remuneration Archives - European Industrial Pharmacists Group (EIPG)

A new member within EIPG


The European Industrial Pharmacists Group (EIPG) is pleased to announce the Romanian Association (AFFI) as its newest member following the annual General Assembly of EIPG in Rome (20th-21st April 2024). Commenting on the continued growth of EIPG’s membership, EIPG President Read more

The EU Parliament voted its position on the Unitary SPC


by Giuliana Miglierini The intersecting pathways of revision of the pharmaceutical and intellectual property legislations recently marked the adoption of the EU Parliament’s position on the new unitary Supplementary Protection Certificate (SPC) system, parallel to the recast of the current Read more

Reform of pharma legislation: the debate on regulatory data protection


by Giuliana Miglierini As the definition of the final contents of many new pieces of the overall revision of the pharmaceutical legislation is approaching, many voices commented the possible impact the new scheme for regulatory data protection (RDP) may have Read more

Reform of pharma legislation: the debate on regulatory data protection

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by Giuliana Miglierini

As the definition of the final contents of many new pieces of the overall revision of the pharmaceutical legislation is approaching, many voices commented the possible impact the new scheme for regulatory data protection (RDP) may have on the entire European pharmaceutical and healthcare sectors. In the meantime, the Committee for Legal Affairs of the European Parliament approved the amendment to the Regulation proposed by the Commission to govern the issuing of Union compulsory licences for the manufacturing of medicinal products during crisis.

The initial proposal on regulatory data protection

To resume the main features of the EU Commission proposal on incentives referred to regulatory data protection (RDP), the current 8+2(+1) scheme would be remodulated to grant a standard 6-year period of regulatory data protection, valid for all newly approved medicines. This might be followed by extension periods of different length, depending on specific conditions (see here the impact report, Chap. VII).

The proposed additional criteria may support an RDP duration up to 12 years, as for example in the case of medicines for orphan diseases or unmet medical needs. But the more debated criteria proposed by the Commission is perhaps the request to the holders of marketing authorisations (MAH) to market newly approved medicinal products in all EU members states at the same time, within 2 years from the date of the MA. Should this occur, the MAH may benefit from a 2-year extension of the RDP.

New chemical substances undergoing clinical testing against a relevant and evidence-based comparator may also benefit of a 6-month extension of the RDP. Should the product be already in the market, the approval of a new indication coupled to the provision of a significant clinical benefit may extend regulatory data protection for 1 year. The same extension applies to products that changed their prescription status on the basis of significant non-clinical tests or clinical studies. Repurposed medicinal products may benefit from a 4-year extension of regulatory data protection in case of a new therapeutic indication not previously authorised in the EU.

The RDP is critical for the EU’s competitiveness

According to the Director General of EFPIA, Nathalie Moll, there are three key areas to be kept in mind while reaching the final decision: the positive net financial impact of regulatory data protection for both patients, the EU and member states, the R&D attractiveness at the EU and national level, and the fact the US has currently a more attractive RDP than the EU (see here more).

The regulatory data protection scheme proposed by the Commission might greatly reduce the number of new medicines available in Europe in the next 15 years, says EFPIA. The Commission’s estimate of €1.2 billion/year of additional costs for members states for every additional year of regulatory data protection would be wrong, it adds, as it is based on the List Prices of medicines. But many EU countries have clawback-type mechanisms to reduce this type of impact, which should be added to the indirect impact innovative medicines may exert in reducing other costs supported by healthcare systems. Thus, the final economic impact calculated by EFPIA would be €2 billion/year.

The attractiveness for R&D investments of a certain geographical area may prove also important, especially in the case of advanced therapies and complex types of therapeutics or to support research targeted to unmet medical needs.

As for the duration of regulatory data protection in the US, according to EFPIA this reaches 12 years (including market protection) for biologics and around 6-7 years of market protection for small molecules. ”RDP for non-biologics is the only element of IP where Europe leads on the US and is in the control of EU policy makers”, wrote Nathalie Moll.

