COMMISSION STAFF WORKING DOCUMENT EVALUATION of the Regulation (EC) No 469/2009 of the European Parliament and of the Council concerning the supplementary protection certificate for medicinal products, and Regulation (EC) No 1610/96 of the European Parliament and of the Council concerning the creation of a supplementary protection certificate for plant protection products.
Date: 2020-11-25
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: innovation, intellectual property, market approval, medicinal product, pharmaceutical legislation, plant health product, public health, research and development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 25.11.2020  SWD(2020) 292 final  COMMISSION STAFF WORKING DOCUMENT  EVALUATION  of the Regulation (EC) No 469/2009 of the European Parliament and of the Council concerning the supplementary protection certificate for medicinal products, and Regulation (EC) No 1610/96 of the European Parliament and of the Council concerning the creation of a supplementary protection certificate for plant protection products. {SWD(2020) 293 final}  
 
 
Table of Contents 

1 

INTRODUCTION ....................................................................................................... 6 

2  BACKGROUND OF THE INTERVENTION ........................................................... 7 

2.1  Description of the SPC system ............................................................................ 7 

2.2  Description of the intervention logic and objectives of the SPC ......................... 9 

2.3  Mapping of relevant stakeholders ...................................................................... 11 

2.4  Baseline and points of comparison .................................................................... 12 

3 

IMPLEMENTATION / STATE OF PLAY .............................................................. 13 

4  METHOD .................................................................................................................. 13 

4.1  Methodology and sources of information .......................................................... 13 

4.2 

Limitations and robustness of findings .............................................................. 14 

5  ANALYSIS AND ANSWERS TO THE EVALUATION QUESTIONS ................ 15 

5.1 

Effectiveness ...................................................................................................... 15 

5.1.1  Objective 1: Encouraging global innovation in new products for EU 
patients and consumers of PPPs ................................................................................ 15 

5.1.2  Objective 2: Attracting R&D to the EU and preventing delocalisation ..... 24 

5.1.3  Objective 3: Promoting a uniform SPC system in the EU ......................... 31 

5.1.3.1  SPC grant and enforcement procedures across the EU .............................. 31 

5.1.3.2  Transparency: publication of SPC-related information across EU Member 
States 

35 

5.1.3.3  Bolar exemption: implementation differs across the EU ........................... 37 

5.2 

Efficiency ........................................................................................................... 37 

Impact of the SPC system on the availability, accessibility and affordability 
5.2.1 
of medicines .............................................................................................................. 38 

5.2.2 

Cost of a fragmented SPC system .............................................................. 46 

5.2.3 

Impact of suboptimal transparency ............................................................ 50 

5.3  Relevance ........................................................................................................... 52 

5.3.1  The COVID-19 pandemic and EU recovery...................................................... 56 

5.4  Coherence .......................................................................................................... 56 

5.5 

EU added value .................................................................................................. 59 

6  CONCLUSIONS ....................................................................................................... 60 

6.1 

Effectiveness ...................................................................................................... 61 

1 

 
 
 
6.2 

Efficiency ........................................................................................................... 61 

6.3  Relevance ........................................................................................................... 62 

6.4  Coherence .......................................................................................................... 63 

6.5 

EU added value .................................................................................................. 64 

ANNEX 1: PROCEDURAL INFORMATION ................................................................ 65 

ANNEX 2: STAKEHOLDER CONSULTATIONS ......................................................... 67 

ANNEX 3: METHODS AND ANALYTICAL MODELS ............................................... 69 

ANNEX  4:  COSTS  AND  BENEFITS  ANALYSIS  OF  PROLONGED 

EXCLUSIVITY DUE TO SPC ................................................................................. 71 

ANNEX  5:  EVOLUTION  OF  THE  APPROVAL  OF  NEW  ACTIVE 

INGREDIENTS ......................................................................................................... 84 

ANNEX 6: LEVEL OF SPC APPLICATION AND RENEWAL FEES ......................... 86 

ANNEX 7: SPC WORKLOAD AT NATIONAL PATENT OFFICES ........................... 87 

ANNEX  8:  THE  QUESTIONS  PER  EACH  OF  THE  FIVE  EVALUATION 

CRITERIA ................................................................................................................. 88 

ANNEX  9:  SWOT  TABLES:  THE  EU  AS  A  LOCATION  OF  R&D 

INVESTMENT IN THE PHARMACEUTICAL AND PPPS SECTORS ............... 90 

ANNEX 10: PHARMACEUTICAL INCENTIVES IN THE EU .................................... 92 

ANNEX 11: EU INDUSTRIAL ECOSYSTEMS AND  EU RECOVERY ..................... 94 

2 

 
Term/Acronym 

Accessibility 

Affordability 

Glossary 

Meaning/Definition 

The  extent  to  which  a  medicine  is  authorised,  marketed  and  reimbursed  in  an  EU 
Member State, and therefore may be actually used by a patient.  

The extent to which patients are able to make out-of-pocket payments on health care, 
or  able  to  make  co-payments  in  some  form  (affordability  at  micro  level),  and  the 
extent to which public funding of the health care sector raised through premia or taxes 
is sustainable (affordability at macro level).   

Availability 

The  extent  to  which  a  medicine  exists  (to  treat  a  certain  condition)  and  has  been 
authorised (in an EU Member State or centrally in the EU), without necessarily being 
marketed.  

API 

Active  pharmaceutical  ingredient.  This  is  the  component  of  a  medicine  or  plant 
protection product (e.g. a pesticide) that produces its effects. 

Biopharmaceuticals 
or biologics 

A medicine whose active substance is made by a living organism. Biological medicines 
contain  active  substances  from  a  biological  source,  such  as  living  cells  or  organisms 
(from  humans,  animals  and  microorganisms  such  as  bacteria  or  yeast).  The  European 
Medicine Agency (EMA) evaluates biologics in the EU. 

Biosimilar 
medicine or 
biosimilar 

A  biosimilar  is  a  biological  medicine  highly  similar  to  another  already  approved 
biological  medicine.  Biosimilars  are  approved  according  to  the  same  standards  of 
pharmaceutical quality, safety and efficacy that apply to all biological medicines. 

Biotechnology 
(short: biotech) 

Technological application that uses biological systems, living organisms, or derivatives 
thereof, to make or modify products or processes for a specific use. 

Bolar exemption 

to 

for 

the  generic/biosimilar 

The  Bolar  exemption  makes  it  possible  to  conduct  the  testing  required  to  obtain 
regulatory  approval 
the 
patent/supplementary-protection-certificate  (SPC)  protection  period  of  the  reference 
medicine.  The  rationale  for  this  exemption  is  to  allow  for  the  swift  introduction  of 
generic  medicines  shortly  after  the  expiry  of  the  patent/SPC  term  of  the  original 
product. Otherwise, in the absence of a Bolar exemption, tests for regulatory approval 
of generic medicines could only be conducted after patent/SPC expiry of the reference 
medicine, which would delay their market entry by months or even years. The EU Bolar 
exemption  is  laid  down  in  Article  10(6)  of  Directive  2001/83/EC  and  Article  41  of 
Regulation (EU) 2019/6 (formerly Article 13(6) of Directive 2001/82/EC).  

take  place  during 

Data protection  

(See entry below 
on ‘market 
protection’) 

Period  of  protection  (of  8  years)  during  which  pre-clinical  and  clinical  data  and  data 
from clinical trials handed in to the authorities by one company cannot be referenced by 
another company in their regulatory filings.  

EMA 

European Medicines Agency 

Effective 
protection period 

The period that elapses from the time a product obtains a marketing authorisation until 
the last measure of protection (e.g. SPC, market protection, patents) on it expires. 

FDA 

US Food and Drug Administration 

3 

 
 
Generic medicines 
(‘generics’) 

A generic medicinal product is a copy of an original non-biologic ‘reference medicinal 
product’  whose  intellectual  property  rights  (IPR)  and  market  protection  has  lapsed  or 
expired.  The  generic  medicine  is  usually  manufactured  by  a  different  company. 
Generics  have  the  same  qualitative  and  quantitative  composition  in  active  substances 
and the same pharmaceutical form as the reference medicinal products. 

Manufacturer of 
generics and 
biosimilars 

Marketing 
Authorisation 
(MA) 

Marketing 
Authorisation 
application 

term 

This 
manufacturers of APIs corresponding to those generics/biosimilars. 

includes  manufacturers  of  generics  and/or  biosimilars  as  well  as 

The approval to market a medicine in one, several or all Member States. 

An  application  made  to  a  European  regulatory  authority  for  approval  to  market  a 
medicine within the European Union. 

Market protection  The period of protection during which generics, or biosimilars, cannot be placed on the 

market (typically 10 years from the marketing authorisation). 

Originators or 
innovators 

The companies which develop new medicines or active ingredients. They are typically 
the  SPC  holders,  but  are  increasingly  becoming  leaders  in  the  production  and 
commercialisation of biosimilars. 

Paediatric rewards 
and Paediatric 
Regulation (**) 

The  Paediatric  Regulation  (**)  has  governed  the  development  and  authorisation  of 
medicines  for  paediatric  use  since  entering  into  force  in  2007.  Its  objective  is  to 
improve  the  health  of  children  in  Europe  by  addressing  the  low  level  of  research  and 
development in medicines for children. The Regulation sets up a system of obligations, 
rewards and incentives to encourage clinical research and development in medicines for 
children. 

(**) Regulation (EC) No 1901/2006 of the European Parliament and of the Council of 
12 December 2006 on  medicinal  products  for  paediatric  use  and  amending  Regulation 
(EEC) No 1768/92, Directive 2001/20/EC, Directive 2001/83/EC and Regulation (EC) 
No 726/2004 (Text with EEA relevance) 

Personalised 
medicine 

A  medical  treatment  using  analysis  of  individuals’  phenotypes  and  genotypes  (e.g. 
molecular  profiling,  medical  imaging,  lifestyle  data)  to:  (i)  tailor  the  right  therapeutic 
strategy for the right person at the right time; (ii) determine a person’s predisposition to 
disease; or (iii) deliver timely and targeted prevention.  

PPP 

Plant protection product (e.g. a pesticide). 

R&D / R&I 

Research and development / Research and innovation 

SPC 

A  supplementary  protection  certificate  is  a  sui  generis  intellectual  property  right  that 
extends  by  up  to  5  years  the  effect  of  a  patent  in  a  Member  State  (with  an  extra  6 
months  possibly  added  for  SPCs  for  medicinal  products,  if  a  paediatric  investigation 
plan  is  conducted).  SPCs  apply  to  human  medicinal  produts,  or  to  plant  protection 
products, subject to regulatory authorisation. 

SPC manufacturing 
waiver 

An  exception  to  the  rights  conferred  by  SPCs  for  medicinal  products,  as  set  out  by 
Regulation  (EU)  2019/933.  This  exception  allows  –  under  specific  conditions:  (i)  the 
manufacturing of a product protected by an SPC in order to export the product outside 
the EU; or (ii) the storing of a product protected by an SPC before placing it on the EU 
market after SPC expiry. 

TRIPS 

Agreement  of  the  World  Trade  Organization  (WTO)  on  Trade-Related  Aspects  of 
Intellectual Property Rights. 

4 

 
Unitary patent  

(NOTE: Unitary 
patents were not 
yet in force at the 
date of publication 
of this staff 
working document) 

Term used to describe a ‘European patent with unitary effect’ laid down by Regulations 
No 1257/2012 and 1260/2012, which is a European patent granted under the European 
Patent Convention, to which unitary effect is attributed at the request of its proprietor. 
The  unitary  effect  will  cover  all  Member  States  (MS)  participating  in  the  enhanced 
cooperation  for  unitary  patent  protection  and  which  have  ratified  the  Unified  Patent 
Court  (‘UPC’)  Agreement,  in  accordance  with  which  litigation  relating  to  European 
(including unitary) patents and related SPCs will take place. As of September 2020, the 
unitary patent system (including the UPC) is not yet operational. 

Unmet medical 
need 

A  condition  for  which  there  exists  no  satisfactory  method  of  diagnosis,  prevention  or 
treatment,  or  if  such  a  method  exists,  it  should  bring  major  therapeutic  advantage  to 
those affected (see Art. 4 (2) of Regulation (EC) No. 507/2006). However, there is so 
far  no  agreement  on  the  definition  of  unmet  medical  need  among  patients,  industry 
players, regulators, health-technology assessment bodies, and payers. The concept may 
include a lack of access to existing products1. 

1    https://ec.europa.eu/eurostat/statistics-

explained/index.php?title=Unmet_health_care_needs_statistics#General_overview 

5 

 
                                                           
1 

INTRODUCTION 

The  present  Commission  staff  working  document  provides  an  ex-post  evaluation  of 
Regulation  (EC)  No  469/2009  of  the  European  Parliament  and  of  the  Council  (codified 
version) and Regulation (EC) No 1610/96 of the European Parliament and of the Council, on 
supplementary  protection  certificates  (SPCs)  for  medicinal  products  (pharmaceuticals)  and 
plant protection products (PPPs, e.g. pesticides) respectively (hereafter mostly referred in the 
text as “SPC Regulations”). The evaluation assesses whether the main objectives of these two 
SPC Regulations (see Section 2.2 below) have been achieved. The following criteria are taken 
into account by the evaluation: effectiveness, efficiency, relevance and added value of the EU 
intervention. The evaluation also reviews both the internal coherence of the SPC Regulations 
in  EU 
and 
pharmaceutical  legislation  (including  orphan  incentives  and  paediatric  rewards);  (ii)  the 
applicable patent framework in the EU; and (iii) the EU’s international commitments. 
The  Health  Council  conclusions  of  June  20162  called  upon  the  Commission  to  engage  in  a 
wider review of incentives in the pharmaceutical sector. The Council invited the Commission 
to conduct an evidence-based analysis of the impact of EU pharmaceutical incentives on the 
innovation, availability and accessibility of medicinal products. Among those incentives, the 
Council considered that particular attention should be given to SPCs for medicinal products 
and the Bolar exemption (which applies to pharmaceutical patents and SPCs). 

their  external  coherence  with:  (i) 

incentives  enshrined 

the  regulatory 

The Commission published an inception impact assessment in February 2017, announcing a 
back-to-back  evaluation  and  impact  assessment  of  all  relevant  provisions  and  options  for 
modernising  the  SPC  Regulations.  In  October  2017,  the  Commission  launched  a  12-week 
online  public  consultation3  (see  Annex  2).  Several  studies  on  SPC  protection  have  been 
contracted or conducted within the European Commission since 2015 (see Section 4.1 below). 

