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European Commission Proposal on

Supplementary Protection Certificate

(SPC) manufacturing waiver

Regulation 2018/0161

All facts, figures and data of this brochure are

extracted by the Impact assessment and

official studies published from the

European Commission in the last years

More info in all EU languages:

www.spcwaiver.com

https://ec.europa.eu/growth/single-market/strategy_en

Contents

European Commission Official Documents and Studies ...................... 2

IMPACT of SPC manufacturing waiver on Patients access & National

Public healthcare expenditure ........................................................... 3

IMPACT of SPC manufacturing waiver on API sector ............................ 5

IMPACT of SPC manufacturing waiver on SMEs ................................... 7

IMPACT of SPC manufacturing waiver on R&D ..................................... 9

IMPACT of SPC manufacturing waiver on Biosimilar Companies ......... 11

IMPACT of SPC manufacturing waiver on

EU Pharmaceutical System ................................................................... 13

http://www.spcwaiver.com/



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European Commission Official Documents and Studies

On 28 May 2018, the European Commission adopted a proposal for a regulation to

amend Regulation (EC) No 469/2009 on supplementary protection certificates (SPC)

for medicinal products.

This initiative was first considered in the Single Market Strategy of 2015, in the context

of a targeted recalibration of certain aspects of patent and SPC protection. It is

supported by a series of studies (see below) and was the subject of a public

consultation in October 2017.

Commission proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 469/2009 concerning the supplementary protection certificate for medicinal products

Annex to the proposal

Impact assessment of the proposal - Summary

Summary of the public consultation

Study and annexes on the legal aspects of Supplementary Protection Certificates in the EU, Max Planck Institute (May 2018)

Study of the economic impact of supplementary protection certificates, pharmaceutical incentives and rewards in Europe, Copenhagen Economics (May 2018). This study analyses the combined effect of pharmaceutical incentives in the EU

Assessing the economic impacts of changing exemption provisions during patent and SPC protection in Europe, Charles Rivers Associates (October 2017)

25 years of SPC protection for medicinal products in Europe: Insights and challenges, M. Mejer, (May 2017)

Economic Analysis of Supplementary Protection Certificates in Europe, M. Kyle (January 2017) PDF, 313 KB




https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2018%3A317%3AFIN



https://ec.europa.eu/docsroom/documents/29462








https://publications.europa.eu/en/publication-detail/-/publication/6e4ce9f8-aa41-11e7-837e-01aa75ed71a1/language-en

https://publications.europa.eu/en/publication-detail/-/publication/6e4ce9f8-aa41-11e7-837e-01aa75ed71a1/language-en



https://ec.europa.eu/docsroom/documents/25621/attachments/1/translations/en/renditions/native


www.spcwaiver.com


IMPACT of SPC manufacturing waiver on Patients access & National Public healthcare expenditure in EUROPE: according to the official studies published by European Commission

European Commission reported:

An SPC manufacturing waiver for would be “the most effective and simplest

option”, Impact Assessment, p. 105.

“Patients in a certain Member States were not able to access to certain

treatments until a biosimilar is available. Therefore, limiting the day-1 entry

capacity for EU biosimilars in those Member States could make a difference for

some EU patients”, Impact Assessment, p.23.

“Reduced competition affects access to medicines for EU patients and health

expenditure for EU public budgets. […] Reduced competition may lead to price

increases.”, Impact Assessment, p. 22.

“We do not find evidence that the SPC has supported the objective of better

accessibility and diffusion of innovative products across the internal market”,

Copenhagen Economics p. 178.

“…later entry of generic medicinal products pushes up total expenditure on

medicinal products (…)”, Copenhagen Economics p. 15.

“Patients […] would enjoy additional sources of supply of medicines with this

stockpiling waiver”, Impact Assessment, p. 41.

“Security of supply” and risks of “episodes of shortages” require an SPC

manufacturing waiver “The increased dependency on non-EU sources has

already led to concerns with regard to maintaining security and quality of

supply in the EU”, Impact Assessment, p.22.