On the other side of the game, Medicines for Europe on behalf of the generic and biosimilar industry also addressed a note to the rapporteur and shadow-rapporteur of the EU pharmaceutical legislation.

The key message is that there might have been a misunderstanding about the concrete impact of the extensions of regulatory data protection proposed by the EU Parliament, which received a strong political support, due to the complex interactions between the pharma legislation and the IP and SPC legislations.

The correct understanding of the dual track of pharmaceutical incentives (regulatory and patent/ SPCs) should be thus the key area of attention during the final set up of the new provisions. According to Medicines for Europe, some parliamentary amendment would extend the duration of regulatory data protection well beyond the duration of SPC, thus further extending the global protection (up to 13.5 or 18 years, depending on the specific proposal) and preventing the entry of generics and biosimilars in the European market.

The analysis run by the industrial association also calculated the potential impact on pharmaceutical budgets corresponding to the possible different lengths of regulatory data protection, and how the same budget might be used to potentiate the resources of healthcare system in terms of available nurses and doctors. The calculated range spans from €2.5-5.35 bln for the three countries considered (France, Germany, Spain) up to €19.5 bln to the entire EU in the case of 13.5 year extension, and it reaches, respectively, €13.2-24 bln and €99.5 bln in the case of the 18 years extension.

A strong critical voice in support of a true competition

The European Social Insurance Platform (ESIP) published a note at the end of February signed by its Director, Yannis Natsis. “Let us be clear that these protection periods are not companies’ rights, but privileges granted to the manufacturers by the European legislators, and they come at a significant cost for public budgets”, wrote Mr. Natsis.

The extension of regulatory data protection would thus result in a possible distortion of competition, and in a delay of patients’ access to treatments. Mr. Natsis also identified the “elephant in the room” of the European healthcare system, i.e. the extremely high prices of medicines in many therapeutic areas. An issue that ESIP’s Director considers a systemic problem.

The note supports the proposed 6-year standard regulatory data protection, with extensions that should not exceed the current situation. Incentives for orphan medicines should go in favour of truly rare diseases and unmet medical needs. ESIP also supports the availability of alternative incentive mechanisms to reward development of new antibiotics, instead of the Transferable exclusivity vouchers (TEVs) that should be replaced.

ESIP’s Director also wrote that “Put simply, we need to take these industry threats with a pinch of salt”, with reference to the pharmaceutical industry having repeatedly threatened to leave Europe since the beginning of the revision of the pharma legislation. “In any case, we cannot afford to end up with a reform which hands a free-for-all incentives “menu” to the companies. These are very expensive “carrots”. Such an outcome will be counter-productive for patients and self-defeating for healthcare systems across Europe”, commented Yannis Natsis.

From the perspective of statutory payers, a well-functioning generic competition allows to treat larger groups of patients at lower prices, while the pricing and business strategies of pharma companies often would limit the possibility to treat patients with most severe conditions. The request for the Parliament is thus to reach a well-balanced text. “There needs to be a renewed social contract between the pharmaceutical industries and the society at large”, wrote Yannis Natsis.

The JURI Committee amendments to the proposed Regulation on the Union compulsory licensing

In the meantime, the Committee for Legal Affairs (JURI) of the EU Parliament approved on 13 February 2024 (17 votes in favour, 6 against) the report detailing the amendments to the proposed Regulation on the Union compulsory licensing during crisis and emergencies for the public health.

The Report also include the opinion given by the Committee on International Trade, and the list of entities or persons that provided input to the rapporteur (Adrián Vázquez Lázara) in the preparation of the report, among which are many industrial associations.

The Explanatory Note by the rapporteur highlights the need to maintain the equilibrium between innovation and rapid access to essential products. The JURI Committee has identified several aspects of the proposed Regulation that should be better clarified to ensure legal certainty, and which were addressed within the approved amendments.

The definition of “crisis” raised many concerns; the proposed amendments refer to a cross-border effect in the UE with involvement of two or more member states. Measures put in place should be proportionate, and not unnecessarily and disproportionally affecting the rights of citizens or the protection of intellectual property rights of businesses.

