By May 2024, the 194 countries of the World Health Organization (“WHO”) aim to finalize negotiations on a new international treaty on pandemic prevention, preparedness and response (“Pandemic Accord”).  At the center of the negotiations is the contentious issue of Pathogen Access and Benefit-Sharing (“P-ABS”).  In this blog we explain how this will directly affect many companies developing medical countermeasures against infectious diseases.  Of note, this is not only relevant to vaccines manufacturers, but equally for those entities working on (e.g., repurposed) therapeutics or medicines, diagnostics, and personal protective equipment. 

As we approach the Sixth official round of negotiations on July 17-21, 2023, we have summarized the key issues underlying the P-ABS negotiations and highlighted what companies should look out for.

What is Pathogen Access and Benefit-Sharing (P-ABS) in Global Public Health?

“Access” refers to the rapid, systematic and timely sharing of biological materials with epidemic and pandemic potential, as well as related information.  This kind of sharing is critical during an outbreak of an emerging disease: development of a diagnostic test, a vaccine, or a therapeutic, typically requires access to information and/or physical samples on the pathogen that it targets. 

As we reported in January 2023, pathogen-sharing currently occurs through dozens of formal and informal networks, where timely access is not always guaranteed for everyone.  Therefore, the Pandemic Accord aims to facilitate access through “laborator[ies] recognized or designated as part of an established WHO coordinated laboratory network.”  The system is expected to apply to “all pathogens with pandemic potential, including their genomic sequences.”  That means it will comprise both physical materials – e.g., a vial containing an isolated SARS-CoV-2 Omicron strain, as well as digital information – e.g., the sequence of an Omicron variant of SARS-CoV-2.

Turning now to “Benefit-Sharing”, this term refers to the timely, effective, global, predictable and equitable availability of pandemic related products – i.e., vaccines, therapeutics and diagnostics, as well as “monetary and non-monetary benefits” – e.g., profits from sales or know-how related to pandemic related products.  During COVID-19, inequitable access to masks, reagents, and (updated) vaccines was a major flashpoint.  For instance, South Africa criticized that it had no access to updated vaccines against the Omicron variant, even though South Africa’s researchers were among the first to identify and publish information on the new variant of SARS-CoV-2.  The WHO negotiations seek to make amends for the “… catastrophic failure of the international community in showing solidarity and equity in response to the coronavirus disease (COVID-19) pandemic…”.

But how and why, is access to pathogens for R&D, linked to equitable access to countermeasures to save lives (benefit-sharing)?

Why the Link between Accessing Pathogens for R&D, and Sharing of Medical Countermeasures against those Pathogens?

The political linkage between Access to pathogens, and Sharing of pandemic-related products, goes back to 2005-2007.  During the H5N1 avian influenza outbreak, Indonesia had shared pandemic influenza samples through the WHO’s global influenza laboratory network.  However, Indonesia faced major difficulties in securing access to vaccines developed from “its” H5N1 influenza samples, due to Advanced Purchase Agreements negotiated by other countries.  In response, Indonesia stopped sharing influenza samples. 

From a legal perspective, Indonesia considered that it exercised its “sovereign right” to restrict access to its “genetic resources” under the Convention on Biological Diversity (“CBD”) (and later, its Nagoya Protocol).  To continue sharing, Indonesia demanded that it will have fair access to “benefits” (e.g., vaccines) arising from R&D on the influenza samples materials it shared.  This global incident led to the creation of the 2011 Pandemic Influenza Preparedness Framework (“PIP Framework”) and the notion that countries exercise sovereignty over “their” pathogens.  Unfortunately, Covington’s research into the impact of exercising “viral sovereignty” has shown that delays or refusals for timely pathogen-sharing have led to: (i) sub-optimal vaccine composition, including lack of regional representativeness; (ii) diagnostics that were not tailored or tested against original or new variants of pathogens; and (iii) skewed and non-representative epidemiology in genomic surveillance.

Mirroring the aftermath of the avian influenza outbreak, the COVID-19 pandemic has also led to the reassessment of the global rules on pathogen sharing.  The Pandemic Accord is quite simply history repeating itself, but applying the PIP Framework model much more broadly to “biological materials with epidemic and pandemic potential”.  This is why many vaccine, therapeutic, and diagnostic companies, which were blissfully unaware of the PIP Framework, may be in scope of the Pandemic Accord.  Here is how.

