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The European Commission’s effort to relax supplementary protection certificates to help generic-drug makers and biosimilars producers has sparked strong opposition from the research-based pharmaceutical sector.
The European Commission, the Brussels-based European Union executive, mentioned in a strategy document (1) in 2015 possible changes in the system under which research-based pharmaceutical companies have been able to extend their patents on their new medicines through the granting of five-year supplementary protection certificates (SPCs). Among the alterations to the SPC rules suggested by the commission was one that would provide a waiver for generic and other drug producers to allow them to make, but not market, medicines covered by the extended patents. The commission, however, in October 2017, put forward for public consultation a list of proposed SPC improvements, including a manufacturing waiver. After the consultation ends early next year, the commission has indicated that it would then start work on drawing up firm proposals to include possible amendments to existing EU legislation.
“The commission has been a little bit slow in doing something about this issue, but now the process for making changes has started,” says Adrian van den Hoven, director general of Medicines for Europe, a lobby group representing generic drug and biosimilar medicine manufacturers. “We are hoping that if everything goes smoothly, the changes will come into force in one and half to two years, with the manufacturing waiver being the priority for us.” The organization wants new rules that will enable large quantities of a drug to be manufactured during its SPC protection period to take advantage of the expiry or non-existence of the protection certificates in non-EU markets. The waiver should also be applicable in the EU itself so that generic-drug or biosimilar producers can launch their products immediately in European markets as soon as the certificates expire.
“There is a relatively large number of blockbuster drugs, many of them biopharmaceuticals, whose SPCs are expiring in Europe over the next few years,” van der Hoven told Pharmaceutical Technology Europe. “That is an opportunity we want to take full advantage of.” Furthermore, manufacturing waivers would help to make the European generic drugs and biosimilars sector more competitive internationally, attract investment in EU drug manufacturing capacity, and help create thousands of new jobs in the industry, according to Medicines for Europe (2).
Manufacturing waivers for bulk production of medicines during the SPC period is, however, being opposed by many drug innovators on the grounds that it is weakening their intellectual property rights. Rather than strengthening the European pharmaceutical sector, it would undermine its R&D capabilities. “[We] believe that the introduction of an SPC manufacturing exemption would be detrimental to medical innovation and Europe’s knowledge-based economy,” a spokesman for the European Federation of Pharmaceutical Industries and Associations (EFPIA), representing the research-based sector, told Pharmaceutical Technology Europe.
SPCs were first introduced in Europe in the early 1990s as a means of compensating drug originators for the lengthy testing and clinical trials that their products needed to gain marketing authorizations. Because of stricter regulatory requirements, the 20-year protection period for drugs was effectively being reduced to 10 years or less. By 2015, the number of SPCs issued in Europe had reached 20,000, a figure that the European Commission said showed how important they were to medicine developers.
Generic-drug and biosimilar producers and small medium-sized enterprise (SME) innovators, particularly small biotech companies, have long complained that the rules on SPCs have restricted the quantities of SPC drugs they can manufacture during the five-year protection period. Bolar exemptions first introduced in the EU legislation (3) in 2001 allow manufacturing of SPC-covered drugs for research or testing purposes to provide data for marketing and other regulatory approvals. But like SPCs themselves, the Bolar exemptions are granted on a national basis by the 28 EU member states, which has led to variations in their scope. Some only apply to development work for national or EU marketing authorizations and others for approvals outside Europe and anywhere in the world.
The generic-drug and biosimilar producers in Europe are focusing on achieving legislative changes that will enable them to manufacture sufficient quantities of a drug during the SPC period to supply markets that do not have SPC regulations or where the certificate on a medicine has expired. Their major target is the right to stockpile a medicine so that they can immediately launch it on the EU market as soon as its SPC expires. The commission’s eventual proposals for alterations to the SPC system in the EU may fall short of what the generic-drugs and biosimilars sector wants.
