HOT TOPIC: Supplementary Protection Certificates (SPC) Manufacturing Waiver pursuant to Article 5(2) b) of the Amended Regulation (EC) No. 469/2009 concerning the Supplementary Protection Certificate for Medicinal Products
The SPC manufacturing waiver and its legal requirements have been the subject of controversy and divergent decisions by national courts in the European Union since the first decision of the District Court Munich I in October 2023. The latest decision concerning the SPC manufacturing waiver was issued by the Brussels Business Court on December 23, 2024. It provides reason for an overall view.
I. Supplementary protection certificates for medicinal products and the manufacturing waiver
New medicinal products often have to undergo a lengthy process before they receive the necessary marketing authorization to be placed on the market. The length of the process results in a considerable reduction of the time period when the medicinal product can be marketed while patent protection exists. SPCs are intended to compensate for that time period required, by factually extending the term of the patent by 5 or 5.5 years.1Regulation (EC) 469/2009 of the European Parliament and of the Council of May 6, 2009, concerning the supplementary protection certificate for medicinal products (“SPC Regulation”). The aim behind this is to promote research and innovation required for the development of new medicinal products and to prevent the relocation of pharmaceutical research to sites outside the European Union (“EU”).
An unintended side effect of the introduction of the SPC was that manufacturers of generics and biosimilars based in the EU could not even manufacture medicinal products in the EU for export to third countries, or for stockpiling them for a limited period before the expiry of an SPC and thus, enable effective day 1 launch and competition.
The European legislator recognized this side effect and saw a need to revise the SPC Regulation. The objective was to remove the competitive disadvantage that European manufacturers of generic and biosimilar medicines are facing vis-à-vis third countries’ manufacturers, which can start manufacturing generics and biosimilars earlier. At the same time, the rights of SPC holders should essentially remain the same. Overall, competitiveness and growth should be promoted, jobs created and a contribution made to improving the supply of medicinal products.
The main result of the revision was the introduction of the so-called manufacturing waiver,2Amendment of Art. 5 of the SPC Regulation by Regulation (EU) 2019/933 of the European Parliament and of the Council of May 20, 2019 amending Regulation (EC) No. 469/2009 concerning the supplementary protection certificate for medicinal products. which limits the scope of the SPC from the very beginning.
The acts covered by the waiver can be divided into two groups:
- Manufacture of the product for the purpose of exporting the product to third countries (Art. 5(2)a)(i) SPC Regulation (in the amended form)), and
- Manufacture of the product no earlier than six months before the expiry of the SPC for the purpose of storing it in the member state where the manufacture took place in order to place that product on the market in the EU after the expiry of the SPC (Art. 5(2)a)(ii) SPC Regulation (in the amended form)).
In both cases, also such related acts that are strictly necessary for the manufacture and/or storing of the product in the EU are excluded from the SPC’s scope of protection.
In order to benefit from the manufacturing waiver, manufacturers must fulfill strict requirements. These include the fulfillment of notification obligations to the responsible authority and the SPC holder. Furthermore, due diligence obligations along the supply chain and labeling obligations apply in the case of exports to third countries.
II. Decision of the District Court Munich I of October 20, 202333District Court Munich I, final judgment of October 20, 2023, case no.: 21 O 12030/23 – Janssen Biotech vs Formycon (published in BeckRS 2023 39994 and MittdtPatA 2024, 133). Please note that the author was involved as legal representative in the proceedings.
As part of preliminary injunction proceedings, the District Court of Munich I had to decide
- whether the notification needs to include a marketing authorization number or list of countries where the product will be exported, and
- whether countries receiving exported products must be patent-free to rely on the SPC manufacturing waiver.
The District Court ruled that the manufacturing waiver must be interpreted restrictively according to its meaning and purpose. It found that a manufacturer cannot rely on it if it had not provided the marketing authorization number for at least one country and not declared to which third country an export was to be made. In addition, the manufacturing waiver requires, according to the District Court, that third countries receiving exported products must be patent-free. The decision was met with criticism, particularly from generics and biosimilar manufacturers and respective interest groups.