THE EUROPEAN COMMISSION PROPOSED AN SPC MANUFACTURING WAIVER:

FOR EXPORT ONLY

WITH ANTI-DIVERSION MEASURES

APPLICABLE ONLY TO NEWLY GRANTED SPCS




www.spcwaiver.com


Citizens “care about the origin of the production of the medicines they consume”,

Impact Assessment, p. 22. With “a stockpiling-only waiver [..] it could tackle […]the

concerns expressed by some public authorities and citizens about over-reliance of

imported medicines”, Impact Assessment, p. 41.

“Relocation of clinical trials may also be detrimental to certain groups of

patients, as [they…] benefit from experimental medicines”, Impact Assessment,

p. 22.

“Patients and doctors favoured an SPC manufacturing waiver on the ground

that it would promote early competition in the market, and thus more

affordable medicines”, Impact Assessment, p. 37.

“An SPC waiver for stockpiling purposes would result in savings on

pharmaceutical expenditure from this earlier competition and therefore lead to

a speedier reduction of prices in Member States upon expiry of the SPC”, IA p.

41.

In the comparison of the impacts of policy options (IA pp. 46, 47):

- With an SPC manufacturing waiver for EXPORT only, patients “would enjoy

some improvement in better timely access to generics/biosimilars of high

EU-made quality, and therefore a more diversified source of supply”.

“Additional savings to public spending […] of the order of upwards of 4%” (p.

12 of the Proposal)

- With an SPC manufacturing waiver for STOCKPILING, “the stockpiling

feature would bring additional time gains for timely access in the EU day-

1, and a more diversified source of supply”

- With an SPC manufacturing waiver for EXPORT & STOCKPILING, the impacts

of previous options “would be cumulative”. “Estimated savings on public

health budgets expenditure on pharmaceuticals of up to 8%”.

European Commission provided NO evidence against but only strong support in

its official studies to:

Introduce the “EU day-1 launch”

Remove anti-competitive, unjustified and unnecessary anti-diversion measures

Allow an immediate applicability of the SPC manufacturing waiver




www.spcwaiver.com


IMPACT of SPC manufacturing waiver on API sector in EUROPE: according to the official studies published by European Commission


An SPC manufacturing waiver for export AND stockpiling would be “the most

effective and simplest option”, Impact Assessment, p. 105.

The actual SPC system “has two unintended consequences that were not

foreseen, namely preventing generics/biosimilars (1) from being

manufactured in the EU and exported to third countries (where no legal

protection applies) during the EU SPC term, and (2) from being manufactured in

the EU (and then stored) early enough to be placed on the EU market

immediately from day-1”, Impact Assessment, p.15.

“The main consequence of the above-mentioned problems is increased

relocation and/or outsourcing of the manufacturing of generics/biosimilars

outside the EU, and loss of business opportunities inside the Union more

generally” p. 19. “As mentioned above, such a waiver could potentially reduce

the risk of relocation, not only of manufacturing, but also of R&D (in the

biologics/biosimilars sector)”, Impact Assessment, p. 41.

“Loss of manufacturing capacity: once production is delocalised, it might well

never return to the EU. This risk affects EU-based SPC-holders (that also use the

manufacturing capacity of generic manufacturers) as well as generics and

biosimilars manufacturer”, Impact Assessment, p. 20.


FOR EXPORT ONLY






www.spcwaiver.com


“Switching API suppliers has a high cost due to the requirement of new stability

batches and new analytical studies on impurities, among others. It is estimated

that for the more complex APIs, the cost associated to a change of API supplier

could be around EUR 4m. Therefore, once an API supplier is chosen, the decision

tends to be irreversible.”, Impact Assessment, p. 20.

“The waiver is also expected to improve access to the APIs and make the supply

chain stronger”. “For SME manufacturers that are currently not exporting

outside the EU, and do not plan to scale up to export outside the EU, a stockpiling

waiver would assist in scaling up production to be ready for timely entry into

domestic or to other Member State market upon SPC expiry”, Impact

Assessment, p. 106.

