Generics closer to gaining new EU manufacturing waiver

Out-Law News | 18 Jan 2019 | 12:05 pm | 3 min. read

Plans to give generic drugs companies more freedom to manufacture new medicines in the EU more quickly moved closer to becoming law after they were endorsed by an EU law-making body earlier this week.

The proposed new 'manufacturing waiver' would allow producers of generic medicines to manufacture rival products to original medicines in the EU even if those originators benefit from a supplementary protection certificate (SPC). However, the waiver would only apply if the manufacturing is being carried out for the purpose of exporting the rival generic products to non-EU markets where patent protections for the originators have expired or were never registered in the first place.

The draft EU regulation (18-page / 446KB PDF) providing for the new waiver also sets out further conditions that generic drug manufacturers would need to meet, including in relation to disclosures and labelling, to benefit from the waiver.

"This is at least partly good news for the European generics and biosimilars manufacturers and will certainly be welcomed by the generics and biosimilars industry in Germany as a first step," said Munich-based intellectual property law expert Dr Julia Traumann of Pinsent Masons, the law firm behind

"It is expected that manufacturing within the EU will further lead to enhanced security and quality of supply, reduced counterfeits and uncertainty due to import reliance. However, it remains to be seen whether some additional requests of generics and biosimilars industry regarding the proposal will be implemented, especially with regard to amending the disclosure requirements on commercially sensitive and confidential information within the notification requirement and the permission to manufacture for day-one market entry in the EU," she said.

Dublin-based IP law expert Aoibheann Duffy also of Pinsent Masons said the latest development is likely to receive a mixed reaction in Ireland.

"This development will be welcomed by makers of generics and biosimilars in the EU, as although stockpiling for launch on the EU market is not permitted it will enable them to build up production capacity with a view to selling into the EU once SPCs expire," Duffy said. "The plans are of particular interest to the large number of generics and biosimilars manufacturers based in Ireland."

"SPC holders are likely to be less enthusiastic about the proposed changes. The Irish Pharmaceutical Healthcare Association (IPHA), which represents the research-based pharmaceutical industry in Ireland, has previously criticised the proposal and stated that 'without in-built safeguards, the change will not incentivise new innovative medicines, new jobs or new investments'," she said.

Duffy said: "The draft regulation aims to strike a balance between the interests of EU based generics and biosimilar manufacturers and the legitimate interests of SPC holders. It includes safeguards such as a requirement for makers of generics and biosimilars to notify both the authority that granted the SPC and the holder of the SPC, three months before manufacturing begins. It also imposes labelling requirements on the manufacturer, as well as due diligence requirements, such as a duty to inform persons within its supply chain that a particular medicinal product is covered by the exception and is only intended for export."

While the proposals, initially set out by the European Commission last year, were backed by the Council of Ministers on Wednesday, MEPs must also approve the changes for the draft regulation to enter into EU law. The Council of Ministers is made up of representatives from the national governments of the 28 EU member states.

The Council of Ministers said: "Thanks to the waiver, EU-based makers of generics and biosimilars will be entitled to manufacture a generic or biosimilar version of an SPC-protected medicine during the term of the SPC if done exclusively for the purpose of exporting to a non-EU market where protection has expired or never existed."

"The draft regulation is expected to remove the competitive disadvantages faced by EU-based manufacturers of generics and biosimilars vis-à-vis manufacturers established outside the EU in global markets, but also in day-one EU markets by building up production capacity," it said.

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 patent rights are in force. This restriction applies even in relation to exporting outside the EU to patent-free territories.

According to the Council of Ministers, the manufacturing waiver will only initially apply to SPCs that are applied for on or after the date of entry into force of the regulation. That initial period is proposed to last three years from the entry into force of the regulation. Thereafter, the waiver will also affect SPCs applied for before the entry into force of the regulation, but which become effective after the entry into force of the regulation.