What does Brexit mean for biopharma companies?
Many issues around free trade and the movement of goods and services have been well documented but details of how this will affect IP in the UK have grabbed fewer headlines.
Nevertheless, this issue is highly relevant as IP can underpin the value of businesses, especially in the pharmaceutical industry.
The EU-UK Trade and Cooperation Agreement, which came into effect on January 1, outlines the ongoing relationship between the UK and EU and governs trade between EU member states and the UK. The Agreement includes a number of provisions relating to the protection and enforcement of IP rights, and specifies that such rights will continue to be protected to at least the standards required by the international treaties that the UK and EU are both parties to. We comment on some key considerations for biopharma companies below.
Post-Brexit, patent protection is unaffected.
Patents covering the UK will continue to be granted by both the UK Intellectual Property Office (UKIPO) and the European Patent Office (EPO), neither of which are EU institutions. The UK will continue to be one of the 38 contracting states to the European Patent Convention, which is the international treaty that established the EPO. UK patent attorneys can also continue to represent their domestic and overseas clients before the EPO in obtaining European patents covering the UK and other European countries of interest.
The UK has confirmed that it will not seek to be involved in the EU’s proposed Unitary Patent system. The future of the Unitary Patent was already uncertain before Brexit in any event. If, however, the system does come into being, there will be no change to the territorial scope of patents that can be obtained via the EPO, but simply that the patents granted for some EU countries (not including the UK) will be part of a Unitary Patent rather than individual patents for those countries. Further, Unitary Patents will be available to applicants regardless of nationality or residence and so UK companies would still be able to benefit from the system
Supplementary Protection Certificates (SPC)
As it typically takes considerable time for a pharmaceutical company to move from the development stage to the sale of a drug, Supplementary Protection Certificates (SPCs) can compensate the patent owner for some of the time lost between the patent’s filing date and the date of marketing authorization.
Introduced in the European Union in 1992, SPCs were designed to encourage pharmaceutical companies to do more research into new medicines and make the EU a more attractive market for pharmaceutical and biologics companies to operate in.
Upon leaving the EU, the UK has introduced its own SPC system that largely maintains the status quo of the existing EU law and thus SPCs will continue to be a valuable asset for pharmaceutical companies who are looking to protect new drugs in the UK.
The good news for biopharma companies is that UK SPCs which have already been granted or applied for will continue to be in effect. In addition, all new applications will, as before, be made via the UKIPO on the basis of a UK or EP(UK) patent and a marketing authorization in the UK.
The UK’s Withdrawal Act outlines that EU legislation on SPCs at the end of the transition period is absorbed in the form of ‘retained EU law’ with minimal adjustments. Further, Court of Justice of the European Union (CJEU) case law as it stands at the end of the transition period will continue to apply unless and until this is changed by the UK Supreme Court or the Court of Appeal (or equivalent).
Only time will tell whether the UK courts will begin to diverge from CJEU case law in order to provide legal and commercial certainty for the new UK system. Added to this, changes to the UK SPC system could be implemented following further trade negotiations by the UK, or the EU could choose to amend its own SPC law independently of the UK.
The impact of two marketing authorizations: UK and Northern Ireland
SPCs in the UK are secure for now but one key sticking point of the negotiations between the EU and the UK was the role that Northern Ireland would play. With tensions around a hard border in Ireland and what this would mean for the Good Friday Agreement, it was decided that Northern Ireland will remain in the Customs Union to maintain freedom of movement. Due to this, authorization of medicinal products and plant protection products in Northern Ireland must be in accordance with EU regulations.
One of the key requirements for an SPC is an authorization to place the product on the market. Although the UK is now split in terms of marketing authorizations – authorizations for Northern Ireland under EU regulations and authorizations for Great Britain under UK regulations – moving forward, biopharma companies will still be able to get an SPC covering the entirety of the UK, provided that they have marketing authorization(s) covering Great Britain and Northern Ireland.
Even so, if only an authorization covering one of Great Britain and Northern Ireland can be obtained in time, a UK SPC can still be granted on that basis and simply have a restriction on its territorial scope.
Costs after Brexit
One concern for biopharma companies is that there will be increased costs for UK pharmaceutical companies when applying for IP protection.
However, at least from a patenting perspective, there is unlikely to be a significant impact on costs. One of the aims of the European Patent Convention is that companies can make just one application and be granted a bundle of patents covering states both within and outside the EU, which are maintained through payment of annual renewal fees in each country. This centralized patent granting process usually saves costs for patent applicants through its streamlined procedure. Hence, it is expected that biopharmaceutical companies will still continue to use the European route for patents as before. As mentioned above, obtaining patent protection in the UK via either the UKIPO or EPO route is unaffected by Brexit.
There may be additional legal costs associated with securing UK SPCs to reflect the fact that marketing authorizations in the UK may cover only part of the UK (Great Britain or Northern Ireland), and there will likely be increased enforcement and litigation costs involved in maintaining separate trade mark and design registrations in the UK, alongside those in the EU. However, given that the legal systems between the UK and EU are currently largely the same, there should not be significant additional costs to comply with different intellectual property rules.
The key takeaway for biopharmaceutical companies is that the new agreement should have little impact on IP protection moving forward, at least in the short term. However, changes in EU law will not be updated and incorporated into UK law automatically. Therefore, the UK and the EU can independently diverge from the existing regulations. Although little has changed in the immediate aftermath of the withdrawal agreement, it will be important that pharmaceutical companies remain aware of future changes both in the UK and EU.