Union compulsory licenses might be issued only after the rights-holder has the time to negotiate a voluntary license with a potential licensee. To this instance, the Parliament has indicated 4 weeks as a suitable period for the Commission to wait for the results of ongoing negotiations. Furthermore, the Union compulsory licensing should remain a last resort instance and should have a duration strictly in line with that of the crisis, with a maximum of 12 months unless otherwise needed.

According to the JURI Committee, the definition of the know-how necessary for the manufacturing of certain products should be also clarified, as it is key to activate an expanded production capacity during crises. A new proposed recital indicates the Commission should have the authority to oblige rights-holders to provide all needed information, including know-how, especially for highly complex pharmaceuticals such as vaccines.

The Committee also highlighted the need for a better definition of the role of the advisory board. The proposed amendment indicates the inclusion as observers of other crisis relevant bodies at the UE level to ensure consistency with the measure, and of representatives of national authorities responsible for issuing compulsory licenses under the national patent laws.

Rights-holders should be able to provide their comments and other pertinent information to the advisory board prior to the final issuing of the Union compulsory licence. The procedure should start with the identification of the intellectual property rights concerned, and of potential licensees. The Commission should not grant any compulsory licences should the rights-holders not have been completely identified.

The JURI Committee also amended the text of the proposal to indicate the remuneration for the rights-holders should be determined, among others, considering the total gross revenue gene-rated by the licensee from the pertinent activities governed by the Union compulsory licence.

Remuneration should be also provided in cases where the rights-holder should disclose the trade secrets strictly necessary to achieve the purpose of the licence. A new amendment asks the Commission to assess the list of crisis modes or emergency modes reported in the Annex to the Regulation every two years from its entry into force, or without undue delay in case of exceptional threats to public safety or national security.


The proposals of the EU Commission for the revision of the IP legislation

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By Giuliana Miglierini

In parallel to the new pharmaceutical legislation, on 27 April 2023 the EU Commission issued the proposal for the new framework protecting intellectual property (IP). The reform package impacts on the pharmaceutical industry, as it contains proposals on Supplementary Protection Certificates(SPCs) and compulsory licensing (CL) in crisis situations. It also includes a new Regulation on Standard Essential Patents(SEPs).

The proposed reform, which is part of the EU Industrial Strategy, will now undergo the scrutiny of the European Parliament and Council. It aims to improve European competitiveness, innovation and technological sovereignity, with a special attention to the role played by SMEs. The proposal is based on comments received during the consultation on the Action Plan on Intellectual Property issued in November 2020. The IP legislative framework will complement the Unitary Patent system, that will fully entry into force on 1 June 2023.

Supplementary Protection Certificates

Central to the reform of the SPC system is the creation of a unitary SPC to complement the Unitary Patent. The aim is to reduce the current fragmentation in the issuing of SPCs at the national level, which often leads to complex interpretation of patents’ expiry dates, and consequent legal uncertainty. The new system would not replace the existing national SPC schemes.

Procedures should be simplified, with a single application to be submitted to the EU Intellectual Property Office (EUIPO), which would be responsible for its central examination in close cooperation with EU national IP offices. The process would lead to national SPCs granted for each of the designated member states (MS), plus a unitary SPC if required by the applicant (here the Q&As).

According to the Commission, approx. 25% of current SPC procedures have contradictory outcomes. The mean number of annual SPC applications is 81 per MS, with a total cost of €192,000 over the 5 years of duration (compared to roughly €3,000 in the US and €4,200 in Japan). Savings from the new procedures may amount to up €137,000 for the EU27 wide, five years long SPC protection. A central SPC database is also planned in order to increase transparency.

The proposed reform is comprehensive of a Regulation specific to medicinal products and a second one focusing on plant protection products, plus parallel recasting regulations to review the current legislative provisions (i.e. Regulation (EC) No 469/2009). Innovators would be incentivised to use unitary SPCs, since otherwise a unitary patent could be extended at higher costs only by means of national SPCs. Infringements of unitary SPCs would fall under the judgement of the UPC Court.

