EU Draws Closer to Adopting SPC Manufacturing Waivers for Biosimilars and Generics

The European Union has announced that The Committee of the Permanent Representatives of the Governments of the Member States to the European Union (Coreper) agreed this week on the European Council’s draft regulation that grants an exception to Supplementary Protection Certificates (SPCs).

An SPC is an intellectual property right that grants an extension of up to 5 years on a 20-year patent term for an innovative drug. The goal of the SPC is to offset the loss of patent protection that occurs during the development and clinical trials of a generic or biosimilar. When it was first implemented in 1992, the SPC system sought to provide the pharmaceutical industry with sufficient incentives to develop innovative products within the European Union, and to prevent companies from relocating to other countries.

Under the new regulation, an SPC waiver will allow EU biosimilar developers and generics makers to manufacture products that are protected by SPCs while the SPCs are still in force if the manufacturing is done solely for the purpose of exporting to a non-EU market that is not protected by an SPC.

Until 3 years after the regulation comes into effect, the waivers will affect only those SPCs that are applied for on or after the date of the regulation. After the 3-year term, the regulation will also affect SPCs that were applied for before—but which did not become active until after—the regulation took effect.

According to the European Council’s statement announcing the Coreper agreement, SPC waivers will remove “competitive disadvantages faced by EU-based manufacturers of generics and biosimilars vis-à-vis manufacturers established outside the [European Union] in global markets, but also in day-1 EU markets by building up production capacity.”

According to the council, assuming an annual growth rate of 6.9% by 2020, generics and biosimilars will represent 80% of all medicines by volume, and 28% by value. The regulation, which is designed to help newer companies launch and scale up their operations, could generate annual export sales that exceed €1 billion (approximately $1.1 billion).

When the European Commission first launched a public consultation on the SPCs in 2017, comments demonstrated broad support for the proposed waiver as means to make the European Union more competitive as an exporter of drugs.

The next step in the regulation’s journey into effect will be for the European Parliament to agree on a negotiating mandate, and the Romanian presidency will begin negotiations with the European Parliament with the goal of adopting the regulation during its first reading.