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SPC waiver benefits all manufacturers says European Commission officer

Alfonso Callez-Sanchez explains the reasoning behind the waiver proposal, including how it was intended to benefit the entire pharmaceutical industry and spur competitiveness in the EU


A European Commission policy officer has said the Supplementary Protection Certificate (SPC) Manufacturing Waiver was developed to balance the interests of both originator and generic pharmaceutical manufacturers.

Speaking at the Pharmaceutical Patent Term Extensions conference in Munich last month and answering questions from industry stakeholders, Alfonso Callez-Sanchez set out the reasoning behind the Commission’s initial exemption proposal and how it expects parties to use the waiver.
He said that the EU’s executive body looked at the pharmaceutical industry as a whole when it was considering the proposal, including how originators often operate in the generics space and vice versa, and the manufacturing activities that are relevant to both sides.
“What if I were an originator and planned to manufacture in Europe because it is a high-income area, but I see that there are no active pharmaceutical ingredient manufacturers and some manufacturing sites are closing because they want to go abroad?
“Perhaps I will follow them and not stay in Europe,” he said.
He added that in this way the waiver benefits both sides of the pharmaceutical industry and, more importantly, enables them to attain competitive advantage within the EU.
The SPC Waiver was proposed by the Commission after a study was conducted by the Max Planck Institute of the bloc’s SPC framework. The original proposal only set out provisions for the manufacture of SPC-protected goods for export to countries where the SPC had expired or never existed.
Subsequent iterations of the regulation that emerged through the European Parliament included a stockpiling provision as well, enabling generics and biosimilar makers to manufacture an SPC-protected product six months before the SPC’s expiry for launch in the EU market.
Callez-Sanchez pointed out that as the Chinese and other pharmaceutical sectors grow, it is more important than ever for Europe to cater to manufacturers. The bloc cannot do that if Europe-based makers are unable to compete with manufacturers in other countries that can already manufacture drugs for day-one launch in Europe and for jurisdictions without SPCs.
The project, he said, was not about driving down the price of medicines or simply benefitting generics and biosimilar makers but increasing the competitiveness of drug makers that choose to operate in Europe.
The Commission conducted an impact assessment of the waiver and concluded that it was the best way to solve the competitiveness problem in the EU while preserving the core objective of SPCs – to give protection and incentives to originators.
The SPC Waiver was published in the Official Journal of the EU on June 11 and came into force last week. The waiver will not apply to SPCs already in effect by the time the regulation came into force but will apply to those filed for before July 1 2019 – however, these SPCs will only be subject to the waiver after July 1 2022. The waiver will also cover SPCs applied for after July 1 2019, as soon as they come into effect.
Patent Strategy reported at the end of June on how in-house counsel are starting to prepare for the waiver.

Industry questions

As well as questioning the economic reasoning behind the SPC Manufacturing Waiver, industry stakeholders were also keen to ask about whether the Commission considered manufacturing confidentiality and the complexities of drug supply chains.
Generics manufacturers were quick to point out that one of their biggest concerns during the conversation to implement a manufacturing waiver was the risk to them of having a notification protocol.
Under the notification provisions, generics and biosimilar manufacturers making use of the waiver must notify the relevant authority in the member state where the manufacture of an SPC-protected drug is taking place and provide information to the SPC holder.
Robin Ellis, who was head of patent and IP product strategy at Sandoz at the time of speaking and is now a partner at Reddie & Grose in Munich, explained that without the notification provision, it is potentially difficult for other businesses to discover where a generic company is manufacturing a drug.
“That is a large bit of information we have to hand over to the SPC holder, which owns more than one SPC and has a lot of secondary patents,” he said.
Callez-Sanchez said this was indeed a hotly-debated topic but that the Commission decided that it was important that notification be given. He added that generics manufacturers are protected in the sense that they do not have to disclose which manufacturing plant they are producing the drug in, but only the country where manufacturing is taking place.
“We understand this challenge, and once the waiver has been in force for five years and we have more data, we will go back and see how these aspects work.”
Callez-Sanchez also addressed industry questions on what sort of actions in supply chains might be considered to be related acts that are strictly necessary for the actual export of an SPC-protected drug outside the EU, which are exempted from infringement under the waiver.
In a situation where a generic made an active pharmaceutical ingredient (API) in Germany and then a medical product containing the API in Spain before exporting it to Canada, the making of the API could be considered a related act. Similarly, if an API were made in Austria and then transported to Belgium for shipping to Japan, that could also be considered a related act.
He noted that it is ultimately up to the Court of Justice of the EU to interpret the legislation, but said he hoped that the waiver would not give rise to too many referrals.
The SPC Waiver is now in force and pharmaceutical firms will have to deal with its provisions and any consequences that might arise in the coming years. For now, companies might want to get a better idea of what they can and cannot do with the waiver before that time.


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