The Commission expects the development and access to generic medicines will be facilitated. In particular, SMEs will be able to submit observations during the examination of a centralised SPC application, and to file an opposition in order to centrally challenge the validity of the SPC protection, if justified. The new framework complements the proposed pharmaceutical legislation, for example on the Bolar exception. This should allow the generic industry to perform research and testing for preparing regulatory approval also while a patent/SPC is still in force.

Compulsory licensing

Compulsory licensing may be used during crisis in order to provide access to relevant products and technologies, should result in impossible (or not adequate) to close voluntary licensing agreements with owners of IP rights. The current fragmentation of procedures at the national level results in a wide legal uncertainty (see also the published Q&As). The new framework would complement other EU crisis tools, such as the Single Market Emergency Instrument, HERA regulations and the Chips Act.

According to the proposal, a Union compulsory licence can only be granted after activation of an emergency or crisis mode at EU level. Instruments to trigger this fundamental passage are listed in an Annex, so to improve legal certainty. A remuneration scheme for IPR holders is also included, on the basis of successive steps in the activation and termination of compulsory licensing.

The existing national frameworks on compulsory licensing will continue to operate, and they may be used to manage local crisis. Compulsory licensing of exported products would not be allowed.

Standard Essential Patents

SEPs refer to technologies essential for the implementation of a technical standard adopted by a standard developing organisation. They are typical of the ITC industrial sector, and central to building the Internet of Things.

To improve the transparency and legal certainty of SEPs, the proposal aims to ensure innovation would be run in the EU by both EU SEP owners and implementers. End users would benefit from products based on the latest standardised technologies at fair and reasonable prices. SEPs licensing is based on the FRAND scheme (fair, reasonable and non-discriminatory) for the remuneration of patent holders.

Comments from the stakeholders

EFPIA granted positive feedback on the simplification and harmonisation of the SPC system and to the opportunities offered by the unitary SPC. On the other hand, the proposals on compulsory licensing didn’t find the agreement of the research-based pharmaceutical industry.

According to a note, voluntary licensing would be the preferred instrument for innovators, as it allows for the choice of the best-positioned and trusted partners to speed up production and distribution of medicinal products during health crisis. On the contrary, compulsory licensing is seen as a threat to investment stability of the EU’s IP system and to the overall innovation pipeline.

Protecting the EU’s intellectual property framework could not be more important if we are to close the investment gap between Europe, the US and increasingly China and continue to offer patients the best possible treatments. Yet we are seeing multiple proposals emerging from the European Commission in the pharmaceutical legislation and patent package which tend towards the opposite”, said EFPIA Director General Nathalie Moll.

Medicines for Europe (MfE), on behalf of the generic and biosimilar industry, said that while “voluntary licensing agreements are relevant for health crises, we will contribute constructively to the EU-wide compulsory licensing system”. The request to the Commission is to make it a remedy also for anti-competitive abuses of the patent system, according to art. 31(k) of the TRIPS Agreement.

As for new SPCs, MfE highlights the new regime would extend their geographical scope from the current 20 out of 27 MS covered on average. “The proposal for a reform in the SPC system has the potential to reduce fragmentation in Europe but the legislation must ensure improved quality and transparency of granting procedures to prevent misuse by right holders to delay competition”, said MfE Director General Adrian van den Hoven.

Critics of the proposed scheme for compulsory licensing also came from EUCOPE, representing pharmaceutical entrepreneurs. According to the Confederation, the Commission’s proposal would further weakening the value of intellectual property rights within the EU. “Together with the proposal on the revision of the general pharmaceutical legislation, it is another indicator that the development of an innovation-friendly environment is not a priority, contrary to statements in the Intellectual Property Action Plan”, it states in a note.

For EUCOPE, the proposed SPC regime would not amend the substantive elements of the current system. Furthermore, a centralised SPC application would only be possible on the basis of a European patent, including a unitary patent, and for products with a centralised marketing authorisation. EUCOPE position goes for an optional EU-wide SPC, so to allow flexibility for IP owners in deciding their strategy for the protection of IP rights.