How will P-ABS under the Pandemic Accord affect Vaccine, Therapeutic and Diagnostic Companies?

To understand how P-ABS will impact companies, the comparison with the PIP Framework is helpful.

Advance Agreements between WHO and Companies, or Not?

The PIP Framework applies to “PIP Biological Material”, which means “H5N1 and other influenza viruses with human pandemic potential.”  When a private company wishes to receive these materials from the WHO’s laboratory network, it must first conclude a Standard Material Transfer Agreement (“SMTA”) with the Secretariat of the WHO.  This SMTA will enable the transfer of the physical influenza samples to the company.  In return, the company must agree to provide to WHO specific items to respond to pandemic influenza.  For instance, in the case of vaccine manufacturers, a company can opt to, e.g., “donate at least 10% of real time pandemic vaccine production to WHO”, or to “grant to manufacturers in developing countries licenses on mutually agreed terms that should be fair and reasonable including in respect of affordable royalties.”

This regime created by the PIP Framework is highly controversial.  Amongst the many critiques, from a legal perspective, the negotiation between the WHO – a highly politicized international organization that relies on privileges and immunities under international law – and a private commercial entity, is burdensome and can take years to complete.  Moreover, the private sector also pays millions USD in financial contributions to the PIP Framework, raising questions over accounting and transparency of how the monies are spent.

Whether companies will be expected to sign an SMTA under the Pandemic Accord, depends on where the negotiations land on “linking” access to benefit-sharing.  If access to “biological materials with epidemic and pandemic potential, as well as related information” is considered to be “open”, then in principle there is no need for an advance SMTA.  Countries could give their advance consent for any transfer and use of biological materials falling under the Pandemic Accord.  To assure Benefit-Sharing, in return for the access, companies could register through a central platform at WHO that they are developing countermeasures.  This would avoid burdensome negotiations as in the PIP Framework, while still enabling transparency for the WHO on which entities are developing what. 

However, the prevailing mood in early July 2023, according to the journalists at Geneva Health Files, still seems to favor the PIP model whereby the “the recipient” of biological materials (in physical or digital form) will need to conclude an advance agreement.

Which Companies will be caught by the obligation to sign Advance Agreements?

Who then, are these “recipients” obliged to sign advance agreements?  There lies the catch, since it will not be just those entities that physically have received “biological material with epidemic and pandemic potential.”  The negotiations started 18 months ago, and there are multiple, competing drafts of the Pandemic Accord.  But the wide definition of entities that would be within the scope of the P-ABS, and that would be expected to share benefits, has tellingly survived so far.  P-ABS would apply to those entities “utilizing” biological materials within scope of the Accord, which is defined as follows:

… the production of pandemic vaccines or other pandemic-related products, irrespective of the technology, information or material used, implies the utilization of pathogens with pandemic potential, their genomic sequence, components and related information.

The reason for this fine example of legal drafting goes back to 2016.  Under the PIP Framework, there have been concerns that modern vaccine platforms that only require a genetic sequence of the target pathogen could “evade” benefit-sharing with the WHO because they do not necessarily require receiving physical viral samples from a WHO lab.  Without a transfer of physical viral samples, there would be nothing obliging the company to sign an advance material transfer agreement with a deal on benefit-sharing.  Hence the definition creates a presumption that if a company produces vaccines, therapeutics or diagnostic, it must have somehow – however remotely – accessed pathogens.  Because of this history, we consider that the definition is pretty much set in stone and will likely remain in the final version of the P-ABS.

What kind of benefit-sharing is being considered?

On benefit-sharing, two models have currently emerged:

  • The first approach (i.e., modeled on the PIP Framework) would oblige the “manufacturers of pandemic-related products” to commit, e.g., “real-time access by WHO to a minimum of 20% of the production of safe, efficacious and effective pandemic-related products, in order to support their equitable distribution through the WHO allocation mechanism, in particular to developing countries.”  Half of these pandemic-related products would be provided as a donation, and other half at “affordable prices to WHO.” 
  • The second approach would see benefit-sharing integrated into the purchase agreements between governments and manufacturers of pandemic-related products.  The draft text of the Pandemic Accord envisages that the government-funded purchase agreements would envisage, e.g., “donation of products outside its territories,” “delivery swaps or other modifications to address supply gaps around the world,” or “incentivize the increased production capability… for example through subcontracting, licensing or technology transfer.”