The  SPC  for  medicinal  products  is  an  incentive  for  pharmaceutical  research,  which  plays  a 
decisive role in the continuing improvement of public health4. In view of Council conclusions 
mentioned  above,  this  evaluation  includes  and  assessment  of  the  impact  of  the  SPC  on  the 
availability  (e.g.  supply  shortages5  and  deferred  or  missed  market  launches  of  innovative 

2    Paragraph 47 of the Council Conclusions on strengthening balance in the pharmaceutical systems in the EU 

and its Member States (17.6.2016) ask the Commission to:  

Prepare  as  soon  as  possible  and  with  the  close  involvement  of  the  Member  States,  while  fully  respecting 
Member  States  competences,  the  following:  an  evidence  based  analysis  of  the  impact  of  the  incentives  in 
these  EU  legislative  instruments,  as  implemented,  on  innovation,  as  well  as  on  the  availability,  inter  alia 
supply shortages and deferred or missed market launches, and accessibility of medicinal products, including 
high  priced  essential  medicinal  products  for  conditions  that  pose  a  high  burden  for  patients  and  health 
systems  as  well  as  availability  of  generic  medicinal  products.  Among  those  incentives, particular  attention 
should  be  given  to  the  purpose  of  supplementary  protection  certificates  as  defined  in  the  relevant  EU 
legislative  instrument  and  the  use  of  the  “Bolar”  patent  exemption,  the  data  exclusivity  for  medicinal 
products and the market exclusivity for orphan medicinal products. 

3   That consultation included questions relating to procedural and substantive aspects of  the SPC regulations, 
including  a  possible  SPC  manufacturing.  These  categories  of  questions  were  already  asked  as  part  of 
discussions about further future potential initiatives to modernise the SPC regime. 

4   Recital 2 of  Regulation (EC)  No 469/2009 states that ‘pharmaceutical research plays a decisive role in the 

continuing improvement in public health’. 

5   See European Parliament resolution on the shortage of medicines  – how to address an emerging problem  - 

2020/2071(INI) 

6 

 
                                                           
medicines)  and  accessibility  (e.g.  launch  of  generic  medicinal  products  and  biosimilars)  of 
medicinal products in the EU.  

This is the first evaluation of the SPC Regulations. It covers the period from 1992 to October 
2020 and considers all EU Member States during that period. It also takes into account recent 
case-law  from  the  Court  of  Justice  of  the  European  Union  (CJEU)  and  changes  in  the 
pharmaceutical and agrochemical sectors of the EU’s main trading partners (see Section 5.1.2 
for details).  

This  evaluation  does  not  assess  the  narrow  exemption  (‘SPC  manufacturing  waiver’) 
introduced by Regulation (EU) 933/2019 of the European Parliament and of the Council, that 
is too recent to measure any impact and will be the subject of specific future evaluations. 
This evaluation takes place as part of the IP action plan6 and of the pharmaceutical strategy 
for Europe7. It goes alongside the evaluation of the legislation on medicines for children and 
rare diseases. 

2  BACKGROUND OF THE INTERVENTION  

2.1  Description of the SPC system   

An  SPC  is  a  sui  generis  intellectual  property  right  that  can  extend  by  up  to  five  years  the 
protection conferred by  a patent (“the basic patent”), but  only with  respect  to  the medicinal 
product,  or  plant  protection  product  (PPP),  that  is  covered  by  the  related  marketing 
authorisation. SPC protection for medicinal products was first introduced in the EU in 1992 
through Council Regulation (EEC) No 1768/92 and is currently governed by Regulation (EC) 
No 469/2009 of the European Parliament and of the Council (codified version). In 1996, SPC 
protection  for  PPPs  was  established  by  Regulation  (EC)  No  1610/96  of  the  European 
Parliament and of the Council.  

SPC protection aims at offsetting the loss of effective patent protection due to the length of 
the  necessary  testing,  clinical/field  trials  and  marketing  authorisation  procedures,  thereby 
providing the pharmaceutical and PPP industries with incentives to innovate. 

As shown in Figure 1 below, an SPC takes effect at the end of the term of the basic patent, 
and is granted for a period equal to the period which elapsed between the date on which the 
application for a basic patent was filed and the date of the grant of the first authorisation to 
place  the  patented  product  on  the  market  in  the  EU,  reduced  by  five  years,  and  with  a 
maximum  duration  of  five  years.  Some  patented  products  may  thus  not  be  eligible  for  SPC 
protection at all, i.e. if the marketing authorisation was obtained in less than 5 years after the 
filing of the application for the basic patent; some may enjoy SPC protection having the full 
duration  of  5  years;  while  others  enjoy  SPC  protection  of  a  shorter  duration.  The  average 
duration of SPCs for medicinal products granted in the EU amounts to 3.5 years8. 

6   https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12510-Intellectual-Property-Action-

Plan 

7   https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12421-Pharmaceutical-Strategy-

Timely-patient-access-to-affordable-medicines 

8   Source: Copenhagen Economics study of 2018 (see Section 4 and annex 3). 

7 

 
 
                                                           
Figure 1: Duration of the SPC 

Following the request of the holder of an SPC for medicinal products, the duration of the SPC 
can  be  extended  once  by  six  months  in  the  case  where  Article  36  of  Regulation  (EC)  No 
1901/2006 of the European Parliament and of the Council of 12 December 2006 on medicinal 
products  for  paediatric  use  applies  (namely  that  all  the  measures  included  in  an  agreed 
paediatric  investigation  plan  are  complied  with,  the  protected  product  is  authorised  in  all 
Member  States  and  relevant  information  on  the  results  of  studies  is  included  in  product 
information). 

Since an SPC ‘confer[s] the same rights as conferred by the basic patent’ (Articles 5 of the 
SPC Regulations), the exclusivity resulting from the basic patent is extended and enables its 
holder to prevent competitors from practicing the invention (e.g. manufacturing, offering for 
sale or storing generic products) in those Member States in which an SPC has been granted.  

Some  exemptions  to  the  SPC  rights  for  medicinal  products  apply,  such  as  the  Bolar 
exemption  and  the  SPC  manufacturing  waiver.  The  Bolar  exemption  allows  generics  to  be 
manufactured  during  the  patent  and  SPC  term  for  clinical  trials  purposes.  The  SPC 
manufacturing  waiver  allows,  under  certain  conditions,  generics  to  be  manufactured  during 
the SPC term for export or storing purposes. 

As  analysed  in  Section  5.1.3,  the  existing  SPC  system  requires  the  filing  of  an  SPC 
application  in  each  of  the  EU  Member  States  where  SPC  protection  is  sought.  Each  of  the 
Member States concerned has to examine and publish the application and eventually grant or 
refuse the SPC. These nationally granted SPCs are enforced in national courts. In the absence 
of a unitary SPC title, this situation will remain the case even with the future introduction of 
the unitary patent system, with the exception that the currently nationally granted SPC might 
be  centrally  enforced  before  the  future  Unified  Patent  Court  (‘UPC’)  for  the  participating 
Member States (having ratified the UPC Agreement).  

Section 3 below provides statistics on the use of the SPC in the EU. 

Further  to  patents  and  SPCs,  EU  legislation  provides  pharmaceutical  innovators  with 
additional types of incentives and rewards such as data exclusivity and market protection (see 
glossary), orphan incentives and paediatric rewards. Annex 10 provides for graphics (source 
Copenhagen  Economics  (CE)  study)  on  the  related  legislation  (and  its  chronological 
introduction), duration and interaction of the EU constellation of incentives and rewards for 

8 

 
 
 
human medicinal products. Veterinary medicinal products can enjoy periods of protection of 
the technical documentation on quality, safety and efficacy originally submitted with a view 
to obtaining a marketing authorisation9. Innovators in the field of PPPs can also enjoy periods 
of  regulatory  data  protection  or  exclusive  use  to  safety  and  efficacy  data  in  the  registration 
dossier necessary for marketing authorisation of chemical plant protection products10. 

2.2  Description of the intervention logic and objectives of the SPC  

The following graphic depicts the intervention logic for the EU SPC legislation when the SPC 
system was established, including the objectives sought by the SPC protection.  

9   Regulation (EU) 2019/6 of the European Parliament and of the Council of 11 December 2018 on veterinary 

medicinal products and repealing Directive 2001/82/EC.   

10   Regulation  (EC)  No 1107/2009  of  the  European  Parliament  and  of  the  Council  of  21 October  2009 
concerning  the  placing  of  plant  protection  products  on  the  market  and  repealing  Council  Directives 
79/117/EEC and 91/414/EEC. 

9 

 
 
                                                           
10 

 
 
 
The  first  objective  of  the  SPC  system  is  to  encourage  R&D  in  new  active  ingredients  of 
medicines and PPPs at worldwide level (i.e. the location of the R&D is not relevant11) so that 
it could result in more availability of those products for EU patients and consumers of PPPs. 
External  factors  such  as  incentives  and  rewards  in  the  EU  pharmaceutical  and  PPPs 
legislations can contribute to  additional investments  and jobs  in  innovation and therefore to 
the availability of more active ingredients.  
The second objective is about attracting R&D centres and jobs to the EU and preventing R&D 
delocalisation  outside  the  EU,  which  was  especially  relevant  in  the  1990s  considering  the 
‘competition’ of certain third countries that had introduced SPC-like legislation (e.g. ‘patent 
term extensions’).  

The third objective is about promoting a homogenous SPC system in the EU. This would in 
particular prevent the heterogeneous development of national laws that would hamper the free 
movement of medicinal products and PPPs within the internal market.  

The 2017 inception impact assessment for optimising the Internal Market's industrial property 
legal  framework  relating  to  supplementary  protection  certificates  (SPC)12  identified 
unintended results that the SPC legislation brought for the EU-based manufacturers of generic 
and  biosimilar  medicines,  namely  the  loss  of  export  markets  (third  countries)  and  of  day-1 
entry  onto  EU  Member  State  markets.  The  lawmakers  had  not  anticipated  in  1992  this 
negative  impact  of  the  SPC  on  the  competitiveness  of  EU-based  generics/biosimilars 
manufacturers.  The  impact  assessment  related  to  Regulation  (EU)  2019/93313  on  the  SPC 
manufacturing waiver analyses in detail those unintended results. 

2.3  Mapping of relevant stakeholders 

The  following  stakeholders  have  been  consulted  by  the  Commission  through  an  online 
general public consultation (see Annex 2):  

-  Group I: General public, which can be users of medicines and PPPs. 

-  Group  II:  Innovative  companies  or  originators,  which  apply  for  and  enforce  SPC 
protection. Originators are typically universities, start-ups, SMEs and large companies 
conducting  research  to  develop  new  products  (as  opposed  to  generics  manufacturers 
below).  

-  Group  III:  Companies  dealing  with  generic  medicines  and  generic  PPPs,  including 
producers of active pharmaceutical ingredients (APIs). They need to know the status 
and scope of SPCs across the EU to conduct their businesses. They can make use of 
flexibilities such as the Bolar exemption and the SPC manufacturing waiver. 

11   In  this  respect,  the  Technopolis  study  (2018)  states  that  ‘whilst  the  SPC  regulation  clearly  embodies  an 
intent  to  promote  pharmaceutical  innovation  in  Europe,  it  does  not  contain  any  provisions  to  favour 
innovation  originating  from  Europe  over  that  from  elsewhere.  Rather,  all  pharmaceutical  innovation  is 
treated  equally,  regardless  of  the  country  where  the  applicant  is  based  or  where  the  R&D  has  been 
performed. Consequently, the greatest economic returns from the SPC regulation appear destined to flow 
towards where the greatest research and innovation intensity is.’ 

12   https://ec.europa.eu/smart-

regulation/roadmaps/docs/2017_grow_051_supplementary_protection_certificates_en.pdf  

13  https://ec.europa.eu/docsroom/documents/29463 

11 

 
                                                           
-  Group IV: EU large consumers/purchasers of PPPs or medicines; health professionals 
and associations; health or price-setting authorities, including ministries of health; and 
patients  associations,  which  are  interested  in  the  availability  and  accessibility  of 
innovative products.  

-  Group V: National authorities such as the IP offices and courts of EU Member States, 
which respectively grant and enforce SPCs; IP agents and attorneys who deal with the 
registration, monitoring and enforcement of SPCs.  

-  Group  VI:  industry/trade  authorities,  which  monitor  and  manage  incentives  for 

industrial investments and trade. 

A total of 231 replies were provided to the Commission online consultation: 43 replies from 
the general public (Group I above), 71 from originators industry/associations (Group  II), 63 
from  generics  and  biosimilars 
from  health 
industry/associations 
authorities/doctors/patients  groups  (mostly  from  national  organisations  dealing  with  health 
insurance/reimbursement/health  technology  assessment,  from  a  doctors’  organisation,  and  2 
from patients’ associations) (Group IV), 34 from patent offices/practitioners (Group V), and 5 
from industry/trade authorities (Group VI).   

