Diverging before Converging; SPC Waiver and its effect on European Healthcare and Pharma

Co-authored by Todor Finkov, Manager, Pricing, Tenders & Contracts

In 2015, the European Union (EU) set a single market strategy that provided more opportunities to people and business.[i] It enables people, services, goods and capital to move more freely, offering opportunities for European businesses and greater choice and lower prices for consumers.[ii] As for the pharmaceutical industry, one of the main goals was to evaluate the legal aspects of the current Supplementary Protection Certificate (SPC) system and its economic impact.[iii]

HOW DOES THIS TRANSLATE INTO PHARMA?

Policy makers, regulators and the pharmaceutical industry were attracted by the fact that under the current SPC regulation, EU-based medicinal product manufacturers are not permitted to produce and stockpile generic and biosimilar versions of the originator products before their patent and SPC expire. In layman’s terms, it means that companies cannot prepare themselves for the launch of generics or biosimilars. It turns into a minimal access to generics or biosimilars for patients, while limiting the savings for the healthcare system.

In addition, this was also valid when such production is intended for export of those products to a non-EU market, where the patent is already expired. That’s a huge loss for the EU, as it meant companies would have to create additional manufacturing capacity outside of the EU.

In an attempt to solve this issue, in 2017 the European Commission performed a public consultation on SPC and patent research exemptions[iv], which with the Commission´s efforts to implement the SPC manufacturing waiver, resulted in the Commission’s proposal for amending the Regulation (EC) 469/2009 on SPCs for medicinal products (COM 2018 317 Final).[v]

SPC WAIVER IS ON ITS WAY

But what does all of this mean for patients and the pharmaceutical industry?

On January 24, 2019, the European Parliament Legal Affairs Committee (JURI) voted[vi] in favor of the proposed SPC manufacturing waiver.[vii]

The SPC manufacturing waiver solves the issue that manufacturers had with producing generic and biosimilar products during the SPC period. If they intend to export or stockpile them within the EU in the last two years of the SPC validity period (in preparation of the launch). In addition, the new waiver program also requests additional work from the potential manufacturers to ensure patents respect.

POTENTIAL IMPACT

With the adoption of the proposed SPC manufacturing waiver, the JURI intends to remove the “unintended legal barriers for generic and biosimilar producers based in the EU, placing them at a disadvantage compared to non-EU companies not subject to such restrictions.”[viii]“Members of the European Parliament are convinced that these measures will reaffirm the attractiveness of the EU as a global hub for investment in innovative pharmaceutical research, while reducing costs and improving access to generic and biosimilar medicines within the EU,” a statement released by the JURI said.

This vote is another example of the long-term strategy of the policy-maker to:

  • Reduce pharmaceutical expenditure as part of the healthcare related costs;
  • Improve access and speed to access for off-patent medicinal products in Europe;
  • Less manufacturing business will de-localize to non-SPC countries which are outside of the borders of the EU.

WHAT WILL OCCUR NEXT?

In the period before the vote on January 24, both the European Federation of Pharmaceutical Industries and Associations (EFPIA)[ix] and the Medicines for Europe[x] released position papers about the potential economic impact of the SPC manufacturing waiver. Both organizations shared estimates from independent research (Assessing the economic impacts of changing provisions during patent and SPC protection in Europe and Future-proofing EU competitiveness by limiting the negative impact of the SPC manufacturing waiver) and put the emphasis on monetary loses, as well as job losses, defending the pro- and against- the vote positions. Medicines for Europe emphasized the potential savings for the European healthcare systems, estimated at EUR 3.2 billion, creation over 25,000 additional jobs and net sales for the industry amounting to EUR 9.5 billion. In contrast, EFPIA´s position underlines that the SPC manufacturing waiver is removing certain level of incentives to invest in Europe´s innovative pharmaceutical sector. Such action can result in losses of up to 4.6 billion to the global biopharmaceutical sector, of which EUR 2 billion goes to the European innovative industry, estimating about 6,000 direct job losses, and a decrease of EUR 364 million in European Research & Development investment.

The EU view: Advantages, disadvantage of SPC-waiver

Criteria Advantages Disadvantages
Access to treatment May increase access to treatment with biosimilars and generic versions May disincentivize originators from investing in novel treatment
Speed to market May increase the speed to market for biosimilars and generic versions
Manufacturing May create additional manufacturing capacities in Europe May negatively impact companies involved in outsourcing and offshoring
Complexity May decrease complexity in logistics and supply Not applicable
Jobs May increase pharma-manufacturing jobs related to biosimilars and generics in Europe Not applicable
Localization Locating product manufacturing close to the consumer will generate less “product miles” and will be more sustainable Potential ecological burden originating from the manufacturing process

 

Since the JURI´s decision, it is expected that the European Parliament will conclude the next tasks and negotiations within the TRILOGUE (trilateral negotiations with the Commission and the Council) in February and there will be parliamentary discussions later this year.

The future evolvement remains to be seen.


[i] COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS, Upgrading the Single Market: more opportunities for people and business: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2015:550:FIN

[ii] The Single Market Strategy: https://ec.europa.eu/growth/single-market/strategy_en

[iii] Study on the legal aspects of Supplementary Protection Certificates in the EU: https://ec.europa.eu/docsroom/documents/29524

[iv] Public consultation on supplementary protection certificates (SPCs) and patent research exemptions: https://ec.europa.eu/info/consultations/public-consultation-supplementary-protection-certificates-spcs-and-patent-research-exemptions_en

[v] REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Regulation (EC) No 469/2009 concerning the supplementary protection certificate for medicinal products: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2018:317:FIN

[vi]Committee on Legal Affairs, VOTING LIST on the draft report on supplementary protection certificate for medicinal products, 2018/0161(COD): http://www.europarl.europa.eu/cmsdata/159901/juri-committee-voting-list-supplementary-protection-certificate.pdf

[vii]CRUCIAL EUROPEAN PARLIAMENT VOTE VASTLY IMPROVES SPC MANUFACTURING WAIVER: https://www.medicinesforeurope.com/news/crucial-european-parliament-vote-vastly-improves-spc-manufacturing-waiver/

[viii] SPC update: generics and biosimilar medicines for exporting and stockpiling: http://www.europarl.europa.eu/news/en/press-room/20190122IPR24032/spc-update-generics-and-biosimilar-medicines-for-exporting-and-stockpiling

[ix] Future-proofing EU competitiveness by limiting the negative impact of the SPC manufacturing waiver: https://www.efpia.eu/news-events/the-efpia-view/blog-articles/future-proofing-eu-competitiveness-by-limiting-the-negative-impact-of-the-spc-manufacturing-waiver/

[x] SPC Manufacturing Waiver, Medicines for Europe, http://www.spcwaiver.com/en/index.html