The first approach would require advance agreements between the company and the WHO, as explained above.  It also does not necessarily require the adoption of specific legislation by the countries signing up to the Pandemic Accord, and companies could therefore be confronted quite quickly with new obligations.  The second approach would not require advance contract negotiations with the WHO, and instead would depend largely on the national laws and approaches of WHO governments.

The Future of P-ABS: Four Key Take-Aways

Moving forward, companies should keep in mind the following four key takeaways on Pathogen Access and Benefit-Sharing under the Pandemic Accord:

  • May 2024 is the date to keep in mind.  At that time, the next World Health Assembly in Geneva will make key decisions on the Pandemic Accord.  There’s significant political pressure and momentum for a text by that date.
  • There will not be a Pandemic Accord without a deal on ABS.  In some form, P-ABS is here to stay.
  • The scope of application of P-ABS will be as broad as possible.  Any entity working on infectious diseases, and not just vaccine manufacturers, should be on alert.
  • Access and Benefit-Sharing originated in the Biodiversity Convention and its later 2014 Nagoya Protocol that already apply to pathogens.  The P-ABS may be a “lex specialis” to the general ABS regime.  In any case, regulatory authorities are increasingly enforcing compliance by life sciences companies with ABS – e.g. in the UK (2022), Germany (2018 and 2022) and Switzerland (2023).

In an earlier blog, we noted that the German drug pricing and reimbursement laws are among the most complicated legal areas in the entire field of life sciences law. Now, these laws and the respective German market access rules are becoming more complicated. A new law will come into effect in the next few weeks.

Continue Reading Germany to enact new law with significant changes to drug pricing and reimbursement rules

At the end of June 2023, a draft Health Data Use Act (“GDNG”) and a draft Digital Act (“DigiG”) of the German Federal Ministry of Health have become public. These drafts are part of the German government’s digitalization strategy for the health sector. The Health Data Use Act plans to grant industry companies an access right to patient health data for research purposes. The Digital Act envisages significant restrictions for the pricing and reimbursement of Digital Health Apps. Below, we summarize key aspects of these two legislation proposals.

Continue Reading Germany plans Health Data Use Act and stricter pricing & reimbursement rules for Digital Health Apps

The EU Clinical Trials Regulation 536/2014 significantly expanded the transparency requirements for clinical trials in the EU, resulting in the public availability of most documents and information submitted by sponsors to the new EU Clinical Trial Information System. Tune into this episode of Covington’s Life Sciences Audiocast, where Robin Blaney and Roderick Dirkzwager look at the new transparency requirements and the opportunities for sponsors to redact or defer the publication of commercially confidential information.

In short

We won Case T-201/21 Covington & Van Vooren vs European Commission.  But why did we litigate?  Why did we ask to see how the member states voted on an EU implementing act?  A short background story, worth a few minutes of your time if interested in the EU as a democracy… 

The context

In 2017, the European Food Safety Authority (EFSA) adopted an opinion expressing safety concerns over Hydroxy Anthracene Derivatives (HADs).  HADs occur naturally in plants like cabbage, sprouts, rhubarb, etc.  They taste bitter and are a defence mechanism of the plant against bugs.  In humans, in high concentrations HADs have a laxative effect.

In 2018, the Commission starts work on banning foods with high concentrations of HADs and laxative effect, through a draft Implementing Act.  To be adopted, these kinds of administrative Acts require a positive vote by a Committee composed of the 27 EU Member States. 

By 2020 the draft Implementing Act had expanded in scope and would ban certain HADs altogether.  The ban itself is being challenged in four parallel annulment proceedings (with hearings taking place over the next few weeks), but that’s another story.

The vote

Not all member states agreed with the expanded scope of the draft implementing act. There was quite some back and forth in the Committee, but by 5 November 2020, the Commission pushed for a vote, using the written procedure (remember that, this matters).

The voting sheet for November 2022 shows that 22 member states voted in favour and five member states against.  This means that a Qualified Majority Vote (QMV) had been reached, although a “blocking minority” against the draft Act was just a hair away.  And so the draft ban became law in April 2021.  