The EC notes that “there is no evidence of illicit diversion resulting from the

existence of the ‘Bolar exemption’ in the EU, which itself is a form of

manufacturing waiver for clinical trials purposes (and is available during the

term of both patents and SPCs)”, Impact Assessment, p. 35.

“[U]rgent need to tackle the specific problems faced by EU-based generics and

biosimilars manufacturers”, and that “[t]his has been understood by EU’s trade

partners”. Therefore, the EC concludes that “[d]oing nothing, or postponing an

initiative would, firstly, further weaken the EU pharmaceutical industry”. However,

according to the actual proposal, the waiver would presumably “on average, be

available from 2025”, Impact Assessment, p. 76.

The European Commission provided NO evidence against but only strong support

in its official studies to:







www.spcwaiver.com


IMPACT of SPC manufacturing waiver on SMEs in EUROPE: according to the official studies published by European Commission




The actual SPC system is “particularly detrimental for small and medium-sized EU

pharmaceutical companies, since they rarely possess manufacturing facilities in

‘non-SPC’ third countries. The creation and growth of EU-based start-ups is also

affected […] This situation gives way to a number of negative consequences that

will be exacerbated over time”, Impact Assessment, p. 19.

Today, significant innovation comes from specialised SMEs focused on the initial

steps of R&D and development, with less than 25% of the new medicines being

developed by originators” (p. 12). “…over the past decade, 60% of innovator small

molecules and 82% of innovator biologics have their roots outside big

pharmaceutical company”, Impact Assessment, p. 12.

“[V]ast majority of SMEs […] supports the introduction of a waiver in the EU, and

considers that the longer duration of SPCs in the Union compared to non-EU

countries makes manufacturing in the Union less interesting for them”, Impact

Assessment, p. 36.

“The cost of anti-diversion measures would be negligible for major

manufacturers, but it could have a more significant impact on SMEs”, Impact

Assessment, p. 39. “[It] should take account of potentially dissuasive costs for

SMEs (additional operational costs (e.g. labelling), the need to contract specialised

attorneys (e.g. for


FOR EXPORT ONLY






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potentially complex notification procedures, and court proceedings)”, Impact

Assessment, 42.

“There is no evidence of illicit diversion resulting from the existence of the ‘Bolar

exemption’ in the EU, which itself if a form of manufacturing waiver for clinical

trials purposes (and is available during the term of both patents and SPCs)”, Impact

Assessment, p. 35.

“40% of the SMEs manufacturers of medicines in the EU (1 362 firms) who are

currently exporting outside the EU will directly benefit from this measure” p. 106.

[It] “would be especially beneficial for EU SMEs manufacturing generics or

developing biosimilars, because they do not necessarily have access to the

necessary funding or skills to outsource or delocalise production outside the EU”,

Impact Assessment, p. 42.

“For SME manufacturers […] a stockpiling waiver would assist in scaling up

production to be ready for timely entry into domestic or to other Member State

market upon SPC expiry”, Impact Assessment, p. 106.

The Max Planck Institute study confirms that “neither the production for export,

nor the production for stockpiling purposes run counter to the legal objectives of

the SPC system”, and “arguably the only effect of prohibiting stockpiling would

be to boost the business opportunities of non-EU companies to the disadvantage

of generic manufacturers established here.”, MPI part 3, section 15.3.7.3.

There is no evidence of any problem of diversion of products from SPC-free EU

countries and SPC-protected countries. Already today, for every medicines

protected by SPCs, SPCs are not protected in 8 out of the 28 Member States,

Mejer Study.

The European Commission provided NO evidence against but only strong

support in its official studies to:







www.spcwaiver.com


IMPACT of SPC manufacturing waiver on R&D in EUROPE: according to the official studies published by European Commission




The actual SPC system “ has two unintended consequences that were not

foreseen, namely preventing generics/biosimilars (1) from being

manufactured in the EU and exported to third countries (where no legal

protection applies) during the EU SPC term, and (2) from being manufactured in

the EU (and then stored) early enough to be placed on the EU market

immediately from day-1”, Impact Assessment, p. 15.