III),  15 

(Group 

In addition, the Max Planck Institute conducted a number of surveys among stakeholders in 
the Groups II, III and V above as part of the study on the legal aspects of the SPC contracted 
by the Commission (see Section 4.1). 

2.4  Baseline and points of comparison 

In  the  1990s,  the  Commission  did  not  conduct  a  formal  impact  assessment  for  the  SPC 
Regulations  as  it  was  not  yet  part  of  the  procedure  for  adopting  a  proposal  until  2004. 
Therefore,  the  baseline  has  been  reconstructed  as  far  as  possible  based  on  available  data, 
including by reference to the explanatory memorandum14. 

In Section 5, the analysis of the evolution of investments in innovation and job creation will 
be  mostly  benchmarked  against  the  situation  of  the  SPC  system  in  the  EU  in  1992  (for 
medicines)  and  1996  (for  PPPs)  when  the  SPC  Regulations  were  adopted  (the  ‘base 
scenario’). As of the adoption of those regulations, concerned patent holders had certainty that 
they  could  obtain  SPC  protection  in  the  EU.  In  1990,  when  the  Commission  proposed 
legislation on the SPC for medicinal products, the USA and Japan had, since 1984 and 1988 
respectively,  started  providing  patent  term  restoration  for  pharmaceutical  roducts  on  their 
national markets also for a maximum period of 5 years. 

In a counterfactual scenario, if the SPC Regulations had not been adopted at EU level, similar 
measures might have been introduced in most EU Member States through national legislation 
(in  1991,  France  and  Italy  had  adopted  national  SPC  legislations)  likely  in  a  non-uniform 
way. 

14  Explanatory Memorandum to the Proposal for a European Parliament and Council Regulation (EC), of 11 
April  1990,  concerning  the  creation  of  a  supplementary  protection  certificate  for  medicinal  products 
(COM(90) 101 final) 

12 

 
 
                                                           
3 

IMPLEMENTATION / STATE OF PLAY 

The SPC Regulations have been implemented by all EU Member States (EU MS) (see Mejer 
study (2017)). No infringement actions against EU MS have been brought in relation to their 
implementation. In all EU MS, national  IP offices have been entrusted with examining SPC 
applications  and  granting  SPCs.  National  courts  deal  with  their  enforcement  but  also  with 
appeals against refusals to grant or challenges to the validity of SPCs. National courts are also 
responsible for referrals to the CJEU on the interpretation of the SPC Regulations. 

Since the entry into force of the SPC Regulations, the use of SPC protection has been steadily 
increasing.  The  average  number  of  SPC  applications  in  EU  MS,  combining  both 
pharmaceutical  and  PPP  SPCs,  remained  at  the  level  of  30  applications  annually  between 
1996 (year of adoption of the SPC Regulation on PPPs) and 2004, and then shifted to about 
50  applications  annually  (see  Mejer  study  (2017)  for  more  details).  The  highest  number  of 
SPC filings has been recorded in the biggest markets (Germany, France, Italy and UK). Kyle 
study  (2017) shows that the share of new medicinal products  (i.e.  active ingredients  for the 
purpose of the SPC) obtaining an SPC in at least one Member State increased from 75% in 
the early 1990s to 86% to 2017. More than 20,000 SPC applications have been filed in the EU 
since the entry into force of the SPC Regulations.  

Many more SPCs are applied and granted for medicinal products than for PPPs. For example, 
according  to  the  Kyle  study  (2017),  197  plant  protection  SPC  applications  were  lapsed,  in 
force, or pending in 2015 in Germany, compared to 1,257 for medicinal products. 

By 2016, more than 40 medicinal products had been granted an SPC extension by the national 
patent offices in one or more Member States, resulting in over 500 national extensions. 

4  METHOD  

4.1  Methodology and sources of information 

A  legal  analysis  of  the  SPC  legislation  has  been  conducted  in-house  and  through  several 
external  studies,  especially  the  Max  Planck  Institute  study  on  the  legal  aspects  of  the  SPC 
system (see Annex 3 on studies). This study analysed in detailed each of the provisions of the 
SPC Regulations, and was based on desk research and surveys to stakeholders (SPC holders 
and generics manufacturers and associations, IP attorneys, patent offices and judges), which 
were based on highly technical and detailed questionnaires. In the context of that study, two 
workshops with stakeholders were organised. 

Economic  analyses  of  the  SPC  system  have  also  been  conducted  both  in-house  (e.g.  Mejer 
study (2017)) and through external studies like the Copenhagen Economics study (see Annex 
3  on  studies),  which  analyses  the  economics  of  the  SPC  and  other  EU  pharmaceutical 
incentives and how they interact. The latter also included several case studies. 

The  Commission  conducted  an  online  public  consultation  on  the  SPC  system  and  the  EU 
Bolar  exemption  from  12  October  2017  to  4  January  2018  (hereinafter  Commission 
consultation). Its outcomes are summarised in document SWD(2018)24215 (see Annex 2).  

15  https://ec.europa.eu/docsroom/documents/29464 

13 

 
 
 
                                                           
4.2  Limitations and robustness of findings 

In order to evaluate whether the first and second objectives identified in the intervention logic 
have been met, time-series data on R&D expenditures (at project level) and numbers of new 
chemical  entities  and  new  biologic  entities  launches  in  the  EU  are  required  for  both  the 
pharmaceutical  and  PPPs  sectors.  A  main  challenge  in  this  evaluation  is  the  collection  of 
historical data in this regard as: 

-  The  first  SPC  Regulation  dates  back  to  1992,  therefore  the  time-series  data  for  the  last 
three decades were needed. While R&D data is available and provided by public sources 
(OECD), there is no distinction between generic and innovator companies. The evaluation 
thus  attributes  all  R&D  to  the  innovative  industry  (this  is  not  a  major  limitation  as 
innovators  invest  considerably  more  on  R&D  than  generics,  even  if  the  latter’s  R&D 
investment  is  far  from  being  insignificant  especially  since  the  emergence  of  biosimilars 
and complex generics). Data on PPPs is scarce as confirmed by the CE (2018) and Kyle 
(2017) studies. 

-  Fragmentation of the EU framework prior to the establishment of the European Medicine 
Agency  (‘EMA’)  in  1995  makes  it  challenging  to  count  the  number  of  new  chemical 
entities and new biologic entities launches in the EU. Prior to 1995, new chemical entities 
(NCEs)  were  approved  at  a  national  level.  To  have  consistent  long  term  series,  Section 
5.1.1  takes  as  a  proxy16  for  the  yearly  generation  of  NCEs  at  world  level  the  annual 
approvals  of “novel  drugs”17  by the Center for  Drug Evaluation and Research of the US 
Federal Drug Administration. Several studies are based on that data.18 Section  5.1.1 also 
contrasts data from the US FDA with some recent data from EMA, and table 2 of the Kyle 
study of 2019, that confirm the trends are similar.  

Finally, data on the R&D costs of development of individual, or groups of, medicines is not 
available, or partly available only via private database subscriptions.  

A  causality  analysis  between  the  introduction  of  the  EU-level  SPC  legislation  and  the 
evolution of investments in R&D and registration of active ingredients in the pharmaceutical 
and  PPPs  sectors  is  further  complicated  by  the  fact  that  other  external  factors  can  have  a 
significant  impact  on  that  evolution  (see  Section  5.1.1  for  details).  Indeed,  quantifying  the 
impact of intellectual property rights on innovation in any field of technology is a well-known 
challenge  and  the  SPC  framework  is  no  exception  in  this  respect.  This  limitation  of  the 
causality analysis is discussed in Kyle (2017), CE (2018) and Mejer (2017) studies. 

Evaluating  the  first  objective  is  particularly  challenging  as  the  levels  of  R&D  spending  in 
Europe are influenced by reforms of the regulatory framework related to pharmaceutical and 

16   The use of this proxy can be found in several studies. See pages 203 and 219 of CE study.  
17   According to the annual reporting documentation of the Center for Drug Evaluation and Research of the US 
Federal Drug Administration (FDA), ‘novel drugs’ are often innovative products that serve previously unmet 
medical  needs  or  otherwise  significantly  help  to  advance  patient  treatments.  The  active  ingredient  or 
ingredients in a novel drug have never before been approved in the United States. These ‘novel drugs’ are 
approved  either  as  new  molecular  entities  (NMEs)  under  New  Drug  Applications  (NDAs),  or  as  new 
therapeutic  biologics  under  Biologics  License  Applications  (BLAs).  In  some  cases,  an  NME  may  have 
actions  similar  to  earlier  drugs  and  may  not  necessarily  offer  unique  clinical  advantages  over  existing 
therapies (https://www.fda.gov/media/134493/download). 

18   C.  F.  Munos,  B.  (2009).  Lessons  from  60  years  of  pharmaceutical  innovation.  Nature  reviews  Medicine 

discovery, 8(12), 959 and https://www.nature.com/articles/s41587-019-0021-6.  

14 

 
                                                           
PPP products in both in the EU and USA. This is because, while R&D is local in a sense that 
R&D is undertaken in specific country, drug development efforts are global (i.e. R&D in one 
country, when successful, leads to sales in many countries). 

Due to these limitations, this evaluation presents trends and correlations. Still, the analysis is 
robust as it draws on a number of different economic and legal studies (see Annex 3) whose 
results  point  to  the  same  conclusions.  Furthermore,  in  the  analysis  of  SPC  applications,  the 
evaluation relies on high-quality (i.e. complete and detailed) data. That makes the evaluation 
results of the third objective particularly robust. Finally, trends and correlations found in the 
studies are in line with the feedback obtained from stakeholders in public consultations. 

5  ANALYSIS AND ANSWERS TO THE EVALUATION QUESTIONS 

The  Commission’s  rules  on  Better  Regulation  outline  five  evaluation  criteria:  effectiveness, 
efficiency, relevance, coherence and EU added value.  

For each of the five evaluation criteria and each of the three legislative objectives set out in 
the  intervention  logic  of  Section  2.2  (encouraging  innovation,  preventing  delocalisation  and 
providing uniformity), a set of evaluation questions (see Annex 8) was designed. This section 
analyses the SPC Regulations on the basis of those questions and provides answers. 

The design of the questions took into account the elements of the intervention logic of Section 
2.2  above  and  major  policy  developments  related  to  the  pharmaceutical  and  agrochemical 
sectors.  

5.1  Effectiveness 

The  effectiveness  analysis  considers  how  successful  the  SPC  Regulations  have  been  in 
achieving their three objectives.  

5.1.1  Objective 1: Encouraging global innovation in new products for EU patients and 

consumers of PPPs 

The main aim of the SPC system is to promote the development of new active ingredients in 
the  pharmaceutical  and  PPP  sectors  (not  incremental  innovation  such  as  repurposing  of 
known  active  ingredients  for  new  treatments,  new  formulations,  new  dosages  of  existing 
medicines, or combining existing active ingredients with non-active ingredients).  

As explained in the intervention logic, this first objective will be evaluated disregarding the 
geographical  location  of  the  R&D.  It  would  be  sufficient  that  the  SPC  contributes  to 
worldwide research in new active ingredients as long as EU patients and farmers can benefit 
from that global research (induced by EU and non-EU countries) through the availability of 
more products (i.e. more registration of active pharmaceutical and PPP ingredients in the EU). 
Conversely,  the  second  objective  (attracting  R&D  to  the  EU  and  preventing  R&D 
delocalisation outside the EU), analysed in Section 5.1.2, has a geographical focus on the EU. 

15 

 
 
-  Question  1:  Has  worldwide  innovation  in  new  active  ingredients  increased  since  the 

introduction of the SPC system? 

Pharmaceutical sector 

The pharmaceutical industry remains a leading industrial sector in R&D investment. Figure 2 
below  shows  the  development  since  1975  of  business  expenditure  on  R&D  for  the 
pharmaceutical  industry  in  the  US,  Japan,  Canada,  Australia  and  10  EU  Member  States19. 
Figure  2  also  shows,  as  a  benchmark,  the  development  of  R&D  expenditure  in  the  whole 
manufacturing sector. The two vertical dotted lines indicate the dates on which SPC systems 
were introduced in the USA (in 1984) and in the EU (in 1992). 

Figure 2: Development of R&D investment in the pharmaceutical industry and 
manufacturing industry in general (Source: OECD ANBERD database) 

Figure 2 shows that the pharmaceutical industry has devoted significantly more resources to 
R&D  investment  since  the  mid-1980s  than  the  aggregated  manufacturing  sector.  Moreover, 
unlike other industries, the pharmaceutical industry continued to accelerate  its investment in 
R&D in the first half of the 1990s.  

However, not all this worldwide pharmaceutical investment in R&D is necessarily devoted to 
the  development  of  new  active  ingredients,  the  subject-matter  of  SPC  protection.  For 
example, a part of this R&D investment may be devoted to finding additional therapeutic uses 
for  existing  active  ingredients.  Therefore,  to  further  ascertain  the  effectiveness  of  this  first 
objective, the evaluation analysed the evolution  of approvals  of new active ingredients (this 
also helps in  analysing the efficiency of the SPC).  

As discussed in Section 4.2 above, the evaluation takes the annual approvals of ‘novel drugs’ 
by  the  Center  for  Drug  Evaluation  and  Research  of  the  US  FDA  as  a  proxy20  for  the 
generation of ‘new  active ingredients’ at  world level.  It  can be observed  that the increasing 

19   Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Spain, Sweden and the UK. 
20   The use of this proxy can be found in several studies. See pages 203 and 219 of the CE study.  