But for those who’d closely followed the process, something was off.  Through informal conversations, it seemed that at least one member state had abstained? Why did this not show up in the voting sheet?  And could this abstention have tilted the blocking minority the other way- so that the Act would not have been adopted?  These questions were why we filed the access request under the EU Transparency Regulation.  We wanted to see which member states voted in what way, to double check if and how QMV had indeed been reached.  Then the plot thickened.  We were refused access to 21 votes in favour, not 22 as indicated on the voting sheet.  So this suggested that there was an abstention counted as a vote in favour- but by which country?  When our request for access to the member states twenty-two individual votes was refused, we decided to litigate and brought Case T-201/21.

Public vote = democracy 101

In T-201/21, we had argued that the vote of a member state in an EU context is intrinsically public.  As the exercise of sovereignty by a country, leading to legally binding acts, it cannot be considered an “opinion” that the Commission can refuse to disclose.  Unfortunately the General Court did not accept our argument.  The Court considers that a vote in comitology is “preparatory” to the final implementing act, and therefore access can be refused.  But the Court did agree there is no general presumption that the member states’ votes are confidential.  For the Court, any refusal to release the votes should be duly justified as to how it negatively impacts the decision making process. Let’s see what happens next- will this go on appeal or will we see the votes?  In our view, anyone should be able to check the member states’ votes on any binding EU act.  That is just democracy 101.

On 9 June 2023, the UK Government published further guidance relating to the practical implementation of the Windsor Framework (agreed between the UK and the EU on 27 February 2023, please see our client alert here).  This overarching guidance contains further detail from the Medicines and Healthcare products Regulatory Agency (“MHRA”) on the implementation and operation of medicines labelling rules under the Framework (the “MHRA Guidance”).

The MHRA Guidance is light on detail, but provides confirmation and clarification on certain key points (including timings for new UK-wide packaging), which we set out below.

Background

Following the UK’s withdrawal from the EU on 31 January 2020 and the end of the subsequent transition period, the Withdrawal Agreement between the UK and the EU became effective on 1 January 2021.  The Northern Ireland Protocol is an integral part of such.  This establishes a single regulatory zone on the Island of Ireland, thereby preventing a hard border between Northern Ireland (“NI”) and the Republic of Ireland (“ROI”) by applying specific EU legislation “to and in” NI.  The Windsor Framework will lay down new arrangements aimed at addressing the practical challenges encountered with implementing the Northern Ireland Protocol, in particular for goods entering NI from Great Britain (“GB”).

In this vein, the MHRA Guidance suggests that the Windsor Framework “sets out a long-term solution for the supply of medicines into Northern Ireland.”

UK-wide Medicines Packaging

The MHRA Guidance clarifies that medicinal products intended for the UK market (including NI) must: (i) be authorized by the MHRA; and (ii) bear a clear “UK only” label, which may be placed anywhere on the pack.  The label must comply with MHRA labelling guidance.

The new labelling requirement means that all medicinal products placed on the UK internal market will have the same packaging and labelling and can move freely between GB and NI.  As discussed in our previous client alert here, such products should not be at risk of entering the EU Single Market, but the arrangements potentially create a regulatory border for medicinal products on the Island of Ireland.  The MHRA appears to confirm this when it makes clear that products bearing the “UK only” label “will not be available on the market in [the Republic of] Ireland, or elsewhere in the EU.”

Further, the MHRA confirmed that “UK only” medicines packs will not need to comply with the EU Falsified Medicines Directive 2011/62/EU and bear two-dimensional barcodes and serialization numbers.  Nonetheless, the MHRA “will expect anti-tamper devices to remain on all medicine packaging.”

Timelines Confirmed

The MHRA Guidance confirms that the new measures will be effective from 1 January 2025.  This is consistent with Regulation (EU) 2023/1182, which carves-out medicinal products destined for the UK internal market, specifically NI, from the EU pharmaceutical rules.  In order to provide a single deadline for new packaging requirements for the UK market, the MHRA will continue to allow manufacturers to supply medicines in legacy EU packaging until 31 December 2024.  This provides a further one year extension to the previous deadline of 31 December 2023 that required medicines for GB to be presented in GB compliant packaging.

The MHRA therefore advises that: “UK-based suppliers or distributors of medicines should prepare for different packaging for medicines to be supplied to UK and EU markets from 1 January 2025.”

In addition, the MHRA clarifies that medicine packs already on the UK market and within the supply chain in existing packaging after 1 January 2025 may remain on the market until their expiry date.