III. Decision of the Rechtbank Den Haag of January 23, 20244Rechtbank Den Haag, decision of January 23, 2024, case no.: C/09/657817/KGZA23-1039 – Janssen Biotech vs Samsung Bioepis, available at www.uetspraken.nl.
Only a few months after the District Court of Munich I, the Rechtbank Den Haag (District Court The Hague) issued a ruling (also in preliminary injunction proceedings) on the same legal questions that differed on the key points.
The Dutch court ruled as follows:
- It cannot be inferred from the wording of the SPC Regulation (in the amended version) that the manufacturing waiver can only be relied on if the manufacturer provided a marketing authorization number in the notification to the national authority and the SPC holder. Any other interpretation would not be in line with the purpose of the SPC regulation to remove the competitive disadvantages between manufacturers in the EU and manufacturers in third countries. Furthermore, the amendments to the text of the Regulation in the legislative procedure, and in particular the deletion of the requirement for a provisional list of third countries, were not intended to simplify the notification obligations, but rather to meet the concerns that confidential and sensitive data would have to be disclosed as part of the notification.
- Relying on the manufacturing waiver does not require that the export to countries without relevant IP rights is planned. The wording of the SPC Regulation (in the amended form) neither presupposes that no IP rights exist in the exporting countries, nor that the manufacturer has to verify this. If the manufacturer places the medicinal product on the market in a third country, the IP right holder is obliged to conduct infringement proceedings in the respective third country.
- The manufacturing waiver also allows (as a connected act) stockpiling for a period that is usual in the normal course of business.
IV. Decision of the Nederlandstalige ondernemingsrechtbank Brussels of December 23, 20245Nederlandstalige ondernemingsrechtbank Brussel, decision of December 23, 2024, case no.: A/24/02113 – Amgen vs Samsung Bioepis (see Wolters Kluwer Patent Blog, https://wolterskluwerblogs.com/patent/wp-content/uploads/sites/52/2024/12/20241223114602083-Brussels-Court-Denosumab.pdf).
The Nederlandstalige ondernemingsrechtbank Brussels (Brussels Enterprises Court) had to decide on the same legal questions that the District Court of Munich I and the Rechtbank Den Haag had to decide on.
The result and reasoning of the Belgian court’s ruling is largely in line with that of the Dutch court: It found that submitting a marketing authorization number or a list of the planned export countries is not required in order to be able to rely on the manufacturing waiver. The manufacturing waiver further does not require the exporting countries to be free of relevant IP rights. Stockpiling is allowed for a period of time that is usual in the normal course of business.
The ruling is of particular importance as it is the first decision in proceedings on the merits of a court in the EU on the manufacturing waiver.
V. Assessment and outlook
The courts in Munich on the one hand and in The Hague and Brussels on the other hand come to different conclusions with their respective interpretations. The main reason for this is that their interpretations are based on a different understanding of the meaning and purpose of the SPC Regulation and the SPC manufacturing waiver:
The District Court Munich I assumes that the SPC Regulation intends to grant SPC holders the most comprehensive protection possible, despite the waiver – a narrow interpretation of the manufacturing waiver follows from this. The Dutch and Belgian courts, on the other hand, focus on the objective of the manufacturing waiver being to remove the competitive disadvantages that manufacturers of generics and biosimilars based in the EU are facing vis-à-vis third countries’ manufacturers – a broader interpretation of the manufacturing waiver follows.
There may be good arguments in favor of the broader interpretation of the Dutch and Belgian courts. In any case, due to the enormous economic importance, particularly for manufacturers of generics and biosimilars with production sites in the EU, but also with a view to investments in the EU and the supply chains of medicinal products, it is desirable to obtain legal certainty in the near future. This can be achieved through higher court decisions by national courts and, if necessary, a referral to the Court of Justice of the European Union. This can further be achieved by the European Commission clarifying the relevant provisions in the SPC Regulation (in the amended form), and/or issuing guidelines or a notice to remove the existing uncertainties.
Further developments are eagerly awaited and closely watched.