[co-author: Greig Shuter]*

The SPC Manufacturing Waiver (the "Waiver") is now in force, effective from 1 July 2019 (Regulation 2019/933 amending the SPC Regulation 2009/469). The Waiver has been introduced with the stated aim of putting EU generic and biosimilar manufacturers on a level playing field with their competitors in third countries. The Waiver carves out of supplementary protection certificate ("SPC") protection the making of SPC protected material in the EU during the life of an SPC for export to third countries and the storing of SPC protected material made in the EU in the last 6 months of the SPC's life ready for release onto the EU market when the SPC expires. The Waiver is not intended to interfere with the SPC holder's exploitation of their SPC while it is in force or the other patents owned by the SPC holder which protect the same commercial product as the SPC.

What effect will the Waiver have on SPCs?

The table below illustrates the effect the Waiver will have on SPCs:

Requirements for Waiver

For the Waiver to apply, the following four conditions in the new Article 5(2)(a)-(e) of the SPC Regulation must be satisfied:

1. Permitted Acts (Article 5(2)(a));
2. Notification (Article 5(2)(b) & (c));
3. Packaging (Article 5(2)(d)) (export only); and
4. Awareness and Fees (Article 5(2)(e)).

Condition 1 - Permitted Acts

Making for Export

The Waiver carves out from SPC protection the making of a product (meaning active pharmaceutical ingredient or "API") or a medicinal product in a Member State where there is an SPC in force for the purpose of exporting the product to a third country. Importantly, the manufacture of the product for export can take place at any time during the life of the SPC. The manufacture of a medicinal product will include, for example, adding excipients to the active pharmaceutical product and producing it in different dose tablets.

Related Acts to Making for Export

The Waiver also permits related acts which are "strictly necessary" for either the "making" or the "actual export" of the product or medicinal product. Recital 9 provides guidance as to what acts will satisfy the "strictly necessary" threshold:

The Waiver makes it clear that the related act does not need to take place in the same Member State as the manufacture.

There is likely to be dispute about the precise meaning of the terms "strictly necessary", "making" and "actual export". For example, if a medicinal product is manufactured in Spain, can it be imported into France to be packaged and prepared for the French speaking markets in Africa? Also, if there is a manufacturer in Germany who wants to sell medicinal products to a company in Latin America which has a representative office in Spain, can the manufacturer send a sample of the medicinal product to the office in Spain to be tested before concluding a contract for sale?

Making for Storage

The Waiver also permits the making of a product or medicinal product for the purpose of storing the manufactured product for day-one entry in the EU when the SPC protection has expired. There are two important points to note about this exception:

1. the making can only take place within the last 6 months of the SPC's term; and
2. the manufactured product can only be stored in the Member State where it was made.

It is unclear whether the Waiver requires both the manufacture of the API and the manufacture of the medicinal product to take place in the EU for the Waiver to apply. The language of the Waiver suggests that generic and drug companies have the choice of making either the API or the medicinal product or both in the EU. Consequently, generic and biosimilar drug companies may be able to make the API outside the EU before the 6 month window starts and then rely on the Waiver to import the necessary ingredients into the EU so that the manufacture of the medicinal product takes place within the 6 month window. However, this example arguably runs contrary to the purpose of the Waiver and is similar to the examples which the Recitals state are not covered by the Waiver (see Activities Outside the Scope of the Waiver). Clarification from the CJEU would be desirable on this point.

Related Acts to Making for Storage

The Waiver also permits the related acts which are strictly necessary for the "making" and the "actual storing". The Waiver does not give any examples of what would be "strictly necessary" for "actual storing". Whilst these appear to be tightly drafted terms, we expect that there will be litigation about how widely they should be interpreted. For example, will the Waiver cover a medicinal product made in Member State A being imported into Member State B for the purposes of preparing the medicinal product for day-one entry in Member State B?

Activities Outside the Scope of the Waiver

Recital 11 states that importing a product or medicinal product into the EU solely for re-packaging and re-exporting to third countries will not be covered by the Waiver. Such activity would clearly undermine the stated objective of the Waiver which is to encourage generic and biosimilar companies to move their economic activities to the EU and thereby "enhance…job creation" (Recital 8).

Condition 2 - Notification

The Waiver may lead to a larger quantity of protected products being present in the EU during the term of the corresponding SPCs but without a legitimate route to market in the EU. As a consequence, there will be a heightened risk of accidental and illicit diversion of these products onto the EU market before expiry of the corresponding SPCs. The main safeguard offered to SPC holders is the notification requirements listed in the new Article 5(2)(5) (see below). These requirements are intended to assist SPC holders in identifying which activities are, and are not, covered by the Waiver.

Who has to notify?

Regulation 2019/933 creates a new definition – "maker" – the person who is established in the EU and on whose behalf the making is done who has to provide notification that they are relying on the Waiver for their activities.

It is therefore possible that there is a person not established in the EU on whose behalf making is carried out (e.g. US generic company which has sub-contracted manufacturing activities in the EU). In such a circumstance, the sub-contractor and the non-EU maker could be liable for SPC infringement because the conditions above are not satisfied.

Who is notified and when?

The maker needs to notify both the Member State in which the making is to take place (only) and the SPC holder at least 3 months before the making commences or the first related act takes place. Failure to satisfy the 3 month requirement, seemingly, could forfeit the generic company's right to rely on the Waiver.

What does the notification consist of?

The information to be provided to the SPC holder and the Member State in which making is to take place is as follows:

1. the name and address of the maker;
2. whether the making is for export, storage or both;
3. the Member State(s) in which the making and, if relevant, the first related acts are to take place;
4. the numbers of the SPCs in the Member States listed in (3) above; and
5. for export, the reference number of the marketing authorisation or equivalent, as soon as it is publicly available.

Whereas failure to provide the information in (1)-(4) seems to result in the Waiver not applying at all, failure to provide the information in (5) only results in the Waiver not applying to exports to the particular third country for which the information has not been provided.

Condition 3 - Packaging

This condition only applies to the making of products for exports and requires the EU logo to be fixed to the outer packaging, and where feasible the immediate packaging, of the product or medicinal product to be exported.

Condition 4 – Awareness and Fees

This condition requires the maker to ensure, by written and appropriate means, that any person in a contractual relationship with the maker performing the permitted acts (e.g. a manufacturing sub-contractor) is fully informed and aware of the SPC holder's rights and the scope of the Waiver.

Review

The Waiver includes a mechanism, which is common in EU amending regulations, requiring the Commission to review the impact of the Waiver within the first five years and every five years thereafter to consider if any unforeseen consequences need to be addressed.

*Associate, London

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