Bridging Mechanism for Centrally Authorized Products

Until the implementation of the new measures in January 2025, marketing authorizations (“MAs”) issued by the European Commission through the centralized procedure will continue to be applicable in NI, in accordance with EU law.  However, such MAs are not valid in GB, where a separate national application and MA is required.

Where manufacturers accordingly submit parallel MA applications to both the European Medicines Agency and the MHRA, and the latter issues a MA first, the UK Government will introduce a bridging mechanism for NI.  In such circumstances, companies will be able to supply a GB-licensed product to NI for a period of six months or until the European Commission grants or refuses a centralized MA for the product, whichever is sooner.

This safeguard is designed to ensure that patients in NI have access to medicinal products at the same time as those in other parts of the UK.

Detailed Guidance to Follow

As noted above, this particular MHRA Guidance provides little detail, but does envisage the publication of further “comprehensive” MHRA advice “in due course.”  Such further guidance will provide specifics covering labelling requirements and authorizations for medicines to be marketed in NI, and will be developed based on close engagement with the industry.

Comment

While the MHRA Guidance importantly confirms the timeline for the implementation of new medicines rules under the Windsor Framework and indicates that detailed guidance will follow, it provides limited further insights at this stage. Covington will continue to follow developments and provide further updates.  

In the meantime, if you would like to discuss the Windsor Framework and what it means for your supply chains, please contact our specialist UK and Irish life sciences regulatory lawyers: Grant Castle and Marie Doyle-Rossi.

On 26 May 2023 the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) announced it plans to introduce an international reliance route for the approval of medicinal products.  This shows the UK is now looking beyond the EU in its approach to recognizing foreign marketing authorizations.  The MHRA is “focused on providing UK patients faster access to the absolute best, most cutting-edge, and safest medical treatments” by allowing fast-track reliance on authorizations from a number of trusted jurisdictions, not just the EU. 

What are the Current Reliance Procedures?

After the UK left the EU, the MHRA introduced EU reliance routes.  The routes mean that applicants with a marketing authorization (MA) from the EU can undergo an accelerated 67-day review procedure in the UK to obtain an MA.  These routes are available to medicinal products approved under the:

  • centralized procedure: the MHRA can rely on a decision by the European Commission to grant a centralized MA and determine whether to grant a Great Britain (GB) MA; and
  • mutual recognition or decentralized procedure: the MHRA can also consider an MA granted by an EU/European Economic Area (EEA) Member State to grant either a UK or GB MA.

However, these routes are only temporary.  They are due to expire at the end of 2023.

How will the New International Reliance Route work?

In its Spring Budget, the UK Government said it intended to introduce a new international reliance route.  It would also provide funding to the MHRA to implement this route (discussed in on previous blog here).

The MHRA’s May announcement sets out its plans for this new route.  From Q1 of 2024 the MHRA intends to recognize approvals of medicinal products from:

  • Australia,
  • Canada,
  • the European Union,
  • Japan,
  • Switzerland,
  • Singapore, and
  • the United States.

As for all other MAs granted in the UK, the MHRA will still remain the sovereign regulator and will remain responsible for approving all applications under the recognition route.  Therefore, even if another regulator has approved a medicinal product, the MHRA retains the authority to reject an application if it does not consider it sufficiently robust.

The announcement highlights that this route will sit alongside the MHRA’s other routes for approval.  This includes the MHRA’s own Innovative Licensing and Access Pathway.  The MHRA notes “[t]hrough this new dual approach, we will contribute to the UK’s ambition to be a global science superpower, by making the UK one of the best places in the world to bring life-changing healthcare products to patients safely.”

What are the Benefits?

The MHRA sets out a number of benefits of these new reliance routes.  By expanding the reliance route to a number of trusted regulatory partners, the MHRA can leverage their “expertise and decision-making.”  Additionally, the reliance routes should mean the MHRA can approve “cutting-edge medicines” more quickly, at a lower cost and with a streamlined regulatory process.

This new route should help to reduce the risk of the UK being left behind if  companies focus on launching innovative new products in these other jurisdictions.  Arguably, the UK should have greater access to such products if they are launched in other key jurisdictions. 

What Next?

This announcement is not legally binding.  The UK Government will have to draft a Bill to introduce this new route.  This will then have to be approved by Parliament.  Finally, the announcement refers to this as the “start of a new international framework for medicines.”  It also notes that work has started on developing similar routes for medical devices.  Therefore, we would expect the MHRA to publish details of other expedited routes for medicinal products and medical devices in future.

