New and innovative drugs can be patented. Often, a significant part of the patent life is lost due to procedures for obtaining regulatory approval. To compensate for that time, Supplementary Protection Certificates (SPCs) can be granted to extend patent life by up to five and a half years.
Accordingly, SPCs help to sustain a strong incentive for innovative pharmaceutical research. So far, so good. However, upon expiry of the SPC, there is an uneven playing field, favoring non-European companies over European ones, and placing European pharmaceutical companies at a disadvantage.
How SPCs Hurt European Drug Manufacturers
To sell their generics immediately after the original drug's SPC expires (known as "Day 1"), European manufacturers need to make and stockpile the drugs beforehand. But under the SPC, doing this in Europe would be illegal, forcing companies to move production to non-European countries where these restrictions don’t apply. This relocation hurts the European economy by driving jobs, investments, and production facilities out of the region. It also makes it harder and more expensive to bring these generic drugs back into Europe once the SPC expires, delaying their availability and potentially raising prices for patients.
The SPC Manufacturing Waiver: A Solution That Falls Short
In 2022, the European Union introduced the SPC Manufacturing Waiver to address this problem. The waiver was supposed to allow European manufacturers to start making and stockpiling generic drugs in Europe during the last six months of the SPC, as long as the drugs are not sold until the SPC expires. The idea was to give European companies the same advantages as their non-European competitors.
However, this waiver hasn’t worked as well as hoped. According to a 2024 report by Medicines for Europe, the waiver still leaves European companies at a disadvantage because of several strict and complex rules:
- Not Enough Time: The six-month window to start manufacturing for Day 1 in Europe is considered too short, especially for more complicated drugs like biosimilars, which can take over a year to produce.
- Limitations on Storage and Transportation: The rules also limit how companies can store and move their products within Europe, which makes it harder to have the drugs ready for immediate distribution when the SPC expires.
- Risk of Lawsuits: Companies are required to notify authorities in other countries about their plans to manufacture these drugs, which can lead to legal threats from patent holders who don’t want the competition.
- Unfair Disclosure: European companies have to publish details about their plans, which can give non-European competitors an advantage, as they can see exactly what the European companies are planning.
- Complicated Labeling Rules: The waiver includes strict labeling requirements that add extra costs and cause confusion, making the process even more difficult.
Why This Matters
The bottom line is that while the SPC Manufacturing Waiver was meant to help European companies compete, it hasn’t fully solved the problem. The restrictions and requirements that come with the waiver have put European pharmaceutical companies at a new disadvantage. This ongoing issue is bad for the European economy because it continues to push jobs, investments, and manufacturing outside of Europe, while also delaying patients’ access to affordable medicines.
As the debate continues, it’s clear that more needs to be done to level the playing field and ensure that European companies can compete fairly with their non-European counterparts. The question remains: Can the rules be adjusted to truly support innovation, competition, and the well-being of European patients and the economy?
