Officials are considering adding an “export manufacturing waiver” to the Supplementary Protection Certificates (SPCs) that extend patent protection. The waiver would allow companies to manufacture drugs covered by SPCs at sites in Europe, provided the products are destined for export to markets in which patent protection has lapsed or never existed.
The Commission is proposing the waiver to enable companies based in the European Union (EU) to meet demand for biosimilars and generics in emerging markets and other overseas territories. Currently, SPCs can prevent manufacturers from using their European operations to supply drugs for export, potentially making them less competitive than their foreign peers.
With blockbuster biologics losing patent protection in the next few years, the Commission thinks the situation needs addressing soon to ensure Europe cements its leadership position in the nascent biosimilars sector. The Commission hopes doing so will bring lots of jobs and money to Europe.
“This will help create growth and high-skilled jobs in the EU. It could generate €1bn ($1.2bn) net additional sales per year and up to 25,000 new jobs over 10 years,” said Elżbieta Bieńkowska, Commissioner for Internal Market, Industry, Entrepreneurship and SMEs.
The effect of SPCs on exports is one of the problems identified by European officials during reviews and consultations in recent years. The other is the effect of SPCs on European manufacturers’ ability to corner the domestic market when a drug loses patent protection.
While companies in Europe cannot make a drug until its SPC lifts, manufacturers based overseas can. That means foreign manufacturers can have products ready for the day a drug comes off patent, at which time local firms will only just have gained clearance to start production.
The manufacturing waiver does not deal directly with this day-one issue but the Commission hopes it will have some effect on the perceived problem.
“A manufacturer having set up a manufacturing line for export purposes will easily be able, after SPC expiry, to use the same line to manufacture generics or biosimilars with a view to swiftly supplying the EU market,” wrote the Commission in an explanation of the proposal.
Pharma backlash
The Commission sees the waiver as a sensible solution to real problems. Manufacturers of innovative small molecules and biologics view the situation very differently.
In a white paper on the proposed waiver, the European Federation of Pharmaceutical Industries and Associations (EFPIA) questioned whether the policy will achieve its objectives and said it may create friction between the EU and its trading partners.
EFPIA’s dissection of the effect of the waiver cited data showing SPCs rarely expire long after drugs lose patent protection overseas, suggesting the policy will open up few opportunities for producers of biosimilars and generics. The analysis also claimed the ability of manufacturers to quickly adapt production processes means the perceived day-one issue has little effect on the competitiveness of European companies.
While EFPIA thinks the benefits are limited, the trade group perceives clear downsides to a policy it sees as devaluing the European intellectual property framework and deterring investment in the region.
“The Commission’s proposal is inconsistent with its own ‘innovation-driven economy’ vision, jeopardising long-run innovation potential and dynamic benefits for uncertain short-term and low-value gains,” said Koen Berden, EFPIA’s leading trade expert.
EFPIA made these arguments during earlier discussions about the waiver, only for the Commission to find the case made by manufacturers of off-patent products more compelling. The proposal has now passed to the Council of the European Union for further discussion.