The Voluntary scheme for branded medicines pricing and access (“VPAS”) is a voluntary agreement that regulates the price of the vast majority of branded medicines sold in the UK (including branded generics and biosimilars).  VPAS is critical to the commercial interests of most innovative pharmaceutical companies operating in the UK.  It has traditionally been negotiated and agreed upon by the Association of the British Pharmaceutical Industry (“ABPI”) and the Secretary of State for Health and Social Care (“SoS”). 

These negotiations take place pursuant to Sections 261 – 263 of the National Health Service Act 2006 (the “Act”), which permit the Secretary of State to agree to a voluntary scheme with “the industry body.”

The current VPAS expires at the end of the year, and is set to be replaced by a new scheme in January 2024.  Negotiations between the ABPI (as the industry body) and the Department of Health in respect of the new VPAS commenced on 4 May 2023.

The British Generic Manufacturers Association (“BGMA”) has brought a judicial review to challenge the decision taken by the SoS not to include BGMA in these negotiations. 

BGMA argues that the VPAS not only affects branded innovator products (whose interests are traditionally represented by the ABPI) but also branded generics and biosimilars.  It argues that the relevant “industry body” in respect of those products must be BGMA and not the ABPI.  According to BGMA, it must therefore have a seat at the negotiating table.

The SoS has stated that he prefers to deal with one “industry body” in the negotiations – namely the ABPI – and would only grant BGMA “observer status” in the current negotiations. 

The ABPI is also involved in the case as an interested party.

While the detailed grounds of the SoS and the ABPI are not yet available, we note the following initial observations from the court papers currently available:

  1. The application for permission to apply for judicial review will be rolled up with the substantive claim.  In other words, if the Court grants permission then the substantive case will be heard at the same time.
  1. BGMA applied for an expedited timeline, which the Court has granted.  Given that the preparatory steps set out in the Court’s directions will not be completed until the week commencing 12 June 2023, it is likely that the hearing will take place in late June 2023 (although the timing is not totally clear).
  1. It appears the SoS offered observer status to BGMA for the VPAS negotiations on condition that BGMA discontinue any legal proceedings.  BGMA rejected this.
  1. It appears to be common ground between the parties that BGMA does indeed represent the interests of manufacturers of branded generics and biosimilars.  The SoS, however, has said he wishes only to negotiate with a single industry body (rather than multiple bodies) – on the basis that this is most advantageous to the interests of the NHS – and has the discretion to do so. The SoS believes the appropriate body here must be the ABPI.
  1. BGMA contends that:
  • Section 261 of the Act does not require, nor provide the discretion for, the SoS to select and deal with a single body.  According to the claim, the SoS has therefore made an error of law, given consideration to irrelevant factors, and has frustrated the relevant statute.  Rather, according to BGMA, the Act requires the SoS to make a judgment as to whether a body is “appropriate” to represent a section of the industry in negotiations.  The SoS has failed to carry out a reasonable and objective assessment of who the relevant industry body/bodies is/are here.
  • In the alternative, if the SoS does have discretion to select the relevant industry body/bodies, then in this case the SoS has exercised that power unreasonably, unfairly and incorrectly.

We will continue to follow this case closely and provide updates. At this stage, given the claim is now expedited, we imagine the outcome will be known by mid-Summer.  In commencing negotiations already (and only with the ABPI), the Department of Health seems to have taken a pragmatic “continue as before” approach, unless and until the Court requires it to change tack.

If you would like to discuss the case and what it may mean for your company’s operations, please contact: Grant Castle, Robin Blaney, Brian Kelly and Raj Gathani.

On April 27, 2023 the European Commission (“Commission”) released its proposal to introduce a single procedure for the granting of Supplementary Protection Certificates (“SPCs”) throughout the EU.  The changes are intended to complement the new unitary patent procedure that will enter into force on June 1, 2023.  The Commission intends the new unitary SPC to encourage innovation and promote growth and jobs in the pharmaceutical industry, as well as incentivizing innovators to use the unitary patent system.  The proposal package also contains a draft recast of the basic SPC Regulation governing SPCs granted by national patent offices. 

For the purposes of this blog, we have focused on SPCs for medicinal products, although similar proposals apply with respect to plant protection SPCs.