16 

0100200300400R&D spending compared to 1975 (%)197519801985199019952000Pharmaceutical ManufacturingAll Manufacturing 
 
 
 
                                                           
investment  in  R&D  was  accompanied  by  more  approvals  of  new  active  ingredients  over 
several  decades  as  observed  in  Figure  3  and  Figure  421,22,  especially  during  the  last  decade 
(see  detailed  analysis  in  Annex  5).  However,  there  was  a  decline  in  approvals  of  novel 
medicines in the first decade of the 2000s following the approvals spiked in the late 90s in the 
context  of  the  Prescription  Drug  User  Fee  Act  (PDUFA)  of  199223.  PDUFA  introduced 
measures for the FDA to eliminate the backlog of un-reviewed applications within 24 months 
of the establishment of an user fee program.  
An  OECD24  study  and  many  others  discuss  that  the  efficiency  of  pharmaceutical  R&D  has 
been declining (Eroom’s law in pharmaceutical R&D) in recent decades (with a stable trend 
in  the  past  decade)  due  to  several  interrelated  factors.  The  OECD  study  explains  that  this 
phenomenon  can  also  be  found  in  other  sectors,  including  the  PPP  sector,  and  implies  that 
ideas/treatments that are ‘easy’ to find are developed and exploited first. Then, as the stock of 
knowledge  increases,  new  ideas/treatments  become  harder  to  find  or  inventions  and  output 
can only be sustained or increased by large increases in  research effort  that offset  declining 
productivity.  In  pharmaceuticals,  this  is  apparent  in  an  ever-increasing  back  catalogue  of 
effective  drugs,  and  a  shift  towards  more  complex  conditions  that  has  increased  the 
complexity  of  clinical  trials  and  failure  rates25.  Another  hypothesis  is  that  more  stringent 
requirements  to  gain  marketing  authorisation  have  also  increased  the  costs  of  clinical  trials. 
On the other hand, declines in productivity are also driven by rising R&D costs. 

A similar patterm of the historical approvals of novel drugs observed in the US FDA data in 
recent decades can be also observed in data for approvals of new human and veterinary active 
substances at the European Medicines Agency (see Figure 5), and in the evolution observed 
by the Kyle study of 2019 for the period between 1990 and 2015 at global level (see  Figure 
6). 

Specifically for biologicals26, the figures below show a positive trend in the generation of new 
active ingredients since the emergence of biotechnology in the 1980s.  

21   Munos  B.  (2009),  Lessons  from  60  years  of  pharmaceutical  innovation.  Nature  Reviews  Drug  Discovery, 

8(12), 959. 

22   https://www.nature.com/articles/s41587-019-0021-6  
23   Mary K. Olson, PDUFA and Initial U.S. Drug Launches, 15 Mich. Telecomm. Tech. L. Rev. 393 (2009) 
24   OECD study ‘Pharmaceutical Innovation and Access to Medicines’ (2018).  
25   Scannell et al., 2012; Deloitte Centre for Health Solutions, 2016; SSR Health, 2016. 
26   As discussed under Section 5.3 (relevance) biologics are eligible for SPC protection. 

17 

 
                                                           
Figure 3: US FDA approvals of new molecular entities (NMEs)27 from 1950 to 2008 

Figure 4: US FDA approvals of new molecular entities (NMEs) from 1998 to 2018 
(Source: FDA databases) 

27   New  Molecular  Entity,  i.e.  an  active  ingredient  that  contains  no  active  moiety  that  has  been  previously 

approved by the FDA or has been previously marketed as a drug in the USA. 

18 

 
 
  
 
 
 
                                                           
Figure 5: Number of annual EU centrally authorised human and veterinary products 
for new active substances (Source: data provided by EMA) 

Figure 6: New chemical entitites launched annually - both globally and in the European 
Economic Area (EEA) (Source: data from Table 2 of Kyle study of 2019) 

60

50

40

30

20

10

0

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Global

EEA

PPP sector 
A specialised study by consultants Phillips McDougall in 201328 reported that annual industry 
expenditure on crop protection R&D worldwide more than doubled from USD 3.06 billion to 
USD  6.71  billion  between  1995  and  2012.  A  Phillips  McDougall  survey  in  2016  of  11 

28   R&D  trends  for  chemical  crop  protection  products  and  the  position  of  the  European  Market,  Phillips 

McDougall for ECPA, September 2013. 

19 

 
 
 
 
 
                                                           
companies reported annual, total, agrochemical-industry-R&D expenditure of USD 2.6 billion 
in 2014 and USD 3.2 billion in 2019. 
A subsequent 2019 study by Phillips McDougall AgriService29 highlights that investment in 
R&D in PPPs remains high compared to other industrial sectors. Major companies (many of 
them EU-headquartered) invested around 10% of their annual sales in R&D over the last 50 
years. The study also states that the total number of active PPP ingredients available globally 
has  been  increasing  for  decades,  from  400  at  the  beginning  of  the  1990s  to  600  at  the 
beginning of the 2010s30.  

However,  unlike  in  the  pharmaceutical  sector,  the  annual  number  of  new  active  ingredients 
introduced for conventional crop protection has declined in recent decades in global markets 
according  to  Phillips  McDougell  database  and  analysis  (Figure  7).  According  to  a  study  by 
Deloitte31, this global decline is due to two main factors, set out in the bullet points below.  

-  Longer product-development cycles and escalating costs: the average development period 
for a new PPP has increased from 8.3 years in 1995 to 11.3 years in 2010-2014. This has 
increased the overall R&D costs for a new PPP from  USD 152 million  in 1995 to USD 
286 million in 2010-2014. 

- 

Increasing stringency of regulatory requirements: this hampers the further development of 
innovative  technologies  and  the  use  of  some  types  of  crop-protection  agents  like 
glyphosate. 

This global trend of decreasing numbers of new active ingredients can also be observed at EU 
level.  The  2013  study  by  Phillips  McDougall  points  to  a  decline  in  investment  in  R&D  for 
new  PPPs  that  is  specific  to  the  European  market  (with  fewer  new  active  substances  being 
registered  in  the  EU).  They  conclude  that  there  are  three  possible  reasons  for  this:  (i)  the 
maturity of demand in the EU (compared with other world regions like Asia); (ii) increasingly 
stringent  data  requirements  for  regulation;  and  (iii)  the  non-acceptance  of  genetically 
modified seeds in the EU. The study concludes that this leaves European farmers with fewer 
new  technologies  to  drive  agricultural  production  than  their  competitors  in  other  regions  of 
the world.  

According  to  the  2013  study  by  Phillips  McDougall,  the  number  of  companies  worldwide 
involved in R&D of new active ingredients for PPPs has halved, from 35 companies in 1995 
to 18 in 2012. This has arguably affected competition in new product areas32.  

29   Evolution of the Crop Protection Industry since 1960, Phillips McDougall, November 2018.  
30   In 1960, there were 15 chemical classes on the market, whereas today’s products come from more than 40 
different classes. New chemical classes often bring with them new modes of action which are important for 
addressing problems of resistance, whether to insecticides, fungicides or herbicides. 

31   Deloitte’s 

report 

on 

the 

future 

of 

agrochemicals 

(2019) 

https://www2.deloitte.com/content/dam/Deloitte/us/Documents/energy-resources/us-eri-future-of-
agrochemicals.pdf. This report describes other discouraging factors, such as a reduction in government farm 
subsidies and the accelerated pace of change in farming markets (the long-term demand for PPPs could be 
reduced  by:  the  use  of  advanced  robotics,  drones,  artificial  intelligence,  gene  editing,  reduced  biofuel 
demand, alternative meats, improved animal digestion, and indoor  farming). This industrial sector has also 
shifted overall R&D expenditure toward seeds and traits. 

32   Between 2007 and 2012, the total agrochemical R&D expenditure of major companies increased by 26.4%. 
However, the share of this expenditure directed to the research of new active ingredients fell from 32.5% to 
29.6%  (although  in  actual  dollar  terms  this  is  a  15%  increase).  The  share  of  expenditure  directed  to  the 
development of new active ingredients rose from 23.3% to 24.9%. 

20 

 
                                                           
Figure 7: Annual new PPP introductions for biologicals and conventional crop products 
worldwide (Source: Phillips McDougall) 

-  Question 2: Was the observed increase in investment in research on new active ingredients 

induced by the SPC system? 

The  data  above  and  the  perception  of  innovators  (discussed  below)  suggest  that  the  SPC 
framework  supported  global  investment  in  R&D  of  new  active  ingredients  in  the 
pharmaceutical and PPP sectors in recent decades.  

However, it is challenging to measure the precise contribution made by the SPC framework to 
the  increase  in  global  R&D  efforts,  and  specifically  to  R&D  with  the  potential  to  generate 
new  active  ingredients  in  the  EU.  This  is  because  other  factors  can  also  have  a  significant 
positive  or  negative  influence  (see  Table  1  below  and  Annex  9).  Quantifying  the  impact  of 
intellectual property rights on innovation in any field of technology is a well-known challenge 
and the SPC framework is no exception in this respect.  

Observing  Figure  3  and  Figure  4  above,  and  given  the  time  necessary  to  develop  a  new 
medicine,  the  surge  in  US  approvals  of  novel  medicines  observed  between  1994  and  1999 
(from  around  20  in  1994  to  over  50  in  1999)  could  have  been  positively  influenced  by  the 
adoption in 1984 of the US Medicine Price Competition and Patent Restoration Act (Hatch-
Waxman Act). This legislation introduced US patent-term extensions (the US version of the 
EU’s  SPCs)  along  with  other  measures  (e.g.  a  five-year  period  of  data  exclusivity,  and  the 
establishment of the ‘Orange Book’ where the US FDA publishes the patents that originators 
believe  cover  their  approved  medicines).  South  Korea  and  Japan  introduced  patent-term 
extensions in 1987 and 1988 respectively. 

Table 1 below shows factors that: (i) help increase or hamper global R&D investment in the 
pharmaceutical  and  PPP  sectors,  and  (ii)  have  arisen  in  parallel  to  the  introduction  of  SPC 
protection  in  the  EU.  Negative  factors  may  have  encouraged  investment  in  incremental 
innovation,  such  as  the  repurposing  of  known  active  ingredients  and  increasing  reliance  on 
follow-on patent protection such as secondary-medical-use patents. 

21 

 
 
 
 
 
Table 1: Factors influencing the allocation of investment in pharmaceutical and PPP 
R&D in the EU 

Factors that positively influence 
investment in global R&D for new 
active substances 

Factors that have a negative impact on 
investment in global R&D and new active 
substances 

in 

demand35 

the  EU  and  other 

- IP  protection 
countries33  
- Regulatory  incentives  such  as  data  and 
market  protection,  orphan  incentives  and 
paediatric rewards34 
- Growing 
for 
global 
pharmaceuticals  (over  EUR  1  tn  annual 
expenditure  with  over  6%  annual  growth) 
and greater expenditure on medicines36 
- New  technologies  that  have  untapped  new 
treatment opportunities (e.g. biotech) 
- Increasing  public37  and  private  funding  in 
pharma. This is facilitated by IP rights like 
the  SPC,  as  IP  rights  can  be  used  as 
loan/funding 
facilitate 
collateral 
licensing and outsourcing 

and 

- Increasingly  stricter  regulatory  requirements, 
including  post-approval  requirements.  These 
are  especially  discouraging  for  the  PPP  sector. 
They  may  have  encouraged:  (i)  investment  in 
incremental  innovation  like  the  repurposing  of 
known  active  ingredients;  and  (ii)  increasing 
reliance on follow-on patent protection such as 
secondary-medical-use 
the 
pharmaceutical-sector  inquiry  launched  by  the 
European Commission in 2008). 
- High  cost  of  new  techniques  to  develop  new 
substances38 
- Mergers of leading companies39 

patents 

(see 

33   The  MPI  (2018)  and  Kyle  (2017)  studies  discuss  how  pharmaceutical  innovation  is  financed  from  global 
profits.  The  US  market  (representing  64.1%  of  the  global  sales  of  new  medicines  launched  in  2012-2017 
according to the EFPIA data centre) has experimented a significant increase in medicine prices. It has also 
introduced IP, regulatory and tax incentives for pharmaceuticals (the 1984 US  Medicine Price Competition 
and Patent Restoration Act), arguably encouraging additional investments in pharmaceutical R&I. Likewise, 
Korea and Japan introduced patent-term extensions in 1987 and 1988 respectively. 

34   SWD(2020) 163 final. 
35    Deloitte  report,  2020  Global  life  sciences  outlook  (2020)  https://www2.deloitte.com/global/en/pages/life-

sciences-and-healthcare/articles/global-life-sciences-sector-outlook.html. 

36   e.g. Giaccotto, C., Santerre, R. E., & Vernon, J. A. (2005).  Medicine prices and research and development 
investment behavior in the pharmaceutical industry. The Journal of Law and Economics, 48(1), 195-214. 
37   Iain  M  Cockburn,  Rebecca  M  Henderson,  ‘Publicly  Funded  Science  and  the  Productivity  of  the 
Pharmaceutical Industry’ in Adam B Jaffe et al., Innovation policy and the economy (MIT press 2001) p. 21. 
38   In  the  1990s  the  pharmaceutical  industry  allocated  between  10%  and  15%  of  its  turnover  to  R&I,  but  in 

2017 the industry reported spending over 20% of its turnover on R&I.  

DiMasi et al. (2016)  estimates that the cost of bringing a new medicine to the market is now over USD 2 
billion.  However,  other  researchers’  estimates  conclude  that  the  cost  might  be  substantially  less  than  the 
estimates  by  DiMasi  et  al.  (e.g.  Olivier  J.  Wouters,  Martin  McKee,  Jeroen  Luyten  (2020). ‘Estimated 
research  and  development  investment  needed  to  bring  a  new  medicine  to  market,  2009-2018’;  [published 
March 3, 2020]  Journal of the American Medical Association). Wouters, McKee and Luyten estimated the 
average investment to bring a new product to market at USD 985 m (accounting for costs of failed trials). 

