Introduction
In April 2023, the European Union (EU) Commission proposed a set of reforms to its Supplementary Protection Certificate (SPC) framework, including reforms which would impact SPCs for pharmaceuticals and other medicinal products. A key element of the proposed changes relates to the process of granting SPCs in the EU and how the SPC framework will function within the broader context of the EU Unitary Patent system. Although the proposed changes are still being negotiated in the EU, this blog post aims to explore the potential effects of the proposed changes, if any, on access to medicines, particularly their potential implications for the production of generics and biosimilars in the EU.
Supplementary Protection Certificates: Rationale and Effects in the EU.
The Supplementary Protection Certificate (SPCs) framework was first adopted in 1992. It enables applicants to apply to extend the exclusivity period granted to such patent holders. Ordinarily, patent holders are granted 20 years of exclusive protection from the date of filing a patent application. An SPC, if granted, extends this period, typically by another 5 years.
The rationale for this SPC extension is twofold: first, it is compensatory. In this regard, the SPC operates to compensate patent holders for the time spent awaiting regulatory approval, a prerequisite to market and sell the relevant drug within the EU. This is because a lengthy wait time for regulatory approval could limit the years available for the patent holder to enjoy their market exclusivity. The second rationale is linked to the EU’s competitiveness in the pharmaceutical manufacturing sector. The assumption is that it should encourage innovators to remain in the EU, instead of moving their business elsewhere, like the US, which offers similar extension periods under the Patent Term Extension (PTE). This rationale is noted in the preamble of the SPC Regulation No 469/2009, which states that a core objective of the SPC framework is to “minimise the “risk of research centres situated in the Member States relocating to countries that already offer greater protection.”
Yet, the ability of rightsholders to extend patent protection by obtaining an SPC also raises important questions regarding the development of and access to generics and biosimilar versions of patented medical products. Indeed, Hu et al. note that the extended exclusivity periods offered by SPC protection can translate to higher prices for medicines, creating a barrier for access and jeopardising the sustainability of healthcare systems across Europe.
Current System for SPC Protection in the European Union
Under the current EU approach (SPC Regulation No 469/2009), SPCs are granted through the patent offices of each EU Member State, typically in the jurisdiction where the applicant intends to produce or market a product. This enables patent holders to select their relevant market and many may choose to only apply for SPCs in certain EU States. It also provides strategic tools for the patent holder as they can “forum-shop” for the most favourable jurisdictions. For example, if the application for an SPC is denied in one jurisdiction, they can still apply for an SPC in another EU State, and it may be approved in that State.
However, this approach can be problematic. Apart from efficiency concerns regarding how applicants’ resources are used, de Jongh et al have highlighted that the current system raises questions regarding the fragmentation and consistency of SPC protection across the EU. The Commission notes that about 26% of SPC applications filed between 2004 and 2014 raised fragmentation issues. This fragmentation “translates into inefficiencies and a lack of transparency and predictability, which hampers innovators and generic producers and eventually harms patients.”Consequently, in April 2023, the European Commission proposed reforms which would amend the SPC system to promote innovation and competitiveness and create an efficient and less fragmented SPC framework.
Proposed Reforms to SPC Protection in the EU: An Overview
The proposed reforms to the EU SPC framework provide four options for applying for an SPC. The first option is for an applicant to seek a national SPC, similar to the current approach: Applicants will submit applications in various national EU Member States jurisdictions, but such a grant will only apply to nationally authorised products. The second option for the applicant is to apply for a unitary SPC with the European Union Intellectual Property Office (EUIPO) based on a unitary patent. This means that, through a single application, the SPC will cover all countries where the unitary patent is applicable. The third option is a centralised application, distinct from a unitary application. Here, the applicant applies to the EUIPO based on a European patent. However, unlike the unitary approach, which applies automatically in a unitary patent jurisdiction, the centralised approach lets the applicant choose specific countries for the SPC, and the application undergoes a central examination. This serves to “simplify the examination process and reduce legal uncertainty.” Finally, there is an option to file a unitary SPC application in combination with national applications. This is because the unitary patent system does not apply in all EU countries; currently, 18 EU Member States have ratified the relevant agreements to participate in the unitary patent.
Implications of the EU SPC Reforms for Access to Medicines
By their nature, SPCs have the potential to impact, including limit the development of generics and biosimilars because they extend the exclusivity periods afforded to patentholders. However, the EU’s SPC proposal’s impact on access to medicines, if adopted, would likely be mixed: there are advantages and disadvantages. On its advantages, the new proposal will likely limit the ability of rightsholders, or any entity that is “economically linked” to the rightsholder, to renew their SPCs for the same product, even if a new SPC application is based on a different patent. In this regard, the SPC attaches to the product, not the patent(s) that embody it. Therefore, if Drug A, protected by multiple patents, has been granted an SPC based on one of those patents, an applicant who has received an SPC extension previously, may not apply for a new SPC for Drug A based on another patent. This approach is suitable for developing generic products because it provides a transparent and predictable application system.
A significant area of potential concern around the new SPCs in terms of access to medicines, relates to their territorial scope. Currently, applicants apply for SPCs through national patent offices for each of the national EU States they seek SPCs, and would typically focus on seeking SPC protection in national markets where they have a commercial presence or where the product is launched. Thus, a firm with most of its relevant product market in certain EU States may not apply for SPCs in other EU Member States. As a result, once its 20-year patent expires, it loses protection in any EU States it does not have an SPC in, allowing generic manufacturers to sell or produce products there. This is crucial for affordability and accessibility. The new proposal changes this by enabling applicant to apply for SPCs with unitary effect, applying to all UPC states once granted, regardless of the producer’s manufacturing or marketing location. It has been argued by de Jongh et al that “this could mean that generic entry remains prohibited even when the reference product is itself not on the market. Without safeguards, this could present a risk of further hindering access to medicines in countries where access is already problematic” (p. 15). Yet, de Jongh et al also note that such territorial aspects, including the centralised system for invalidation is also an advantage because if a centralised or unitary SPC is invalidated, it gives generic manufacturers an extensive territorial scope to produce and market their products, and saves them the cost of filing concurrent invalidation applications across multiple jurisdictions.
Conclusions
Based on the proposed EU reforms related to SPCs at the time of writing, the potential effect of the proposals on access to medicines in Europe is likely mixed. There are potential advantages of the proposed SPC reforms in terms of the efficiency and predictability of the process, which could lead to strengthening of certainty for those developing medicines within the EU. At the same time, there are possible limitations, especially as one application may have an extensive territorial effect. However, since the proposals are still being negotiated, a comprehensive understanding of the effects of the new framework will emerge once the final proposals are adopted and implemented.
Funding Acknowledgement: This research was developed as part of the PatentsInHumans project which is funded by the European Union (ERC, PatentsInHumans, Project No. 101042147). Views and opinions expressed are however those of the author only. These views do not necessarily reflect those of the European Union or the European Research Council Executive Agency. Neither the European Union nor the granting authority can be held responsible for them.
You can find out more about the ERC PatentsInHumans project by visiting the project website: https://patentsinhumans.eu/
Author: Dr Opeyemi Kolawole, Postdoctoral Researcher, ERC PatentsInHumans project
