European Generics and Biosimilars – Legal Trends and More Discussed at 11th Annual Legal Affairs Forum – Part One of Two
On March 26-27, 2015, the European Generic and Biosimilar Medicines Association (“EGA”) held its 11th Annual Legal Affairs Forum. The Forum kicked off with an introduction by Sergio Napolitano, Legal Affairs and Trade Director, EGA, who organized this year’s Forum. The EGA represents European generic and biosimilar pharmaceutical industries, which provides European Union savings of over €40 billion (euros) per year, while accounting for 54% of all dispensed medications for only 21% of the pharmaceutical expenditures in Europe. The EGA was formed in 1993 and is a founding member of the International Generic Pharmaceutical Alliance (“IGPA”). The Forum addresses legal issues confronting the European generic and biosimilar industries, which is primarily directed to in-house and outside counsel working in these fields. This year, the Forum focused a bulk of its program on a variety of exclusivity and patent issues affecting these industries.
In the first panel session on “EGA 2020”, Adrian van den Hoven, Director General, EGA, noted how European generic companies have been moving into more complex products, including biosimilars, where the generic industry’s commitment to research comes through. The European industry is committed to providing increased access to mediations and is concerned about fair competition in the industry.
To this point of competition, Dirk Arts, Partner, Allen & Overy, provided a presentation on patent settlements in Europe after Lundbeck, the first a critical case in the European courts dealing with reverse payments including “pay-for-delay”. Similar to U.S. competition law, European competition law prohibits patent litigation settlements that have the object of restricting competition and reduce incentives to enter one or more European Economic Area (EEA) market with the generic product. Some reverse payments include payment (receives the most attention), a license to the generic company, and supply/distribution agreements. The Commission’s complicated competition considerations include the strength of the patent, the payment/reverse settlement involved, and whether the settlement would reduce the generic undertaking’s appetite for entering the market.
A panel of generic industry general counsels predicted that by 2020, about 70-80% products in Europe will be in the generic or biosimilar space with 7 of the 10 top products losing exclusivity. The counsels noted that as the demographics of patients continues to age, there will be increasing demand for generic and biosimilar products in Europe, especially to increase access. As in the U.S., there has been increasing consolidation in the generic drug industry and increasing interest in over-the-counter and specialized medicine areas. In addition, while industry members may have opportunities for launching at risk (i.e., before there is patent non-infringement certainty by virtue of a settlement or winning court case), each county’s legal system and margins come into play when making the decision whether to launch. For the moment, there have been few or no pharmacovigilance requirements for European generic companies, but this too may be changing by 2020, as the market globalizes further and the U.S. considers increasing pharmacovigilance for generic manufacturers. Many European generic manufacturers are hoping that the Supplementary Protection Certificate (SPC) will permit exports to non-EEA countries during the patent term extension period, which has caused many initial manufacturing to develop outside the EEA. And as the U.S. begins approving biosimilars, more European biosimilar manufacturers will look to the U.S. for additional guidance to develop and market biosimilars. In addition, some generic manufactures may also look to develop genomic testing models, e.g. companion diagnostics, in addition to the drug or biological products used in conjunction with these tests. Finally, while in theory payors could enter patent litigations to help bring more generic products to the market sooner, payors rarely participate in such litigations.
Later in the first day followed a panel that discussed the SPC export exception in more detail, featuring an introductory presentation by Alexander Wittkopp, Partner, Maiwald. SPCs are meant to provide innovator companies with increased incentives for new product development by providing a form of additional market authorization exclusivity that operates to extend patents by up to five years in the EEA. SPC protection began in 1993 followed the U.S. model for patent term restoration located in the Hatch-Waxman Act of 1984, which also provides up to five years of patent term extension. While the two models have a different calculation method for the extension, they both do not extend the patent itself, they operate as a type of additional market exclusivity as to the affected products, and both may be extended by 6-months pediatric exclusivity. In the EU, SPCs prevent manufacturing of active pharmaceutical ingredients and dosage forms, stockpiling for “day 1” launches, and advertising, leading to outsourcing such manufacturing to countries with weaker patent protections.
The SPC export proposal, therefore, would be to permit generic manufacturing in the EEA for export to countries where the regional patent is no longer in force, to permit increased generic research and manufacturing to occur in the EEA during the combined patent and SPC terms. According to Wittkopp and the panel, other countries, including the U.S., may have shorter patent terms, due in part to the way SPC is calculated, leading to possible earlier generic entries in these countries, including now biosimilars. Without the proposed SPC export proposal, the result will be less European-manufactured generic and biosimilar products to avoid the SPC, which causes additional market entry delays (e.g., an average another 10 months of delayed market entry beyond the SPC in Hungary). Canada’s SPC-type provision allows for a maximum 2 years of patent term extension and an export exception, as part of the Comprehensive Economic and Trade Agreement (CETA). Enacting a similar export provision in the EEA could take another one and a half to two years once the proposal is formally entered for consideration. And, as some questions addressed later, the SPC should be considered in view of the Transatlantic Trade and Investment Partnership (TTIP) and related free trade agreements between the European Union and the U.S.
Please see the subsequent blog for a summary of the second day’s topics.