The proposals (4) listed by the commission for the public consultation include, among three options, one of no change. The other two are the use of non-legislative instruments to improve the implementation of existing rules and the introduction of amendments to existing EU legislation to allow manufacturing waivers for stockpiling purposes. At the same time, as it launched the consultation, the commission published a study (5) by the UK-based consultancy Charles River Associates (CRA) on the economic impact of the SPC manufacturing waiver and a broadening of the Bolar research exemptions. The study, which was funded by the commission, was completed in 2016.
The CRA report (5) concludes that the manufacturing waiver would pose minor threats to the innovative sector while boosting sales, investment, and jobs in the generic-drugs and biosimilars segment. Among the main benefits would be more investment in pharmaceutical R&D and in manufacturing, €9.5 billion (US$11 billion) additional net sales for the EU pharmaceutical industry, and the creation of 25,000 direct jobs and 100,000 indirect ones.
For the EU generic-drug makers and biosimilar producers, the biggest gain would be from an exemption on their manufacturing SPC drugs for export to third, mainly non-European, countries where SPC protection had expired or does not exist. Export generic-drug sales would go up by an additional €7.6 billion while sales of branded medicines are expected to fall by only up to €278 million. The net sales rise would be equivalent to an increase in EU pharmaceutical exports of up to 18%, according to CRA. Biosimilar export sales would increase by nearly €3 billion.
A significant bonus from the broadening of the Bolar exemption would be the likely benefit to EU-based suppliers of APIs at a time when the vast majority of APIs in the European market are being imported from Asia. The CRA study estimated that sales by third-party European generic-API producers could increase by up to 29%, equivalent to an additional €180 million in annual sales by 2030.
The combined effects of the SPC export waiver and the extension of the Bolar exemption could result in additional EU API sales of €254 million by the end of the next decade. However, the figures and conclusions of the CRA report are being disputed by other consultancies as well as originator representatives such as EFPIA.
“The potential negative impact of the adoption of an SPC manufacturing waiver on the R&D-based pharmaceutical industry has been underestimated,” says the EFPIA spokesman. “Recent studies find that the adoption of such a measure would lead to the loss of between 4500–7700 direct jobs in the [research-based] industry with an additional 19,000–32,000 indirect job losses. It would also result into a decrease of between €215–€364 million in R&D investment.”
Also, the opportunities for exporting European generic drugs to non-European markets prior to an SPC expiry had been exaggerated. Often, SPC extensions in Europe during which generic-drug companies could be entitled to a manufacturing waiver, expire earlier or only a little later than the intellectual property rights for medicines in other non-EU markets, according to EFPIA.
In a report (6) on the impact of the introduction of SPC exemptions on the biopharmaceuticals sector, Pugatch Consilium, a consultancy in Bicester, England, points out that many non-EU generic-drug and biosimilar markets have erected trade barriers to restrict imports from areas such as Europe. “Why would India and Brazil or other emerging markets favour European generic [-drug] manufacturers as opposed to their own domestic ones?” asked David Torstensson, partner at Pugatch and author of the report (6). “In many cases, they already have a policy framework in place that actively discriminates against foreign competitors,” he continued. “Such localization policies often include price preferences in government tenders; import bans and increased taxation on foreign products; and local affiliation and/or production requirements. As a result, locally-produced generic drugs can take as much as 90% of the local generic-drug market in many emerging markets.”
EFPIA has urged that in areas where improvements to the SPC system are considered to be necessary, a non-legislative approach should be taken. Without legislation, there would be no manufacturing waiver, which would be a major disappointment to the generic-drugs and biosimilars sector. It will also reinforce the view within the European pharmaceuticals sector that it needs to act together on key issues like patents and patent exemptions.
“The manufacturing waiver is something which helps the European pharmaceutical industry as a whole,” says van den Hoven. “The research-based sector knows it is a good step for the generic drugs and biosimilars sector. If there was something being considered which was good for them, we would not try to block it.” At the moment, a united front within the industry on matters such as the manufacturing waiver and even other SPC exemptions seems a long way away.
Pharmaceutical Technology Europe
Vol. 29, No. 12
When referring to this article, please cite it as S. Milmo, “Disputes Over Manufacturing Waiver and Other SPC Exemptions,” Pharmaceutical Technology Europe 29 (12) 8–9 (2017).