Out-Law / Your Daily Need-To-Know

Export manufacturing waiver moves closer

Out-Law News | 21 Feb 2019 | 9:40 am | 4 min. read

EU law makers have agreed to update intellectual property (IP) laws to allow European manufacturers of generic and biosimilar medicines to better compete in global markets, but a body representing some of Ireland's biggest pharmaceutical companies has said the proposals could undermine investment in new drugs.

Political agreement on a new 'export manufacturing waiver' was reached by negotiators for the European Parliament and Council of Ministers last week, and that deal has now been endorsed by Coreper, the Council's Permanent Representatives Committee, on Wednesday.

Experts at Pinsent Masons, the law firm behind Out-Law.com, have previously outlined how the new waiver might be received by industry in Ireland and Germany.

The proposed new waiver, which has still to be formally approved, would allow producers of generic or biosimilar medicines to manufacture in the EU even if the relevant originator products benefit from a supplementary protection certificate (SPC).

The initial draft of the waiver by the Commission proposed to allow manufacturing carried out for the purpose of exporting to non-EU markets where patent protections for the originators have expired or were never registered in the first place. The European Parliament subsequently proposed that it should also apply to stock-piling in the last six months in which the SPC is valid.

A series of notification and labelling requirements set out in the draft Regulation provide further conditions on the waiver's application.

Initially, only SPCs applied for on or after the date of entry into force of the regulation would be impacted by the new waiver rights. The scope of the waiver would be extended after three years of the new rules being in force and apply to all SPCs applied for before the new rules came into force but which became effective after that date.

SPCs serve to extend the life of patents owned by pharmaceutical manufacturers by up to a maximum of five years. They are provided for under an EU regulation which is directly applicable across the whole of the EU, although they have to be applied for separately in each EU country.

The rationale for SPCs is to compensate patent holders for the period of patent protection during which they are prevented from commercialising their products owing to the lengthy drug approval process. Patent protection lasts 20 years but it often takes drugs companies around a decade to develop new medicines and gain marketing authorisation.

Currently, however, generic and biosimilar drug manufacturers based in the EU cannot begin their manufacturing operations while rights are in force. This restriction applies even in relation to exporting outside the EU to patent-free territories.

The European Commission has said, though, that updating the existing rules to introduce the new export manufacturing waiver "will support Europe's pharmaceutical manufacturing base and Europe's pioneering role in research and development of biosimilars" and is expected to lead to at least €1 billion per year in net additional export sales and the creation of 25,000 jobs over 10 years.

"The amended rules preserve the strong existing IP rights in order to encourage innovation and research in the EU, but will make it easier to for EU companies to export generic and biosimilar medicines to third countries where IP protection has expired or never existed," the European Commission said in a statement. At present, non-EU based generic and biosimilar manufacturers can start selling in Europe immediately upon expiry of SPCs whereas those based in the EU are unable to do so, nor sell products globally, where no such rights exist.

However, the proposals are controversial and legislators have found it difficult to strike a balance which is acceptable to both the originator side of the industry and generic and biosimilar manufacturers. The latest proposals have been labelled as "a gamble on the future of medical innovation" by the Irish Pharmaceutical Healthcare Association (IPHA), which represents the research-based pharmaceutical industry in Ireland. Members of the IPHA include Abbvie, Bayer, GSK, Pfizer, Roche, Sanofi and Shire.

An IPHA spokesperson told Out-Law.com: "The changes debated by lawmakers in Brussels risk impacting negatively on patients living with unmet medical needs. They will significantly weaken Europe’s research and development proposition, risking investment and jobs in our industry, and healthcare outcomes that depend on advanced medicines discovery activity."

"In particular, stockpiling without adequate safeguards risks the further erosion of IP rights, sending the wrong signal to global investors and innovators. It is important that the industry continues to flag concerns as legislators vote on the measures over the coming short period," they said.

Other industry bodies in Ireland have been more supportive of the new waiver.

David Delaney, vice-chairman of Medicines for Ireland, said last year that the reforms "will result in a more competitive medicines market", improve access to medicines both in Europe and elsewhere, "and spur on the development of more affordable generic and biosimilar medicines across Europe".

The notification regime has, however, come in for criticism from Medicines for Europe, which represents the generic and biosimilar medicines industry.

"We deeply regret that the manufacturing waiver includes unnecessary and redundant notification requirements," Medicines for Europe said in a statement. "This will require generic and biosimilar medicines manufacturers to publish commercially confidential information to allegedly prevent our industry from circumventing the rules of the waiver – notably the re-import of medicines manufactured under the export waiver for day one launch. This is obviously redundant now that the manufacturing waiver also authorises its use for day one launch manufacturing."

"Medicines for Europe therefore calls on authorities to closely monitor any potential misuse of the notification system for frivolous litigation which could delay competition from generic and biosimilar manufacturers in markets where SPCs have expired," it said.

Elżbieta Bieńkowska, the EU commissioner responsible for the internal market, industry, entrepreneurship and SMEs, said, though, that the waiver will remove "a major competitive disadvantage of EU manufacturers who will soon be able to compete on equal terms on global markets where competition is fierce".