“The main consequence of the above-mentioned problems is increased

relocation and/or outsourcing of the manufacturing of generics/biosimilars

outside the EU, and loss of business opportunities inside the Union more

generally”, Impact Assessment, p. 19. “As mentioned above, such a waiver could

potentially reduce the risk of relocation, not only of manufacturing, but also of

R&D (in the biologics/biosimilars sector)”, Impact Assessment, p. 41.

Therefore, the impact on R&D with the actual system:

- “Loss of know-how and a brain drain of highly-skilled jobs, especially in the

biosimilars sector, where R&D is increasingly shifting to other countries,

notably in Asia”, Impact Assessment, p.20.


FOR EXPORT ONLY






www.spcwaiver.com


- “Relocation of R&D, in particular for biosimilars: the biosimilars sector is

R&D intensive, and R&D for biosimilars tends to be located where

manufacturing takes place. If manufacturing of biosimilars is rendered less

attractive in Europe, then there is a risk that R&D for biosimilars will also

leave the Union, causing Europe to lose its related expertise and

competitive advantage”, Impact Assessment, p. 20.

"The average effective protection period that medicinal products enjoy in a

country is found not to have a statistically significant effect on the level of

spending on pharmaceutical R&D in that country", Copenhagen Economic

Study, p. 90.

With regard to the objectives of the actual SPC regulation, the Max Planck

Institute study also reports “that the expectation expressed by the historical

lawmakers about the impact on (re)location of research centres was somewhat

unrealistic from the beginning”, MPI part 1, section 2.1.5

“[T]here is no evidence of illicit diversion resulting from the existence of the

‘Bolar exemption’ in the EU, which itself is a form of manufacturing waiver for

clinical trials purposes (and is available during the term of both patents and

SPCs”, Impact Assessment, p. 35.

“[U]rgent need to tackle the specific problems faced by EU-based generics and

biosimilars manufacturers”, and that “[t]his has been understood by EU’s trade

partners”. Therefore, the EC concludes that “[d]oing nothing, or postponing an

initiative would, firstly, further weaken the EU pharmaceutical industry”.

However, according to the actual proposal, the waiver would presumably “on

average, be available from 2025”, Impact Assessment, p. 76.

The European Commission provided NO evidence against but only strong

support in its official studies to:


Remove anti-competitive, unjustified and unnecessary anti-diversion measures Allow an immediate applicability of the SPC manufacturing waiver




www.spcwaiver.com


IMPACT of SPC manufacturing waiver on Biosimilar Companies: according to the official studies published by European Commission




“The EU was a pioneer in the development of regulatory procedures to approve

biosimilars […] However, there are clear signs that Europe is now losing its

competitive edge as a hub for manufacturing of generics and biosimilars, with

trade partners now quickly catching up”, Impact Assessment, p. 7.

“Originators tend to increasingly manufacture biosimilars and generics outside

the Union, and notably in Canada, the USA and Asia”, Impact Assessment, p. 12.

“Indeed, all four BRIC countries (Brazil, Russia, India and China) have updated their

regulatory rules and are becoming increasingly attractive for investments in

biosimilars. Global competition is therefore fierce, requiring the EU to take the

steps needed to remain competitive”, Impact Assessment, p. 13.

“While the legitimate purpose of an SPC is to prevent the manufacturing for the

purpose of marketing of competing products on the EU market when it is in effect,

it has two unintended consequences that were not foreseen, namely preventing

generics/biosimilars (1) from being manufactured in the EU and exported to third

countries (where no legal protection applies) during the EU SPC term, and (2)

from being manufactured in the EU (and then stored) early enough to be placed

on the EU market immediately from day-1”, Impact Assessment, p. 15.


FOR EXPORT ONLY






www.spcwaiver.com


“The main consequence of the above-mentioned problems is increased relocation

and/or outsourcing of the manufacturing of generics/biosimilars outside the EU,

and loss of business opportunities inside the Union more generally”, Impact

Assessment, p. 19.

