The EU Commission is proposing a targeted adjustment to intellectual property (IP) rules to help Europe’s pharmaceutical companies tap into fast-growing global markets and foster jobs, growth and investments in the EU.
The EU already has a strong IP framework in place but there is always room for improvement. This adjustment aims to remove a major competitive disadvantage of EU manufacturers by creating an ‘export manufacturing waiver’ to supplementary protection certificates (SPCs).
SPCs aim to compensate companies for the length of time that medicinal products are required to undergo testing and clinical trials before regulatory approval while using up part of the term of the original IP agreement, which incentivises research and development of new drugs in the EU. The 'export manufacturing waiver' means that EU-based companies will be entitled to manufacture a generic, or biosimilar, version of an SPC-protected medicine during the term of the certificate - but only if done exclusively for exporting to a non-EU market where protection has expired or never existed.
This does not impact on the actual IP term itself, only on the maximum of five years that the SPC can run for after the IP term has already expired.
What does this mean for IP in practice?
Under existing rules, once an IP term has expired, any company is able to produce these drugs as a generic version for the worldwide market (unless the original manufacturer has an IP agreement that was completed later than the original EU one in any specific country). This means that when the SPC certificate expires, manufacturers outside of the EU already have experience in manufacturing these generic versions; they can compete in the EU market with no local competitors producing generic versions of their own. The waiver ensures that local producers have an advantage when the certificate expires, as they would theoretically already have the production infrastructure in place.
According to Elzbieta Bienkowska, Commissioner for the Internal Market, Industry, entrepreneurship and SMEs, the proposal "strikes a balance between the imperative to ensure the attractiveness of Europe for innovative pharmaceutical companies and the urgency to allow EU-based generics and biosimilar [products] to compete on the global market. This will help create growth and highly-skilled jobs in the EU and could generate €1bn net additional sales per year and up to 25,000 new jobs over ten years. It will particularly benefit many small and medium sized enterprises in the field.”
As a final note, many SPC protections on well-known drugs will lapse from 2020. A significant number of medicinal products will then enter the public domain. This development will generate a significant new market opportunity for highly competitive generic medicines - and the urgent need to amend the existing regulation to ensure that EU SMEs can compete against international producers as the investment decisions on the locale of production are being made well in advance.
This proposal strikes a balance between the imperative to ensure the attractiveness of Europe for innovative pharmaceutical companies and the urgency to allow EU-based generics and biosimilar [products] to compete on the global market.