The overall R&D costs for a new PPP have increased from USD 152 million in 1995 to USD 286 million 
during the 2010-2014 period (Phillips McDougall and Deloitte). 

39   Both sectors have seen a continuous wave of mergers. The concentration of major companies is more acute 
in the PPP sector where, in 1996, 12 companies held approximately 35% of global market share, with only 6 
companies controlling 60% of the PPP market in 2011. The pharmaceutical ecosystem has many innovative 
start-ups. The register of the EMA’s ‘SME office’ contains over 1 500 companies registered as active in the 

22 

 
                                                           
 
Stakeholders’ perception of the impact of SPCs on innovation 

The  Commission’s  public  consultation  asked  innovators  (see  Section  2.3  above)  some 
questions about  the  role  of the SPC system in  their own innovation-related decisions. Their 
answers  (71  respondents)  appear  to  reflect  the  SPC’s  positive  impact  as  detailed  below. 
However,  it  can  also  be  observed  that  many  of  the  respondents  did  not  answer  some 
questions.  

Thus,  question  6  asked:  For  innovative  products  or  potential  innovative  products,  does  the 
possibility  of  getting  EU  SPC  protection  play  a  role  when  your  company/organisation  is 
deciding on the following investments? (i) in R&D (excluding clinical/field trials) and (ii) in 
clinical  trials  (medicinal  products),  or  field  trials  (for  plant  protection  products).  In  their 
answer  to  Question  6(i),  only  4  out  of  71  innovators  answered  ‘No’,  with  32  reporting  that 
SPC  protection  had  a  positive  effect.  However,  45%  of  innovators  (32  out  of  71)  did  not 
provide  a  reply.  In  their  answer  to  Question  6(ii),  only  1  out  of  71  answered  ‘No’,  with  33 
reporting that SPC protection had  a positive  effect.  However, 45% of innovators (32 out  of 
71) did not provide a reply. 

The  Commission  public  consultation  also  surveyed  other  stakeholders  (see  Section  2.3 
above). Here, the Commission asked patients, farmers, health practitioners and health-related 
authorities  how  they  perceived  the  progress  made  in  the  last  two  decades  in  the  EU  for 
investments in pharmaceutical innovation and PPPs in general. In their answers, 10 out of 15 
stakeholders reported a positive trend, with 2 reporting a stable trend, and only 1 reporting a 
negative trend. These questions were also included in the questionnaire addressed to industry 
players, innovators and trade authorities, who replied as follows (only 5 replies were received, 
which is a limited sample): 2 out of 5 reported a positive trend, with 1 reporting a stable trend, 
and 1 reporting a negative trend.  

The  Commission  public  consultation  did  not  address  specific  questions  on  innovation  to 
makers of generics as these companies are not  expected to  invest in  new active ingredients. 
However, the issue of  generics was addressed in the Allensbach survey  for the Max Planck 
Institute (MPI) study contracted by the Commission, discussed in the following paragraph. 

Further  surveys  show  that  SPC  protection  appears  to  be  highly  coveted  by  innovators, 
including  SMEs40.  The  Allensbach  survey  (Question  26)  found  that  80%  of  respondents 
agreed/strongly agreed with the statement that the current SPC regime fosters investment in 
R&D  activities,  with  only  15%  of  respondents  disagreeing  or  strongly  disagreeing.  Around 
65%  of  respondents  from  the  generics  industry  agreed/strongly  agreed  with  that  statement. 
The Allensbach survey also found that more than two thirds of all industry respondents agreed 
or  strongly  agreed  with  the  statement:  ‘the  current  SPC  Regulations  act  as  an  incentive  to 
develop  more  products  for  which  a  longer  time  is  needed  until  a  marketing  authorisation  is 
obtained’, while 19% of the respondents disagreed or strongly disagreed. 

However,  not  all  researches  supports  the  claim  that  the  SPC  Regulations  made  a  critical 
difference.  Research41  conducted  by  Médecins  Sans  Frontières  that  focused  on  three  best-

pharmaceutical  sector  in  the  European  Economic  Area  (EEA)  with  SME  status.  This  represents  a  sharp 
increase in recent years (10 times more SMEs than in 2006)). 

40   As reported by industrial associations like EuropaBio and European Biopharmaceutical Enterprises (EBE), 
which represents the interests of  biopharmaceutical companies in Europe (60% of its members are SMEs). 
41    Hu,  Y.,  Eynikel,  D.,  Boulet,  P.  et  al.  Supplementary  protection  certificates  and  their  impact  on  access  to 
medicines in Europe: case studies of sofosbuvir, trastuzumab and imatinib. J of Pharm Policy and Pract 13, 
1 (2020). 

23 

 
                                                                                                                                                                                     
selling medicines concluded that the internationally accepted patent term  of 20  years would 
have  been  sufficient  to  recoup  the  R&D  investments  related  to  those  three  medicines, 
claiming that the assumed general need for SPCs is incorrect, at least for some medicines. In 
this  regard,  it  is  accepted  that  the  time  needed  to  recoup  investments  for  developing  a 
particular  medicinal  product  may  depend  on  several  factors  and  be  shorter  for  some 
medicines, e.g. blockbusters. Annex 4 makes calculations in this regard for a large sample of 
medicines. 

In  the  veterinary  sector,  innovators  consider  any  existing  incentive,  including  the  SPC,  as 
necessary  for  investment  in  innovation,  especially  given  the  challenges  described  in  the 
impact  assessment  accompanying  the  Commission  proposal  on  Regulation  (EU)  2019/6  on 
veterinary medicinal products42. 

5.1.2  Objective 2: Attracting R&D to the EU and preventing delocalisation  

Another  objective  of  the  SPC  Regulations  prominently  claimed  by  the  legislators  was  to 
promote  R&D  activity  within  the  EU,  and  consequently  to  prevent  the  delocalisation  of 
research centres and related jobs to non-EU countries. 

-  Question  3:  Have  more  pharmaceutical  and  PPP  investments  and  jobs  in  R&D  been 
brought  to  the  EU  since  the  introduction  of  the  SPC?  How  have  those  investments 
developed in other trading partners of the EU? 

Pharmaceutical sector 

In 1992, pharmaceutical R&D and manufacturing was essentially located in the US, Western 
Europe  and  Japan43.  Today,  R&D  and  manufacturing  for  pharmaceuticals44  and  PPPs  are 
global phenomena, with increasing global competition to attract investment.  

Despite this increasing global competition, the EU pharmaceutical industry remains a leading 
sector  in  R&D  investment.  The  innovative  pharmaceutical  industry  alone  invests  over  €37 
billion  in  research  in  Europe,  the  highest  proportion  of  all  industrial  sectors,  with  795,000 
direct  jobs45  and  a  €110  billion  trade  surplus  (2019)46.  According  to  Eurostat,  the 
pharmaceutical-manufacturing  sector  (NACE  Division 2147)  in  the  27  Member  States  of  the 
EU  (EU27)  is  characterised  by  a  small  number  of  very  large,  capital-intensive  enterprises.. 

42   That impact assessment highlights that ‘since 1991 the costs for new product development (total costs from 
discovery  to  first  sales,  including  application  procedure)  have  risen  by  229%  for  food-producing  animals, 
173%  for  companion  animals  and  108%  for  minor  species.  The  cost  of  developing  a  regulatory  dossier 
which  would  meet  European  requirements  for  a  major  species  has  been  estimated  at  15-50  million  euros, 
while  for  an  additional  indication  it  has  been  estimated  at  2-6  million  euros’.  Surveyed  stakeholders 
complained about the regulatory burden faced when developing and registering innovative medicines. 
43   Gambardella,  A.,  Orsenigo  L.,  &  Pammolli,  F.  (2000),  Global  competitiveness  in  pharmaceuticals:  a 
European perspective, available at https://mpra.ub.uni-muenchen.de/15965/1/MPRA_paper_15965.pdf.  
44   See  table  on  page  42  at:  https://www.ifpma.org/wp-content/uploads/2017/02/IFPMA-Facts-And-Figures-

2017.pdf  

45   European Federation of Pharmaceutical Industries and Associations (2020) The Pharmaceutical Industry in 

Figures Key data 2020 (https://www.efpia.eu/media/554521/efpia_pharmafigures_2020_web.pdf) 

46    Eurostat  –    International  trade  in  goods  by  type  of  good  (https://ec.europa.eu/eurostat/statistics-

explained/index.php/International_trade_in_goods_by_type_of_good) . 

47    Manufacture of basic pharmaceutical products and pharmaceutical preparations.  

24 

 
                                                           
According to the EFPIA48, the average annual growth rate of pharmaceutical R&D within the 
EU  was  4.6%  from  2000  to  2015.  Figure  8  and  9  below  depict  a  significant  and  sustained 
increase  in  pharmaceutical  R&D  in  the  EU  since  the  introduction  of  the  SPC  for 
pharmaceutical products. Figure 10 shows growth in European employment in pharmaceutical 
R&D since the introduction of the SPC protection. 

On  the  development  of  investment  in  pharmaceutical  R&D,  US-based  investment  in 
pharmaceutical  R&D clearly outperforms  that of the rest  of the world49 (See Figure 9). The 
EU  is  the  second  largest  base  for  R&D  investment  at  global  level,  with  China  increasingly 
closing the  gap50. A study by  Grabowski  and Wang (2006) found that  the  EU maintained a 
leading position in the generation of NCEs from 1982 to 2003 (Figure 11), after which time 
the USA caught up and is now in the lead. Indeed, more recently, 83% of the new medicines 
approved by the US FDA between 2017 and 2018 originated in the USA51. 

Spending on pharmaceutical R&D in China grew at an average annual rate of 21.5% between 
2008 and 2015. China does not provide for SPC protection52, but it benefits from large State-
driven investments in R&D and from foreign R&D investment attracted by its immense and 
growing demand for medicines.  

On employment trends, the CE study noted that, although employment within pharmaceutical 
R&D within the EU increased by 49% between  1990 and 2015, overall employment within 

48   A  PricewaterhouseCoopers  (PwC)  study  on  the  economic  and  societal  footprint  of  the  pharmaceutical 
industry  in  Europe,  contracted  by  the  EFPIA  said  the  following:  ‘The  pharmaceutical  industry  is  a  major 
contributor to the European economy. We  estimate  that in  total, it contributed €206 billion in  gross  value 
added (GVA) and 2.5 million jobs (642 000 direct jobs, 780 000 indirect jobs and 1 072 000 induced jobs) 
in 2016, equivalent to 1.4% of the EU’s combined GDP and 0.9% of the region’s employment. The largest 
contributions  are  made  in  Germany,  the  United  Kingdom  and  France.  As  well  as  supporting  a  significant 
number  of  jobs,  the  industry  has  been  making  strides  in  areas  of  representation  and  gender  equality  and 
compares  favourably  with  other  key  industries.  In  2016,  46%  of  the  pharmaceutical  industry’s  workforce 
were  women.’  This  study  states  that  the  pharmaceutical  industry  directly  contributes  an  average  of 
EUR 156 000 of GVA for every employee, which is significantly higher than the EU average (EUR 59 000), 
or 
industry  (EUR 85 000)  or  aerospace  manufacturing 
(EUR 102 000). 

the  car-manufacturing 

the  average 

for 

A  survey  by  the  EFPIA  of  its  corporate  members  in  2019  showed  that  35%  of  respondents  reported  an 
increase in their investments in the EU over the past 3 years, with 51% of respondents reporting no change. 
The EFPIA argues that R&I and commercial segments of the value chain seem to have benefited the most 
from this positive trend. 

49   The Commission explanatory memorandum for the proposal for the SPC Regulation reported that during the 
1980s there was a decline in the number of molecules of European origin that reached the R&I stage, from 
65% to 40%.  

50   See page 36 of the study Biotech in Europe, Scaling Ion, McKinsey, 2019.  
51   Taking the 15 highest-selling medicines in 2018, only 2 were commercialised by an EU company (and these 
two  were  jointly  commercialised  with  US  partners).  A  Swiss  company  was  responsible  for  the 
commercialisation  of  3  of 
the 
commercialisation of the remaining 10 (including the top 6). 

those  15  medicines,  and  US  companies  were  responsible  for 

52   On  17  October  2020,  the  13th  Standing  Committee  of  the  National  People's  Congress  of  the  People's 
Republic  of  China  adopted  amendements  to  the  patent  law  of  China,  including  the  possibility  for  patent 
holders to request up to  five  years of patent term adjustment  for invention patents related to “new drugs” 
that have been approved for marketing in mainland China (art. 42, para. 3). However, this term adjustment is 
not equivalent to an SPC as the former only compensate for the time taken by the Chinese medicine agency 
for the review and approval of a new medicine. 

25 

 
                                                           
the pharmaceutical sector did not increase between 2006 and 2014. Moreover, employment in 
R&D between 2010 and 2015 in the EU decreased (Figure 10). 

Figure 8: Development of R&D expenditure in several geographical areas 

Figure 9: Change in business enterprise pharmaceutical R&D (BERD) in the EU and 
USA relative to 1975 (Source: OECD) 

26 

0100200300400Pharma BERD compared to 1975 (%)197519801985199019952000EUUSA 
 
 
 
 
 
 
Figure 10: Changes in employment within pharmaceutical R&D in Europe (CE study of 
2018) 

27 

 
 
 
Figure 11: Geographical distribution of discovery of NCEs (CE study of 2018) 

For the veterinary sector, the impact assessment53 accompanying Regulation (EU) No 2019/6 
on  veterinary  medicinal  products  provides  a  detailed  account  of  the  sector’s  current 
circumstances and the challenges in developing medicines for veterinary use. It noted that the 
sector directly supports 50 000 jobs in Europe and over 100 manufacturers. 