EC clearly states that being immediately on the market is fundamental in such a

competitive sector: “the market for generics and biosimilars is highly competitive

with a strong ‘first mover’ effect (i.e. a clear advantage for the first mover) both

in the export and EU markets”. Also: “For biosimilars, studies show that in 2016,

the first biosimilars to reach the market captured over 70% market share”. The

EC also states that “only the first few generics/biosimilars to enter the market

capture a significant market share and are financially viable”, Explanatory

Memorandum, p.3.

“[T]here is no evidence of illicit diversion resulting from the existence of the ‘Bolar

exemption’ in the EU, which itself is a form of manufacturing waiver for clinical

trials purposes (and is available during the term of both patents and SPCs”, Impact

Assessment, p. 35.

The EC notes that, with IP expiries, “over EUR 90 billion of the first generation of

blockbuster biologics will become open to biosimilar competition by 2020. This

will create huge additional opportunities for growth and jobs”. However,

according to the actual proposal, the waiver would presumably “on average, be

available from 2025”, Impact Assessment, p. 76.









www.spcwaiver.com


IMPACT of SPC manufacturing waiver on EU Pharmaceutical System according to the official studies published by European Commission


“Consequences [of actual SPC System]: relocation and decreasing attractiveness

of the EU as a pharmaceutical hub

The problems above result in a lack of a level playing field between EU and non-

EU based generic and biosimilar producers, when it comes to competing in both

global markets and day-1 entry in the EU. As it will be shown below, this affects

not only EU-based manufacturers of generics and biosimilars, but also EU-based

originators, and even EU patients (e.g. in terms of diversified supply). Thus, the

whole EU pharmaceutical ecosystem is affected.

This situation is particularly detrimental for small and medium-sized EU

pharmaceutical companies, since they rarely possess manufacturing facilities in

‘non-SPC’ third countries. The creation and growth of EU-based start-ups is also

affected, as they require a proper ecosystem on top of a regulatory environment

free of unintended legal barriers. This situation gives way to a number of negative

consequences that will be exacerbated over time.

The main consequence of the above-mentioned problems is increased relocation

and/or outsourcing of the manufacturing of generics/biosimilars outside the EU,

and loss of business opportunities inside the Union more generally, as

companies will have a tendency to circumvent the current legal barriers they face,

and will increasingly manufacture in third countries with weaker or no SPC

protection, so as to be able to compete in global markets or be ready for day-1

entry onto the EU market.”, Impact Assessment, p. 19.


FOR EXPORT ONLY






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“Detrimental impact on the EU pharmaceutical industry as a whole, including

the innovative pharmaceutical industry in the longer term:

o Delocalisation of manufacturing capacity of medicines outside the EU might negatively affect originators investments and manufacturing in the Union, as originators often outsource production and are investing in biosimilars.

o Loss of administrative regulatory-related skills in the EU: it is preferable that regulators be located near an advanced R&D and production ecosystem. If it is delocalised, there will be lessened impact of EU rules on the global regulatory environment, or other trade partners could even set the future regulatory rules for global markets. This would impact adversely on EU-based originators as well”, Impact Assessment, p. 20.









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Source: *Medicines for Europe Internal data - **EMA EPARs

European countries with generic medicines R&D and manufacturing*

European countries with manufacturing sites for biosimilar medicines, either approved**, under evaluation* or under development

EUROPE: a global hub for high-quality generic and biosimilar medicines

Medicines for Europe members count across all Europe:

• 450 Manufacturing Sites

• 126 R&D Centres

• 190.000 Direct Jobs

As the European Commission says in the Impact

Assessment (Page 12) “Originators tend to

increasingly manufacture biosimilars and

generics outside the Union, and notably in

Canada, the USA and Asia”




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A COMPREHENSIVE SPC MANUFACTURING WAIVER IS AN ENORMOUS

OPPORTUNITY FOR THE EUROPEAN UNION TO BE TAKEN NOW!

THE INTRODUCTION OF A COMPREHENSIVE SPC MANUFACTURING

WAIVER WILL FIX THE UNINTENDED EFFECTS OF THE 1992 SPC

REGULATION BY RE-ESTABLISHING A BALANCE BETWEEN:




www.spcwaiver.com


