European manufacturing waiver to ‘level the playing field’

By Ben Hargreaves

- Last updated on GMT

(Image: Getty/Sinonimas)
(Image: Getty/Sinonimas)

Related tags European union SPC waiver EFPIA Medicines for Europe

The introduction of the SPC manufacturing waiver will generate billions in export sales and create a number of jobs across the EU, suggests Medicines for Europe.

The potential induction of a supplementary protection certificate (SPC) manufacturing waiver into European law has proved to be controversial: the originator side of the industry has argued that it undermines intellectual property (IP) in the region, while the biosimilars and generics industries have countered that it makes them more competitive against non-European Union (EU) manufacturers.

With the European Parliament agreeing on the proposals​ to implement the manufacturing waiver, the argument of the latter group looks set to win out.

Under current law, the SPC provides IP holders additional protection of five years to prevent the European production of biosimilars or generic versions of originator products. However, the legislation saw companies outside of the EU able to produce and export such treatments and therefore establish themselves as more competitive, globally, than those manufacturers based in the EU.

Introducing a manufacturing waiver to the SPC would then allow European companies to manufacture the products for markets outside of Europe and will also provide a two-year opportunity to stockpile medicines prior to SPC expiry.

Commissioner Elżbieta Bieńkowska, responsible for Internal Market, Industry, Entrepreneurship and SMEs, said: “With this well-calibrated adjustment to intellectual property rules, we are helping Europe's pharmaceutical companies tap into fast-growing global markets and foster jobs, growth, and investments in the EU. We are removing a major competitive disadvantage of EU manufacturers who will soon be able to compete on equal terms on global markets where competition is fierce.”

In particular, the announcement from the European Parliament stated that the change would “generate extra growth of at least €1bn ($1.13bn) per year in net additional export sales” ​and could create an extra 25,000 high-skilled jobs over the next decade. 

Sergio Napolitano, legal affairs and external relations director at Medicines for Europe

BioPharma-Reporter (BPR​) asked Sergio Napolitano (SN​), director of legal & external relations at Medicines for Europe, to clarify what the benefits to the biosimilar and generics industries would be of the waiver introduction, as well as to explain, for the organisation’s part, why the change had become so contentious.

BPR: How will the SPC waiver benefit the biosimilar and generics industries?

SN: ​The objective of the SPC manufacturing waiver is to level the playing field for the European generic and biosimilar medicine producers, between Europe and the rest of the world. Indeed, Europe has the longest IP protection in the world, therefore, generic and biosimilar companies, in order to be able to compete with non-EU producers in non-EU markets and in Europe as soon as SPCs expire, need to delocalise production out of Europe.

The SPC manufacturing waiver will allow them to avoid delocalisation and invest in producing medicines in Europe. This is particularly relevant for biosimilar medicines, on which Europe has been a pioneer and leader worldwide. The European industry, in fact, invented biosimilars and had its first biosimilar on the market in 2006. In the US, for instance, the first biosimilar was approved four years ago. Without the SPC manufacturing waiver, biosimilar producers have needed to invest in developing biosimilars out of the EU, to the detriment of European science, jobs, economic growth, and leadership more generally.

BPR: What specific advantages will this bring to Europe?

SN: ​The SPC manufacturing waiver will allow generic and biosimilar companies, as well as producers of active pharmaceutical ingredients (API), to invest in the production of medicines in Europe. This will allow companies to invest in manufacturing science and R&D within Europe (given the tendency to keep proximity between manufacturing and research centres), with the creation of high skilled jobs (over 25.000 direct jobs, according to EC studies) and economic growth in Europe. It will also create better competition within Europe as soon as SPCs expire in EU Member States, with a subsequent impact on healthcare budgets (€3.1bn within the next three years, according to EC calculations). These benefit calculations are very conservative since they do not even include biosimilar medicines.

BPR: Why is the waiver so strongly opposed by certain areas of the industry?

SN: ​For the originator industry, the waiver will not have any significant impact. Indeed, the European Commission, in its impact assessment, calculated that the impact of the waiver on the originators is close to zero, since the market monopoly granted by the SPC remains absolutely untouched.

Therefore, it is difficult to understand the fierce opposition by originator companies, especially considering that they will be able to actually use the manufacturing waiver in order to produce their own generics, as well as their biosimilars; at the moment, these are being produced by them outside of Europe. Europe should defend the interests of those interested in investing in Europe, rather than outside of Europe.

BPR: Why is the stockpile issue so contentious?

SN: ​Without a stockpiling waiver (i.e. the possibility to produce and stockpile not only for export but also for EU launch on day-1 after SPC expiry), generic and biosimilar companies will not be able to launch in Europe as soon as SPCs expire. They would be in the paradoxical situation of being forced to produce in Europe for export to outside of Europe, and to produce outside of Europe for EU day-1 launch. This would not only be inefficient but also hardly viable, especially for biosimilars, for which a manufacturing plant supplies usually the whole world. In addition, the benefits of stockpiling for day-1 launch in Europe, as calculated in the impact assessment are by far higher than for export.  Therefore, we have not seen any convincing argument for not including the possibility to launch in Europe on day-1. The only effect of not including it would be to delay broad competition in Europe as soon as IP protections expire in the EU.  

BPR: Adrian van den Hoven, president of Medicines for Europe, referred to the waiver as the ‘first step’ in a process of bringing manufacturing back to Europe. What did he mean by this?

SN: ​Europe was a leader in the manufacturing of generic and biosimilar products. We were the first region in the world to even create the concept of biosimilar medicines and to shape a specific regulatory pathway for these products' approval, with the first biosimilar being launched in Europe back in 2006. To help understand the extent of such a pioneering role, consider that in the US the first biosimilar was approved around only four years ago.

Unfortunately, for different reasons, including the EU SPC system (the longest worldwide) that does not allow our companies to manufacture in the EU territory during the SPC period – neither to be ready for the European market right after the SPC expiry, nor for exporting to third countries where an SPC or similar protection is not in place or has already expired – generic and biosimilar manufacturers have been forced to move their production abroad in order to remain competitive worldwide.

The existence of the SPC, with its unintended effect of forcing delocalisation, is a key element for companies to decide where to invest in the production of medicines (without an SPC waiver, out of Europe). However, other regulatory initiatives may stimulate higher and more efficient production in Europe, such as international cooperation for the convergence of regulatory requirements for the approval of medicines, especially complex products. All these are topics under discussion at the regulatory level, but at the moment the risk of massive delocalisation of production and of higher and higher reliance on non-EU products needs urgent resolution through a comprehensive SPC manufacturing waiver.

Sergio Napolitano has been director of legal & external relations at Medicines for Europe for six years, prior to this he worked at the European Parliament in theDirectorate General for External Policies, Committee on International Trade.

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