Current Status

So far, there have been a number of reports and opinions from committees of the EU Parliament, examining the proposal. These crystallised in proposed amendments in a Report published by JURI (the standing committee for Legal Affairs) on 28 January, which followed not long after a final Mandate from the European Council, on 16 January 2019, setting out the Council's desired amendments. Further to a 'trialogue' negotiation between Council and Parliament (with assistance from the Commission), a single draft text has now been agreed, which must now be formally approved by Parliament. Although it is tight, the expectation is that this will happen by the end of the existing Parliamentary term in April 2019.

Stockpiling and safeguards

As to the substance of the agreed text, the most contentious issue has been the stockpiling period for the purpose of marketing in the EU member states after SPC expiry. The Commission proposal never included a stockpiling period and nor did the Council Mandate. However, in its JURI Report, Parliament had proposed an amendment seeking a two year period in which product could be kept before SPC expiry. In the agreed text following the trialogue, this period has been reduced to six months.

Negotiation has also focused on 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 in the draft agreement are:

  • As originally set out in the Commission proposal, an obligation for businesses to provide a notification to public authorities of their intention to commence manufacturing and in which member state. Such information would include the location of the premises, SPC number, authorisation details for the manufacture of the product and an indicative list of the intended third countries to which the product will be exported. Notification must take place no less than three months in advance of the making or other activity relevant to the waiver.
  • A notification must also be made to the SPC holder including: the name and address of the manufacturer; the relevant SPC number; an indication of whether the making is for the purpose of export, for the purpose of storing, or for the purpose of both export and storing; the member state where the making and, if applicable, the storing is to take place; and, the reference number of the marketing authorisation or equivalent in each third country of export. Notification must take place no less than three months in advance of the making or other activity relevant to the waiver.
  • 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.
  • Labelling requirements for the export of products outside the EU have also been agreed. These will require an export logo to be attached to the outer packaging of the product or of the medicinal product containing that product and, where feasible, to its immediate packaging.

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

Transitional arrangements

The agreed text stipulates that those SPCs that entered into effect before the date of entry into force of the waiver, will not be affected by it. There are then two categories of SPC to which the waiver would apply:

  • Certificates that are applied for on or after the entry into force of the waiver.
  • As from 1 July 2022*, those SPCs applied for before the waiver comes into force and which enter into effect on or after that date of entry into force.

*Note that this date will be replaced with a date that is three years after the waiver actually comes into force. The transitional arrangements provide SPC holders with a period of time to prepare for the waiver but also a long-stop date after which it will apply to new SPCs.

What is the impact of Brexit?

Will the waiver come into effect in the UK? The simple answer is that it depends on whether the UK agrees to the draft Withdrawal Agreement for exiting the EU, or not. If not, and subject to delays in the Brexit date, the waiver will not be effective in the UK, because it is expected to come into force after the date of Brexit on 29 March 2019. In this case, the UK may decide to implement its own, domestic version, of the waiver. But it will not be compelled to do so. If there is agreement to the Withdrawal Agreement, the amended SPC Regulation that provides the waiver will also take effect in the UK.

The big issues

The standout feature in the text agreed after the trialogue is the insertion of the six month stockpiling period into the manufacturing waiver. Opinion is strongly divided on this issue: generic manufacturers are typically in favour of the waiver and originator companies holding SPCs are against it. Those on the latter side will consider this an unjustified springboard to launch inside EU member states as soon as SPC protection expires.

Generic companies, on the other hand, will consider it a fair measure which is necessary to be able to manufacture for export because there must be a period of storage before the product can be exported to prepare for launch and be ready on the EU market on the first day of expiry. What will be much less popular for generic companies is the notification they must give to SPC holders and the amount of information they must supply.

Final approval by the EU Parliament is awaited.

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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Matthew Royle

Matthew is a partner in our London office specialising in patents law.

Paul England

Paul is a senior professional support lawyer in our London office specialising in patents law.

"...the most contentious issue has been the stockpiling period for marketing in the EU after SPC expiry."