Background to SPCs and Unitary Patents

The current SPC Regulation (EC) No 469/2009 (“SPC Regulation”) provides patent holders the ability to enjoy additional patent protection with respect to a medicinal product under an SPC for up to five years where there is a delay between the date of filing of the patent and the grant of the marketing authorization (“MA”).  An SPC takes effect at the end of the patent term and remains in force for the period between the date of patent filings and the date that the first MA for the medicinal product covered by such patent was granted, minus five years (and subject to a maximum duration of five years).  However, the period may also subject to a possible six-month extension under the Pediatric Regulation 1901/2006/EC upon the successful completion of an agreed pediatric investigation plan (currently only for non-orphan products).  Patent holders must lodge separate SPC applications with national patent offices in order to obtain SPC protection in each Member State where such protection is available.

The unitary patent is a single, uniform patent right that will have effect in all Member States participating in the unitary patent system, and the corresponding Unified Patent Court (“UPC”) will provide a forum for uniform patent litigation in participating countries.  25 of the 27 EU Member States have agreed to participate in the EU unitary patent scheme, although only 17 to date have signed and ratified the Unified Patent Court Agreement (which establishes the Unified Patent Court (“UPC”) as an international court).

Proposed Unitary SPCs and Combined Application Procedure

Unitary SPC rights will attach to the underlying unitary patent and will therefore take effect in the (currently) 17 Member States that will recognize unitary patents from June 1, 2023.  For medicinal products, unitary SPCs will only be available for products approved via the centralized procedure.  The European Union Intellectual Property Office (“EUIPO”) will be the body responsible for examining and issuing unitary SPCs.  Unitary SPC applicants who receive a negative opinion from the EUIPO will be able to appeal the decision before the Boards of Appeal of the EUIPO, with further appeals possible to the Court of Justice of the European Union.  The EUIPO will also handle third party opposition proceedings and will have jurisdiction to hear revocation actions.

In addition to the new unitary SPC, companies that satisfy the relevant SPC requirements will be able to file a “combined application” to obtain both a unitary SPC and a bundle of national SPCs for any Member States not included under the protection of the corresponding unitary patent.  Double protection by both a unitary SPC and a national SPC in any given Member State is prohibited.

The Commission’s accompanying factsheet states that the new system will provide estimated savings of €137,000 per applicant that receives five-year-long SPC protection in all 27 Member States.  Without a unitary SPC or combined application process, a unitary patent could only be extended through separate national SPC procedures, which can vary between Member States (increasing the administrative burden and costs for innovators).  The new Regulation intends for unitary SPCs to be able to be litigated before the body responsible under national law for the revocation of the corresponding basic patent.  Assuming that the Agreement on a Unified Patent Court (“UPCA”) is updated accordingly, infringements of unitary SPC rights may be handled by the new Unified Patent Court (provided that the Court has relevant jurisdiction over the underlying unitary patent).  

Proposed Updates to the SPC Regulation

Within the proposed recast of the SPC Regulation, the Commission has included some new explanatory language within the recitals of the previous SPC Regulation.  Some of these clarifications appear to specifically address the subject matter of previous EU case law relating to SPCs.  For example, the language in the proposed recitals confirms that an SPC cannot be granted to a patent holder on the basis of an MA held by a third party without such third party’s consent (so called “third party SPCs” or sometimes “hostile SPCs”).  In addition, there is new language regarding the acceptability of having multiple SPCs in connection with a single product, and new explanatory language regarding the SPC protections available for a given product and its therapeutically equivalent derivatives.  Aside from the changes to the Articles of the SPC Regulation, the changes to the recitals will likely impact the interpretation of SPC rights and eligibility requirements by national patent offices and courts in the future.

Conclusion

Overall, the new streamlined approach to obtaining EU-wide SPC protection will likely be welcomed by innovative pharmaceutical companies.  At the same time, generic companies are also likely to welcome the increased transparency that the unitary SPC and combined application procedures promise to bring.  It remains to be seen to what extent the proposed changes to the language of the basic SPC Regulation will affect the scope of rights available under SPCs (and how such rights will be interpreted by national patent offices and courts following such changes).

This blog is based on the wording of the EU’s proposal published on 27 April 2023.  This wording could significantly change during the legislative process.  Our Dublin, Brussels, Frankfurt and London teams will continue to monitor this legislation.  We will be hosting a webinar to discuss the impact of the these recent pharmaceutical legislation proposals on 9 May.  To sign up for the webinar please click here.