PPP sector 

The EU PPP industry remains a global leader in R&D and manufacturing, with the emergence 
of  new  players  in  Asia  where  demand  and  the  industry  are  growing  steadily.  In  2012,  Asia 
overtook Europe as the largest market worldwide for PPPs. 

In 2018, European countries exported USD 17.6 billion of pesticides (48.2% of global exports 
–  noting  that  this  figure  includes  Switzerland,  which  was  the  origin  of  0.8%  of  the  global 
exports).  In  second  place,  Asia  exported  USD  12.3  billion  (33.7%  of  global  exports),  with 
China  alone  exporting  USD  5.3  billion.  In  third  place  was  the  US,  with  USD  4.2  billion in 

53   https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52014SC0273 

28 

 
 
 
                                                           
exports54.  Following  a  wave  of  mergers  among  the  major  companies  in  this  sector,  two 
German companies remain among the now reduced number of major global groups55.  

-  Question  4:  To  what  extent  did  the  SPC  Regulations  increase  investments  in 

pharmaceutical and PPP innovation in the EU?  

Measuring the role of the SPC in the overall increase of R&D efforts by the  pharmaceutical 
and  PPP  sectors  within  the  EU.  This  is  because  several  factors  influence  the  geographical 
distribution  of  R&D  activities.  Many  of  these  factors  are  as  powerful  now  as  they  were  in 
1992, but others have emerged since then.  

The difficulty of measuring the role of the SPC in this area is reflected in the response to the 
Commission  public  consultation.  Over  60%  of  the  71  innovators  that  participated  in  the 
Commission public consultation did not reply to  Question 9, which inquired about the  most 
relevant  drivers  ‘that  affect  your  decisions  on  the  geographical  location/allocation  of 
investments in innovation’. Although 9 respondents reported that the availability of SPC-type 
protection  was  among  the  most  relevant  drivers,  those  that  did  reply  to  the  question  mostly 
reported other factors. These replies referred to:  

(i) 

(ii) 

(iii) 

(iv) 

(v) 

(vi) 

the availability of regulatory data protection (2 respondents);  

the  availability  of  good  health 
respondents);  

infrastructure  (e.g.  modern  hospitals)  (5 

the proximity of research universities (4 respondents);  

the proximity of an effective regulatory agency (3 respondents);  

the availability of public/private funding for their activities (2 respondents);  

labour costs (1 respondent); 

(vii) 

access to high-skilled labour (10 respondents); 

(viii)  ease of recruiting patients or accessing treatment groups (4 respondents); 

(ix) 

(x) 

(xi) 

a  large  market  (in  terms  of  potential  sales  in  the  country  where  you  decide  to 
invest) (2 respondents);  

taxation (1 respondent);  

proximity to the place where the clinical trials (or filed trials) for the product were 
carried out (1 respondent);  

(xii) 

the possibility of getting ‘good manufacturing practices’ from the US FDA and/or 
EMA for the factories based in that country (1 respondent). 

The Commission public consultation also asked innovators whether the ‘prospective product’s 
eligibility for SPC protection has ever been a decisive factor in its development (i.e. without 
an  SPC  you  would  have  discarded  it  despite  having  already  invested  in  part  of  its 
development)?’.  33  innovators  responded  positively  to  this  question,  confirming  that 
eligibility for SPC protection was decisive in their product’s development. There was then a 
follow-on  question:  ‘Was  the  prospective  product  being  developed  (or  did  most  of  its 

54   http://www.worldstopexports.com/top-pesticides-exporters/  
55  http://images.intelligence.informa.com/Web/InformaUKLimited/%7Bb9c5dc16-821f-44ac-8396-

60f28bb66a28%7D_PMcD-Evolution-of-the-Leading-Agrochemical-Companies-v4-2019-ONLINE.pdf  

29 

 
                                                           
development  take place) in  the EU?’. Of the 33 innovators who responded positively to  the 
earlier  question  51%  (i.e.  17  out  of  33)  replied  ‘Yes’  to  the  follow-on  question  and  only  1 
replied ‘No’. 

The  European  Biopharmaceutical  Enterprises  (EBE),  which  represents  the  interests  of 
biopharmaceutical  companies  in  Europe  (60%  of  its  members  are  SMEs),  reported  to  the 
Commission as part of the SPC public consultation. Its report said that any legal uncertainty 
around  SPCs  had  the  potential  to  deter  investment,  postpone  development  decisions  and 
undermine Europe’s reputation as a safe haven for research and development. The EBE said 
that any uncertainty would particularly impact EU-based pharmaceutical SMEs and start-ups, 
which  have  fewer  resources  to  undergo  lengthy  development  pathways  for  their  products 
(they rely on the prospect of getting patent protection and a subsequent SPC). Specifically, for 
the veterinary sector, the impact assessment accompanying the proposal for Regulation (EU) 
No 2019/6 on veterinary medicinal products points out several factors that influence decisions 
on  the  geographical  localisation  of  R&D.  These  factors  are  strongly  influenced  by  market 
forces (e.g. a massive increase in demand for animal-origin food and companion animals in 
Asia) and regulatory approaches outside the EU. 

According to the CE study, companies geographically allocate their R&D activities not only 
on  the  basis  of  IP  rights  but  also  according  to  a  number  of  other  criteria,  such  as  the 
availability of a qualified labour force, good health infrastructure, easy recruitment of patients 
for trials, research universities, public private partnerships, tax schemes, R&D subsidies, high 
spending on pharmaceuticals or PPP, etc. For many of those factors (some of which fall under 
national  competences  in  the  EU)  the  USA  clearly  outperforms  the  EU  (e.g.  the  USA  has 
higher  expenditure  on  medicines  and  greater  funding  available  for  start-ups  through  their 
whole cycle of development).  

The MPI and Kyle studies also recall that companies conducting their R&D activities outside 
the  EU  can  benefit  from  the  IP  protection  available  in  the  EU  and  in  non-EU  jurisdictions. 
Kyle  study  (2017)  finds  that  almost  44%  of  SPC  applicants  are  US-based  companies,  with 
Japanese and Swiss-based applicants accounting for 7% and 6%, respectively. Overall, these 
figures reflect the geographical distribution of R&D.  

Replies  to  Question  26a  of  the  Allensbach  survey  for  the  MPI  study  show  that  36%  of 
stakeholders  agreed  that  the  SPC  Regulations  prevented  the  relocation  of  research  centres 
outside  the  EU  and  34%  disagreed.  There  was  a  large  division  between  originator  and 
generics  companies  on  this  question,  as  57%  of  originator  companies  agreed  that  the  SPC 
Regulations prevented the relocation of research facilities outside the EU, whereas only 19% 
of generics companies shared this opinion.  

In  2019,  the  EFPIA  launched  a  survey  of  18  of  its  corporate  members,  as  part  of  the  PwC 
study  on  the  influence  of  IP  incentives  (SPCs,  regulatory  data  protection,  orphan  market 
exclusivity, and paediatric rewards) on their investments in the EU. Respondents identified IP 
incentives, followed by quicker market access, as the leading factors influencing their R&D 
investment decisions. The survey concluded that phasing out existing IP incentives in the EU 
over a period of 5 years would have a negative impact on their European operations and on 
EU  research-based  investment  activity  in  particular.  Half  of  the  respondents  stated  that  this 
scenario would lead to a reduction in their R&D and commercial footprints of more than 25%, 
and that they would seek opportunities in other regions.  

For  the  PPP  sector,  the  discussion  earlier  on  in  this  report  raised  the  possibility  that  other 
factors external to the SPC have offset the positive effect of the SPC in supporting investment 
in R&D and in new active ingredients in the EU. These other factors include the maturity of 
the EU market and the increasingly strict regulatory environment in the EU.  

30 

 
Based  on  the  studies  and  consultations  mentioned  above,  Annex  9  analyses  the  strengthens 
and weaknesses of the EU as a location for R&D investment in the pharmaceutical and PPP 
sectors. 

5.1.3  Objective 3: Promoting a uniform SPC system in the EU 

The  third  objective  of  the  SPC  Regulations  was  to  introduce  a  uniform  SPC  system  at  EU 
level,  thereby  preventing  the  uneven  development  of  national  laws  that  would  have  created 
obstacles to the free movement of medicinal products and PPPs within the single market. 

The lawmakers expected that the SPC Regulations would provide for SPCs granted under the 
same conditions by each Member State at the request of the holder of a national or European 
patent relating to a product for which a marketing authorisation had been granted.  

-  Question  5:  Are  the  SPC  grant,  enforcement  and  publication  procedures/outcomes 

uniform across the EU?  

5.1.3.1  SPC grant and enforcement procedures across the EU 

Respondents to the Commission public consultation (2017) broadly supported (detailed data 
in Section 5.5 below) the regulation of SPCs at EU level. However, stakeholders claim – and 
studies  and  surveys  suggest  –  that  the  following  differences  in  practices  related  to  the  SPC 
grant and enforcement procedures across Member States have resulted in a fragmentation of 
the SPC framework: 

(1) differences in granting procedures across EU Member States; 

(2) differences in the availability/training of SPC examiners; 

(3) differences in the length of the examination; 

(4) conflicting outcomes of the examinations across EU Member States; 

(5) conflicting outcomes in court proceedings. 

(1) Differences in granting procedures across EU Member States 

Under Article 10(5) of Regulations 469/2009 and 1610/96, Member States may allow the 
national authority (the national patent office (NPO)) to grant SPCs without verifying that 
the  substantive  conditions  laid  down  in  paragraphs  (c)  and  (d)  of  Article  3  (i.e.  the 
requirements that (c) the product has not already been the subject of a certificate, and (d) 
the marketing authorisation is the first authorisation to place the product on the market as 
a  medicinal  or  plant-protection  product)  are  met.  This  has  led  NPOs  to  implement 
different SPC-granting procedures. The MPI study (2018) provides details on the different 
practices  across  EU  Member  States.  In  addition,  non–examining  Member  States  have 
produced more grants of SPC, leading to examining Member States referring questions to 
the  CJEU  when  they  wish  to  refuse  an  SPC  but  note  that  there  have  been  grants 
elsewhere. The substantive conditions most concerned have been the scope of the patent, 
but  also  difficulties  to  abide  by  the  CJEU’s  case  law  on  determining  which  is  the  first 
marketing authorisation in the EU. 

The generics manufacturers that responded to the Commission public consultation (2017) 
mostly  (76.19%)    supported  an  SPC-granting  procedure  that  includes  a  full  substantive 
examination.  In  this  regard,  according  to  a  survey  conducted  as  part  of  the  MPI  study, 
most  NPOs  require  an  examination  of  all  four  substantive  requirements  stipulated  in 

31 

 
Article 3 of Regulation 469/2009. Two NPOs examine only Articles 3(a) and 3(b). Four 
NPOs  replied that they did not examine compliance with the requirement under Article 
3(d). However, both the increasing complexity of the state of the art (e.g. the emergence 
of biotechnology) and the evolution of CJEU case-law have made the examination of SPC 
applications  technically  more  complex56.  According  to  the  survey  conducted  by  MPI, 
some NPOs have declared this growing complexity of the examination to be challenging, 
especially for NPOs with less administrative resources. However,  Member States have a 
duty to abide by the CJEU’s case law. 

On the role of third parties in the grant procedure, it is noted that the SPC Regulations rule 
out  opposition  proceedings57.  Nevertheless,  one  Member  State  has  implemented 
opposition  proceedings  for  SPCs58.  Furthermore,  most  NPOs  (at  least  20)  allow  the 
submission  of  third-party  observations,  although  this  is  not  allowed  by  at  least  two 
NPOs59 . 

As analysed in Section 5.1.3.2, there are also differences in the information published by 
the various NPOs. 

(2) Differences in the availability/training of SPC examiners 

The  MPI  study  found  that  around  8  NPOs  had  SPC  examiners  with  only  a  relevant 
technical qualification and 8 NPOs had examiners with a relevant technical qualification 
and  legal  training.  In  a  few  NPOs,  technical  examiners  cooperate  with  the  legal 
department in examining SPC applications. 

(3) Differences in the length of the examination 

Some  stakeholders  consulted  as  part  of  the  MPI  study  (Question  62  of  the  Allensbach 
survey to stakeholders) confirmed that there were significant differences in the length of 
examination (which can sometimes take more than a  year), and expressed their wish for 
uniform timing and deadlines. Others have criticised the rules in some EU Member States 
that  impose  deadlines  within  the  granting  procedures.  Both  originators  and  generics 
companies highlighted the importance of a quick decision on a product’s eligibility for an 
SPC.  These  differences  between  the  procedures  in  different  countries  may  even  be 
detrimental to the accessibility of generic products. This is because generics makers must 
have early certainty about  the extent to  which a product  may still be protected by SPCs 
after a certain patent expires (across the EU), in order to make corresponding business and 
manufacturing plans. 

The  next  point  (4)  shows  data  on  the  backlog  of  SPC  applications  across  EU  Member 
States. 

56   Some NPOs have introduced their own examining concepts in certain circumstances e.g. the ‘core inventive 

test’, extensively discussed starting on page 232 of the MPI study. 

57   Opposition  procedures  enable  third  parties  to  challenge  the  granting  of  an  IP  right  during  the  grant 
procedure  (ex-ante  opposition  procedure)  or  during  a  period  of  time  subsequent  to  the  granting  of  the  IP 
right (ex-post opposition procedure). 

58   See MPI study (2018). 
59   See MPI study (2018). 

32 

 
                                                           
(4) Conflicting outcomes of the examinations across EU Member States 

In  the  Commission  public  consultation,  56.34%  of  innovator  respondents  indicated  that 
authorities in different EU countries had taken different decisions on SPC applications for 
one (or more) of their products. Only 12.68% reported that this had not happened to them. 
In this regard, 53.97% of generic-maker respondents (and 6 out of 13 SME generic-maker 
respondents)  indicated  that  authorities  in  different  EU  countries  had  taken  different 
decisions  on  SPC  applications  impacting  one  (or  more)  of  their  generics  products.  Only 
14.29% of generic-maker respondents reported that this had not happened to them. 

