From Patent to Patient - The importance of IP rewards and incentives

ABSTRACT: IP REWARDS AND INCENTIVES IN THE EU CONTEXT

The European Commission evaluation of IP rewards and incentives under EU pharmaceutical law followed the Employment, Social Policy, Health and Consumer Affairs Council (EPSCO)24 Council conclusions under the Dutch Presidency in 2016 on the one hand, and ordinary reviews required in certain regulations on the other.

Among the changes to the European IP system understood to be under consideration by the European Commission is a manufacturing and export exemption to the Supplementary Protection Certificates (SPCs), which would allow generic manufacturers to manufacture medicines in the EU whilst the original product is still under the protection of SPCs, though they could only be sold to countries outside the region.

Generic medicine manufacturers argue that such a waiver would create jobs in Europe allowing the EU to better compete with India and China.

However, survey respondents indicated significant disagreement with this assumption. Most healthcare biotechnology developers and manufacturers said they believed it would lead to job losses in the sector and a rapid erosion of innovation investment.

Their views are supported by the findings of a recent study commissioned by among others, the US Chamber of Commerce25. The study suggests that a manufacturing and export exemption is likely to have a detrimental effect on the European research-based biopharmaceutical industry and is unlikely to provide a significant and sustained positive economic impact on the European generics industry.

The study finds that implementation of an EU wide SPC manufacturing and export exemption would potentially result in annual losses ranging between EUR 2.30 billion and up to EUR 4.61 billion to the global innovative biopharmaceutical industry, with approximately EUR 1.15 billion to EUR 1.96 billion of these attributed to the European innovative biopharmaceutical industry.

Translating these losses to current levels of biopharmaceutical sector employment and R&D investment the effect of the introduction of an EU wide SPC manufacturing and export exemption could be between 4,500-7,700 direct job losses (with an additional 19,000-32,000 indirect job losses) and a decrease of between EUR 215 million to EUR 364 million in R&D investment.

On the other hand, there was support from stakeholders for the idea of introducing unitary SPCs, in line with the unitary patent scheme, especially if it involved the establishment of a virtual body composed of SPC experts from national patent offices, as an authority to grant them.

Similar to a unitary patent, a single SPC application that is valid in all member states would simplify the complex terrain of intellectual property across Europe and would reduce internal time and resources.

The overwhelming majority response from the EuropaBio survey was that the current IP system should be preserved as it provides a balanced framework enabling medical innovation. “The industry is operating within a very fragile ecosystem,” said a survey respondent. “It is important the Commission at least maintains the status quo.”

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