The European Commission's first steps to improve the current Supplementary Protection Certificate system in Europe

The European Commission’s Directorate General for Internal Market, Industry, Entrepreneurship and SMEs plans to contract a legal study on the EU system of Supplementary Protection Certificates (SPCs).  The study is due to commence later this year and it will be used by the Commission for an overall evaluation of the SPC system, primarily in order to assess the feasibility of a new “unitary” SPC and also to consider revisions to the existing SPC legislation.

Supplementary Protection Certificates (SPCs) offer extremely valuable patent term extensions for medicinal products marketed in the EU by innovative life sciences and pharmaceutical companies¹. The existence of the SPC regime (codified in Regulation (EC) No 469/2009, also known as the SPC Regulation), which was brought into force in the EU in the early 1990s, is therefore vital to many companies operating in the life sciences sector.

However, despite the obvious benefits of having an SPC system in the EU, the legislative regime which is currently in place has in recent years received a degree of criticism by industry players - in particular, by users of the SPC system who have been faced with a period of legal and commercial uncertainty because of the way in which the legislation has been implemented in the EU.

One of the biggest problems with the SPC Regulation (as currently drafted) is that it is a relatively short document, without containing too much detail or guidance. This leaves open many questions, particularly in relation to the validity of an SPC (e.g. exactly what is meant by a “basic patent” ² ), in addition to procedural issues. This is perhaps an artefact of the age of the legislation – the wording of the SPC Regulation is in part based on the underlying “Explanatory Memorandum” which is a document dating back to April 1990. Against this, the scientific advances in the field of drug discovery and drug development over the last 20-30 years have been extraordinary, and so arguably the wording of the SPC Regulation needs to be updated in order to reflect properly the advances made in this field. In any event, as a result of the lack of detail and clarity in the current wording of the SPC Regulation, numerous references have been made by various national courts to the Court of Justice of the European Union (CJEU) in relation to the interpretation of the SPC Regulation, particularly over the last 5-7 years. The CJEU has in turn provided some further guidance on those specific questions referred to it - however, it is worth noting that the CJEU has in some cases declined to give guidance on some of the subsidiary questions referred. The established CJEU case law has to some extent provided users of the system with much-needed answers on questions of interpretation of the SPC legislation, but there are still important questions which remain.

Another major problem with the existing SPC system in the EU is that there is no centralised procedure available. SPCs are currently obtained in the EU on a member state by member state basis, through national patent offices, using national grant procedures. That of course means that users are forced to obtain SPC protection in a “patchwork” manner, with potentially inconsistent decisions between national patent offices and in some cases vastly different approaches to timings and procedures.

With the Unitary Patent and Unified Patent Court (UPC) steadily approaching (potentially as soon as early 2017)³ , some industry players had originally hoped that the current SPC system would be replaced by a centralised system at the same time as the arrival of the UPC. However, there is currently nothing in the draft set of UPC proposals which would bring about this sort of change. This disparity - between the proposals for UPs and the existing SPC regime - has caused some concern amongst industry players. For example, last year, the European Federation of Pharmaceutical Industries and Associations published a Joint Position Paper on this topic, calling for proposals to introduce a new unitary SPC ⁴ .This push by industry and users of the system has no doubt aided the Commission’s decision to conduct the study currently proposed.

On December 15, 2015, the European Commission published a call for tender to conduct a “study on the legal aspects of the Supplementary Protection Certificates in the EU” .  This study has as its  primary purpose the evaluation as to “whether a new European SPC title [i.e. unitary SPC], with the current or broader scope, with improved provisions, is required to meet the requirements of current and expected innovative market developments in the EU”⁵. The Commission also states that “It shall also suggest whether the existing SPC rules need to be recalibrated given identified limitations”.

To assist in this evaluation, the study aims to look at the existing SPC system as a whole, considering:

• The lack of a “unitary” SPC, which the European Commission suggests may be at odds with current European-dimension trends;
• The potential legal uncertainty and lack of predictability in the life sciences industry which have been brought about by numerous references to the CJEU (clarifying issues such as the definition of the term ‘product’, scope of protection of the SPC and duration of the SPC term);
• The need for a harmonised grant procedure, to address the current gaps and divergences that have arisen between different member states in the EU;
• The need to update the SPC regime in the light of challenges arising from evolving pharmaceutical and agrochemical innovations, such as new uses of previously known active ingredients and the move to an increasing number of products consisting of biologics rather than small molecule drugs;
• The potential risk of discrimination for new products or sectors which are not currently covered by the SPC regime but which currently or in the future may be equally subject to lengthy regulatory trials; and
• The “optimal” duration of SPC protection in the EU, taking into account similar systems in other countries

It appears that the study, which is due to commence shortly after April 2016, promises to be a relatively comprehensive one. Furthermore, the Commission has already recognised that the existing SPC system in the EU has a number of shortfalls, and it has actually identified some of these in its tender paper. It will therefore come as a great relief to innovators in the life sciences industry that this process for improvement and change has finally begun in the EU.

The study might also have a wider impact outside Europe - for example, in Canada, there are proposals to introduce a new SPC system and it remains to be seen whether the draft Canadian legislation will be based on legislation already introduced in the EU (as opposed to other regions of the world, such as the US or Japan).

In relation to timings, the call for tender is just the first step in what will inevitably be a very long process towards the European Commission evaluating what amendments it believes need to be made to the current SPC regime.  It will therefore be some time before any changes to the existing legislation are actually implemented.

Whilst we eagerly await further announcements from the European Commission on the next steps following the study, the good news is that industry players and users of the SPC system have plenty of time to provide their input on how any proposed changes to the SPC system should be achieved.In addition to some of the issues already mentioned above, there may be other areas on which innovators and other companies wish to comment - for example, whether a formal SPC opposition procedure should be available; variations to the maximum term provisions (currently capped at 5 years); and/or whether a transition period might be appropriate (bearing in mind the UPC and UP transition period proposals).Watch this space for further developments.