The CE study shows that the system is highly fragmented. In particular, it shows that the 
share  of  rejected  and  pending  SPC  applications  differ  to  a  large  degree  between  EU 
Member States60.  

Figure 12 below, from the 2015 report Latest News on Medicinal Product SPCs in Europe 
by  Alice  de  Pastors61,  depicts  the  ratios  of  pending  and  rejected  SPCs  for  each  EU 
Member State:  

60   CE  study  (2018),  page  30:  ‘In  Finland,  Italy  and  the  Czech  Republic,  less  than  5%  of  applications  are 

refused, while in Germany, Sweden and Spain, more than 15% of applications are refused’. 

61   SPC  applications  pending:  discrepancies  stem  mainly  from  differences  in  patent-office  procedures  such  as 

waiting for decisions by national courts or lengthy proceedings. 

-  Less  than  10%  of  SCP  applications  pending:  Luxembourg,  Malta,  Slovenia,  Cyprus,  Italy,  Spain, 

Portugal, Sweden, 

-  10%  to  30%:  Lithuania,  Latvia,  Greece,  Estonia,  Austria,  Switzerland,  The  Netherlands,  France, 

Denmark, Slovakia, Norway, Czech Republic, Ireland, Iceland, 

-  30% to 50%: United Kingdom, Romania, Hungary, Belgium, Finland, Germany, Poland, Bulgaria, 

-  about 97% for Croatia (SPC Regulation entered in force in July 2013).  

    SPC applications refused: discrepancies relate mainly to different approaches by NPOs. 

-  Less than 10% of SPC applciations refused: Luxembourg, Malta, Slovenia, Cyprus, Italy, Spain, Portugal, 

Sweden, 

- 

 10%  to  30%:  Lithuania,  Latvia,  Greece,  Estonia,  Austria,  Switzerland,  The  Netherlands,  France, 
Denmark, Slovakia, Norway, Czech Republic, Ireland, Iceland, 

-  30% to 50%: United Kingdom, Romania, Hungary, Belgium, Finland, Germany, Poland, Bulgaria, 

-  about 97% for Croatia (SPC Regulation entered in force in July 2013). 

33 

 
                                                           
 
Figure 12: Ratios of pending and rejected SPC applications in the European 
Economic Area (CE study and Alice de Pastors) 

The  differences  in  refusal  rates  across  Member  States  suggest62  that  there  is  scope  for 
divergent  decisions  on  the  outcomes  of  SPC  applications.  The  Mejer  study  (2017) 
analyses the outcomes of SPC applications filed between 2004 and 2014 for 706 products. 
It  finds  that,  for  26%  of  the  products,  an  SPC  was  granted  in  one  Member  State  but 
rejected or withdrawn in another Member State. Furthermore, the same study found that, 
in 24% of the cases, SPC expiry dates differ across Member States due to differences in 
reporting – or interpretation – of the first marketing authorisation date. 

According  to  the  Kyle  study  (2017),  there  are  substantial  differences  across  Member 
States in the number of SPC applications and the probability of receiving an SPC grant. 
Since  SPC  applications  may  have  diﬀ erent  outcomes  in  diﬀ erent  countries,  eﬀ orts  to 
harmonise  SPCs  across  Member  States,  either  through  the  creation  of  a  unitary  SPC  or 
through  improved  information  sharing,  would  reduce  variations  in  the  IP  landscape  and 
the uncertainty for generic entrants. 

According  to  the  MPI  study,  inconsistencies  and  ambiguities  resulting  from  the  CJEU’s 
interpretation of central  provisions in the SPC Regulations make it difficult for NPOs to 
adapt  their  own  practices  to  the  criteria  set  by  case-law  without  causing  divergences  in 
relation to either their own previous practices, or the practices of other offices. 

The CE study also shows that there are often different outcomes across EU Member States 
for SPC applications for the same product, i.e. in some Member States an SPC is granted 
while in others the application is rejected. Similar findings emerged from the Allensbach 
survey (Question 26)63. This fragmentation and its detrimental effects explain why 88% of 
respondents to the Allensbach survey (both originators and generics companies) expected 

62   The SPC applications corresponding to the same product are not always filed in all EU Member States. 
63   Question 26 was notably about whether respondents agree with the statement: ‘When it comes to examining 
SPC  applications,  the  practice  and  procedures  of  the  national  offices  in  the  EU  Member  States  differ 
significantly in terms of predictability, transparency and quality of the rights granted.’  

34 

 
 
 
                                                           
a  positive  impact  if  ‘the  procedures  for  granting  SPCs  were  harmonised  within  the  EU’ 
(Question 59). 

(5) Conflicting outcomes of court proceedings 

The  replies  by  makers  of  generics  to  the  Commission  public  consultation  show  that 
44.44% of generic-maker respondents (and 5 out of 13 SME generic-maker respondents) 
observed  different  EU  countries  making  conflicting  court  decisions  related  to  SPCs  that 
affected  one  of  their  generics  products.  For  example,  the  validity  of  a  generic-maker’s 
SPC  was  upheld  by  courts  in  some  EU  countries  but  revoked  by  courts  in  other  EU 
countries.  Some  EU  country  courts  concluded  that  the  generic-maker’s  products  had 
infringed  an  SPC  while  others  did  not.  Originators  were  also  asked  the  same  question. 
38.03% of originators saw courts in different EU countries take different decisions on the 
SPC  for  one  of  their  products.  For  example,  the  validity  of  an  originator’s  SPC  was 
upheld  by  courts  in  some  EU  countries  but  revoked  by  courts  in  others,  or  some  EU 
country courts concluded that an originator’s SPC had been infringed while courts in other 
EU countries did not reach that conclusion. 

In  addition,  33.33%  of  generic-maker  respondents  reported  that  they  had  conducted 
multiple  defences  in  a  patent/SPC  infringement  case  in  multiple  jurisdictions  (i.e. 
defences taking place in several EU Member States). 

The Commission public consultation shows that 56.34% of the innovators and 61.76% of 
respondents  in  group  V  (i.e.  NPOs,  judges  and  IP  attorneys)  were  not  satisfied  with  the 
length of proceedings for enforcing SPCs, saying that the length of proceedings depended 
on the EU country.  

5.1.3.2  Transparency: publication of SPC-related information across EU Member States 

The generics manufacturers that responded to the 2017 Commission public consultation said 
that  the  transparency  of  the  current  SPC  system  was  not  optimal.  For  example,  some 
respondents  indicated  that  the  information  published  by  public  authorities  was  not  always 
comprehensive  or  up-to-date,  and  84.13%  of  generic-maker  respondents  (and  11  out  of  13 
SME generics respondents) stated that access to private databases monitoring SPC status can 
be  costly.  Medicines  for  Europe,  the  association  of  generics  manufacturers64,  gave  the 
following response to Question 9 of the Commission’s public consultation (Question 9 asked 
how well the original objectives of the SPC Regulations still corresponded to the needs within 
the EU):  

From the generics point of view, transparency of SPC granting procedures is of utmost 
importance. In fact, when applicable, this guarantees possible third party observations 
or  oppositions.  […]  Lack  of  transparency  and  of  harmonisation  brings  legal 
uncertainty. Any possible future SPC system should make sure this is duly considered in 
order to ensure transparency and predictability for the whole pharma industry […]. 

The above response by generics manufacturers was echoed in the response to the Allensbach 
survey (Question 26), where over 80% of the generics companies agreed that ‘when it comes 
to examining SPC applications, the practice and procedures of the national offices in the EU 

64   Medicines  for  Europe  represents  the  interests  of  generics  and  biosimilar  companies  in  Europe,  and  they 
granted consent for the publication of all information in their contribution to the Commission consultation. 

35 

 
                                                           
Member States differ significantly in terms of predictability, transparency and quality of the 
rights granted’. 

Article 11 of Regulations 469/2009 and 1610/96, which relates to the publication of granted 
and  rejected  SPC  applications,  is  not  implemented  uniformly  across  EU  Member  States. 
According  to  the  MPI  study  (2018),  this  impairs  the  transparency  of  the  SPC  system  for 
stakeholders  (the  degree  of  transparency  was  also  considered  suboptimal  in  the  public 
consultation). The Commission also launched a survey among NPOs in early 2020 to obtain 
details on their transparency practices. Based on this survey, the following different practices 
across NPOs have been identified65. 

-  Most  NPOs  provide  an  online  searchable  database,  although  the  search  criteria  are 
very variable (in two Member States, the only search criterion that can be used is the 
SPC number). 

-  Publishing  SPC-related  information  takes  varying  amounts  of  time,  ranging  from  a 

few days to several months, and even more than a year in specific situations. 

-  Only  a  slight  majority  of  NPOs  (14  out  of  27)  publish  SPC-related  information  in 

English in addition to their official languages. 

-  Only  about  half  of  NPOs  make  the  documents  in  a  file  for  a  given  SPC  application 
accessible  online  (e.g.  in  PDF  format).  However,  the  other  NPOs  usually  allow  file 
inspection and/or are able to provide copies. 

-  Only a slight majority of NPOs (15) provide the European Patent Office (EPO) with 

detailed information on SPCs (which the EPO then publishes). 

-  When asked which source they would consider to be the most suitable for providing 
centralised  access  to  SPC  information,  7  NPOs  mentioned  the  EPO  databases 
(possibly with improvements), 4 did not express any preference, and 14 mentioned a 
new centralised website. 

The above facts are mirrored by the results of the Allensbach survey (Question 26b) for the 
MPI study: 62% of the respondents (48% of originator respondents and 83% of the generic-
maker respondents) to this survey agreed or strongly agreed that the examining practice and 
procedures of the NPOs differed significantly in the predictability, transparency and quality of 
the rights granted (26% of the respondents disagreed). 

This  was  also  confirmed  in  a  Technopolis  study  commissioned  by  the  Dutch  government 
(2018)66. 

From  this  evidence  it  may  be  concluded  that  there  is  a  lack  of  transparency  in  SPC-related 
information. In particular, there is a lack of cross-border transparency, i.e. convenient access 
to  relevant  information  on  all  SPCs  applied  for  in  respect  of  the  same  product  in  various 
Member  States.  Such  information  relates  not  only  to  the  filing,  examination,  granting  and 
maintenance of SPCs, but  also  to the notification system  for the SPC manufacturing waiver 
introduced  in  2019  (Regulation  933/2019),  which  also  has  a  cross-border  dimension.  No 

65   This  information  came  from  a  survey  conducted  by  the  Commission  in  early  2020  among  EU  Member 
States’ NPOs, in which 24 NPOs participated. Similar evidence is available from WIPO’s 2019 survey on 
patent  extensions  and  SPCs  (https://www.wipo.int/edocs/mdocs/classifications/en/cws_7/cws_7_23.pdf). 
However, this WIPO survey was answered by only 11 EU Member States. 

66   https://www.technopolis-group.com/fr/report/effects-of-supplementary-protection-mechanisms-for-

pharmaceutical-products/ 

36 

 
                                                           
evidence is available on the SPC manufacturing waiver, since Regulation (EU) No 933/2019 
has only been in force since July 2019. 

This  lack  of  transparency  in  general  –  and  of  cross-border  transparency  in  particular  – 
potentially  affects  both  SPC  holders  and  third  parties  such  as  generics  manufacturers  (as 
further explained in Section 5.2.3 below). 

5.1.3.3  Bolar exemption: implementation differs across the EU 

All  EU  Member  States  have  transposed  in  their  national  legislation  at  least  the  minimum 
standard of the Bolar exemption as laid down in Article 10(6) of Directive 2001/83/EC and 
Article  41  of  Regulation  (EU)  2019/6  (formerly  Article  13(6)  of  Directive  2001/82/EC)67. 
According  to  the  MPI  study,  in  2018,  there  are  differences  in  implementation  between 
Member  States,  which  points  to  incoherence  in  application  of  the  Bolar  provision  and  can 
create  issues  in  the  internal  market68.  Namely,  5  EU  Member  States  had  implemented  the 
Bolar exemption with a narrower scope in comparison with the other  23 that had opted for a 
broader  scope  (e.g.  covering  activities  for  developing  innovative  medicinal  products  and/or 
for obtaining market authorisation outside of the EU)69. The Agreement on a Unified Patent 
Court  (UPC)  also  includes  a  provision  on  the  Bolar  exemption,  which  refers  to  the  above-
mentioned EU legislation. 

There is no Bolar exemption applicable to patents and SPCs on PPPs. 

5.2  Efficiency 

Assessing the efficiency criterion requires: (i) looking into the costs and benefits of the SPC 
Regulations  for  different  stakeholders;  (ii)  identifying  what  factors  are  driving  these 
costs/benefits; and (iii) identifying how these factors relate to the SPC Regulations.  

As  mentioned  above  in  section  5.1.1,  the  benefits  of  the  SPC  system  are  mostly  associated 
with its role in supporting innovation. To quantify these benefits, the evaluation looked into 
the increase of annual sales for innovators, and the effect of this increase in reducing the risk 
of not breaking even (i.e. the risk that the additional sales do not compensate for the upfront 
expenditure in R&D). More innovation is expected to results in the availability of: innovative 
medicines and new pesticides; more jobs; more industrial and trade activities; and ultimately 
better health70/crops.  

67   Straus,  J.,  ‘The  Bolar  exemption  and  the  supply  of  patented  active  pharmaceutical  ingredients  to  generic 
drug producers: an attempt to interpret Article 10(6) of Directive 2004/27’, Journal of Intellectual Property 
Law & Practice, Volume 9, Issue 11, November 2014, pp. 895–908. 

