European Commission proposes to amend current SPC Regulation
- July 5, 18
The European Commission recently proposed an amendment to the supplementary protection certificate (SPC), a key regulation that grants additional intellectual property rights to patent holders on a wide range of biologically active compounds such as medicaments, veterinary drugs, herbicides and insecticides. The draft legislation, which was presented on 28 May 2018, calls for an “export manufacturing waiver” that would effectively supersede most of the conditions enumerated in Article 4 of Regulation (EC) No 469/2009. Under the new regime, the making of medicinal products intended for export to non-EU countries would no longer contravene the patent extensions guaranteed by the SPC application.
Reactions to the announcement were mixed. Some have been quick to praise the initiative, pointing out its potentially beneficial effects on trade and the economy. Others, including numerous organizations and industry groups, have instead received the news with concern, warning about the risk of stifling innovation and venturesome business activity.
A closer look
The waiver should be understood as altering the directives hitherto prescribed in Article 4. According to it, SPC certificates afford no protection whenever the act at hand meets either of the following criteria:
(i) it comprises making for the exclusive purposes of export to non-EU countries, or
(ii) any related act that is strictly necessary for that making or for the actual export itself.
While the former condition requires no further explanation, the latter leaves room for more than one interpretation. Broadly speaking, point (ii). refers to all the ancillary operations that, in one way or another, render the final export possible. This covers contactors as well as generic third parties other than the maker who contribute at an earlier or later stage to the production process, providing for the import, transit, storage, advertisement and sale of the product.
The amendment will affect all certificates issued on or after three months after the ratification of the bill. Certificates granted prior to said date will not be bound by the extension. Conversely, all SPCs awaiting approval will be subject to it.
In order to take advantage of the reformed legal framework, manufacturers are instructed to:
(i) notify the authority of the Member State where that manufacturing is to take place of their intention to commence manufacturing no later than 28 days before the intended start date of manufacturing in that Member State,
(ii) ensure that a particular “EU export” logo is affixed to the outer packaging of the product or, if there is no outer packaging, to its immediate packaging.
Once the draft is formalized, the European Commission will make the proper arrangements to evaluate every five years the safeguards directed by the legislation and to publish official reports.
Pros and Cons
The European Commission is confident that the proposal will spur economic growth and drive job creation over the next 10 years. Based on the latest projections, export sales are expected to increase by a minimum of €1 billion a year, whereas as many as 25,000 new jobs should be added to the economy in the coming decade. Biosimilar and generics organizations have welcomed the decision, and even suggested that the bill’s provisions should account for instances beyond those expressly or tacitly mentioned in the draft, first and foremost the stockpiling of medicaments and other compounds within the European Union before actual release on the market.
At the same time, industry group spokesmen have attacked the SPC waiver, arguing that loosening IP regulations would hurt small businesses and biotech companies whose main assets are proprietary formulas and cutting-edge technology. Economic prosperity on a continental scale, they insist, goes hand in hand with a solid and comprehensive intellectual property rights system.
What to expect now
The first signs have been positive, but the proposal is still far from being signed into law. For this to happen, the amendment must be approved by both the European Parliament and the European Council. The process, most commentators believe, will likely be expedited, given that the 2016 Resolution stressed the need to implement the waiver by the year 2019.
Last but not least, it remains to be seen what the status of the United Kingdom will be by the time the proposal is implemented. If this were to occur before the 29 March 2019 deadline, the new regulation would be legally binding as “retained EU law”. Otherwise, the two parts will come to an agreement in line with the larger transition process under way.