68   The Bolar provision is further considered in the Pharmaceutical Strategy for Europe. 
69   Table 15.1: Bolar exemption in the EU Member States. As of page 340 of the MPI study. 

70   According  to  the  PricewaterhouseCoopers  (PwC)  study  (contracted  by  the  EFPIA)  on  the  economic  and 
societal  footprint  of  the  pharmaceutical  industry  in  Europe,  pharmaceutical  innovation  brings  about 
significant  societal  benefits,  as  it  improves  the  lives  of  millions  of  patients  through  its  contributions  to 
healthcare.  The  study  estimates  that:  (i)  between  2007  and  2017,  over  500 000  breast  cancer  patients 
received  targeted  treatments,  resulting  in  a  gain  of  nearly  1.2  million  healthy  life  years;  and  (ii)  new 
treatments  create  productivity  gains  of  EUR  9 700  per  patient,  or  EUR  5.3  billion  in  total,  which  is 
equivalent to about 3.5% of the total economic cost of breast cancer care in Europe. 

37 

 
                                                           
In  terms  of  costs,  this  evaluation  looks  mainly  at  three  sets  of  costs,  set  out  below  (see 
summary tables 4 and 6 below). 

(1) Costs related to a delay in the market entry of generics.  

(2) Costs  related  to  the  fragmentation  of  the  SPC  system,  with  granting  and  enforcement 

procedures conducted at national level.  

(3) Costs related to the suboptimal transparency of the SPC system, which is made worse by 
both  different  publication  practices  across  NPOs  and  the  lack  of  a  central  up-to-date 
repository.  

5.2.1 

Impact  of  the  SPC  system  on  the  availability,  accessibility  and  affordability  of 

medicines 

The analysis below focuses on medicinal products, but it is also likely to be valid for the PPP 
sector.  However,  two  major  differences  must  be  taken  into  account.  Firstly,  consumers  of 
PPPs pay for these products ‘out of their own pockets’, i.e. there is no social security or public 
budget  supporting  the  acquisition  of  PPPs.  This  is  also  the  case  for  veterinary  medicines. 
Secondly, there is no Bolar exemption or SPC manufacturing waiver available for companies 
dealing with generic PPPs.  

-  Question  6:  What  is  the  impact  of  the  SPC  on  the  availability,  accessibility  and 

affordability of medicines? 

(i) 

More innovation  

The SPC is expected to support innovators in recouping their investments through additional 
exclusive  sales.  This  would  support  additional  investment  in  innovation,  which  benefits 
society as a whole (i.e. by contributing to greater availability71 of medicines). 

Bearing  in  mind  that  the  SPC  extend  on  average  by  2.5  years  the  exclusive  sales  of  SPC-
protected  medicines  beyond  the  regulatory  data  and  market  protection  (CE  study),  the  cost-
benefit  analysis  of  Annex  4  calculates  the  additional  sales  that  the  SPC  can  add  to  SPC-
protected  medicines  during  the  12.5  years  following  the  market  launch  in  the  EU,  and 
concludes  that  SPC  protection  adds  13%  to  the  turnover  during  the  first  12.5  years  after 
market launch in the EU when compared to scenario without SPC protection (see also table 2 
below).  For  the  analysed  sample  of  232  active  pharmaceutical  ingredients  (APIs),  this 
additional 13% to the turnover amounts to EUR 37 billion (constant 2018) being transferred 
from  public  bodies  to  innovators.  This  amount  would  suffice  to  cover  the  cost  of  R&D  for 
between 39 and 62 new treatments. 

As profitability is skewed, half of this impact comes from the top 10% best-selling APIs and 
markets  for  these  products  are  shown  to  be  “contestable”  (i.e.  subject  to  generics  or 
biosimilars entry when protection expires) 

71   The availability of medicines relies, among other factors explained in this section, on the innovation yield of 
the pharmaceutical sector. Section 5.1.1 above evaluates the effectiveness of the SPC Regulations in terms 
of research into new active ingredients. It concludes (see section 6) that the SPC appears to have positevely 
supported innovation  on new active ingredients.  

38 

 
 
                                                           
 Table 2: Evolution of sales during the regulatory market protection (setting the level of 
sales in the second year equal to 100 monetary units)  

Years since 
EMA 
authorisation 
2 
3 
4 
5 
6 
7 
8 
9 
10 

Estimated 
Annual 
Growth Rate 

92% 
40% 
23% 
10% 
5% 
2% 
3% 
0% 

Annual 
Sales 
100 
192 
267 
329 
362 
379 
385 
395 
396 

Cumulative Sales 

100 
292 
559 
888 
1250 
1629 
2014 
2409 
2804 

Note:  DG GROW CET calculations. Annual  growth rates for sale  years 2-10 are estimated 
using regression (4.1). The level of annual sales is approximated by putting a value of 100 
for sales in second year. 

More  innovation  is  expected  to  bring  about  greater  availability  of  medicines  (innovative  as 
well as subsequent generics or biosimilars), but the availability of medicines is also a function 
of the speed at which new treatments are approved in Europe. Once a medicine is developed, 
it must be approved by relevant national medicines agencies in the EU or centrally authorised 
via  the  European  Medicines  Agency  (EMA).  The  SPC  does  not  play  a  role  in  the  initial 
approval  process  for  SPC-protected  products  (the  approval  process  must  first  be  concluded 
before the SPC application can be filed) and it is not expected to play a role in the approval 
process for any competing innovative medicine.  

On the speed of entry of new active substances (i.e. accessibility of medicines resulting from 
new active substances), once a medicine is approved by the relevant medicines agency in the 
EU,  generally  it  must  also  undergo  pricing  and  reimbursement  negotiation  procedures  with 
individual  EU  Member  States  (pricing  and  reimbursement  of  medicines  is  a  national 
competence).  The  SPC  is  not  expected  to  play  a  role  in  the  duration  of  these  pricing  and 
reimbursement procedures for SPC-protected products or for any other competing innovative 
medicines.  

Other factors clearly play a role in determining the availability of innovative medicines. For 
example, a study by Kyle in 2019 (see Section 4.1) discusses how other factors external to the 
SPC,  such  as  the  establishment  of  the  EMA,  have  helped  speed  up  the  entry  of  innovative 
medicines  to  the  EU.  Furthermore,  the  CE  study  (2018)  states  that  the  presence  of  R&D 
activities within the EU promotes the timely launch of medicines. That study describes how 
pharmaceutical companies often strategically launch their products, EU Member States with 
large  populations  and  high  incomes  benefit  from  more  frequent  and  earlier  new  drug 
launches,  as  do  Member  States  with  fewer  price  controls72.  The  EFPIA’s  WAIT  indicator73 

72   In  the  EU,  national  authorities  are  free  to  set  the  prices  of  medicinal  products  and  to  designate  the     

treatments they wish to reimburse under their social security systems. 

73   https://www.efpia.eu/media/412747/efpia-patient-wait-indicator-study-2018-results-030419.pdf 

39 

 
 
 
 
 
 
                                                           
shows  how  negotiation  of  pricing  and  reimbursement  for  both  innovative  and  generic 
medicines  defers  the  entry  of  approved  medicines  by  hundreds  of  days  on  average  in  a 
number of EU Member States, including some of the most populated ones.  

The  current  fragmentation  of  the  SPC  system  could  hamper  joint  public-procurement 
initiatives by a group of EU Member States, for example if the SPC scope or duration varied 
across  the  Member  States  that  intended  to  procure  medicines  jointly.  In  such  procurement 
situations, fragmentation could thus also hamper market entry. 

(ii) 

Prices and speed of entry of generics 

In  general,  as  pharmaceutical  exclusivities  such  as  the  SPC  expire,  generic  medicinal 
products74 enter the market at a significantly lower price than the SPC-protected ‘reference’ 
product (generics are 50% cheaper on average) pushing down the price of the original product 
after  generic  uptake75,76.  The  SPC,  where  it  expires  later  than  other  EU-specific 
pharmaceutical  protections,  causes  a  delay  in  the  entry  of  generics.  Although  this  is  an 
expected and assumed effect of the SPC that is tolerated to promote innovation, the SPC was 
also designed with targeted features to facilitate generics’ entry onto the market (i.e. the Bolar 
and manufacturing waiver exceptions).  

Section  5.2.2  discusses  the  adverse  impact  of  the  current  fragmented  SPC  system  on  the 
generics industry (in terms of cost, predictability, etc.). Furthermore, as discussed below, the 
entry onto the market of generics can be negatively influenced by a lack of transparency in the 
SPC  granting  procedure  and  status  (e.g.  uncertainty  about  which  products  are  protected  by 
SPCs in various EU Member States and for how long). 

(iii)  Proportionality  

Although the SPC system delays the entry of generics, the effects of this delay are expected to 
be limited and proportionate when compared to the gains from increased innovation.  

As  already  indicated  above  (see  details  in  Annex  4),  SPC  protection  adds  13%  to  the  total 
spending on SPC protected pharmaceuticals during the first 12.5 years after market launch in 
the  EU.  There  is  also  clear  evidence  that  patients  benefit  from  new  treatment  that  are  SPC 
protected.  Yet,  by  extending  protection  SPC  may  impact  on  accessibility.  However, 
calculations in annex 4 show that the impact is limited to medicines with high profits. Thus, 
for  25  high  profitable  active  pharmaceutical  ingredients  (APIs)  that  saw  generics  or 
biosimilars entry, 7.6% more patients could have been treated during 2.5 years in the absence 
of SPC protection (and if those APIs had been developed). 

74   Global demand for medicines is increasing, with a significant switch towards generics and biosimilars. This 
is confirmed by industry data, which show that total global spending on medicines increased from EUR 950 
billion  in  2012  to  EUR  1.1  trillion  in  2017,  with  generics  and  biosimilars  expected  to  represent  80%  of 
medicines  by  volume  by  2020  and  about  28%  of  global  sales  (Deloitte,  2018).  Sales  of  generics  and 
biosimilars  are  estimated  to  have  a  future  compound  annual  growth  rate  of  6.9%  (partly  due  to  efforts  by 
governments to contain overall healthcare costs). According to Medicines for Europe, 56% of medicines by 
volume currently supplied in the EU are generics or biosimilars, with penetration rates varying considerably 
from one Member State to another. 

75   Report from the Commission to the Council and the European Parliament (2019) Competition Enforcement 
at 

in 
https://ec.europa.eu/competition/publications/reports/kd0718081enn.pdf 

Pharmaceutical 

(2009-2017), 

Competition 

available 

Sector 

DG 

the 

76   CE study (2018), as of page 144. 

40 

 
                                                           
 below summarises the findings of the Commission’s cost-benefit analysis of the SPC system 
for pharmaceutical products (see Annex 4). 

As  already  indicated  above  (see  details  in  Annex  4),  SPC  protection  adds  13%  to  the  total 
spending on SPC protected pharmaceuticals during the first 12.5 years after market launch in 
the  EU.  There  is  also  clear  evidence  that  patients  benefit  from  new  treatment  that  are  SPC 
protected.  Yet,  by  extending  protection  SPC  may  impact  on  accessibility.  However, 
calculations in annex 4 show that the impact is limited to medicines with high profits. Thus, 
for  25  high  profitable  active  pharmaceutical  ingredients  (APIs)  that  saw  generics  or 
biosimilars entry, 7.6% more patients could have been treated during 2.5 years in the absence 
of SPC protection (and if those APIs had been developed) . 

-  The SPC system is limited in scope and SPC protection may not be the last protection 

to lapse 

SPC  protection  is  available  only  for  a  limited  number  of  patented  medicines  (although  it  is 
likely  to  concern  a  few  products  that  account  for  a  sizeable  share  of  the  pharmaceuticals 
consumed  by  health  systems  and  patients).  Although  about  3 000  European  patents  are 
granted  annually  in  the  field  of  pharmaceuticals77,  only  a  few  tens  of  SPC  applications  are 
filed every year in Germany (the EU Member State with the most filings). This is due to four 
main features of the SPC that restrict its eligibility and scope, which are set out below. 

(1) Only patents for new active substances not previously authorised are supposed to be SPC-
eligible, i.e. only one SPC is  expected to  be granted per active substance.  Recent  CJEU 
jurisprudence78 (Santen SAS C-673/18, Teva C-121/17 and Abraxis C-443/17) has helped 
mitigate  concerns  among  generic  companies  triggered  by  previous  CJEU  decisions 
(especially the Neurim case C-130/11). These decisions could have: (i) altered the delicate 
balance struck by the SPC Regulations (‘one SPC per product’ rule); and thus (ii) led to a 
proliferation  of  unexpected  SPCs  and  additional  delays  in  the  entry  of  generics79.  The 
CJEU  has  confirmed  that  new  formulations  (Abraxis  C-443/17)  and  new  indications 
(Santen SAS C-673/18) of active ingredients authorised in the past cannot be eligible for a 
new  certificate  based  on  a  more  recent  marketing  authorisation  granted  for  that 
formulation  or  new  indication.  This  is  because  the  more  recent  marketing  authorisation 
would not be the first marketing authorisation for the active ingredient concerned (i.e. the 
Abraxis case dealt with a new formulation of ‘old’ active ingredients, and the Santen case 
dealt  with  a  new  indication  for  ‘old’  ingredients.  These  cases  have  refined  earlier  case-
law, such as Neurim, on those provisions of the SPC regulations which had provoked the 
most references). However, the principle of ‘one certificate per product’ might still not be 
completely settled in relation to combinations of products, as this principle was based on 
two pillars, Articles 3(c) and 3(d) of the SPC Regulations. Chapter 12 of the MPI study 

77  CE study (2018), page 26. 
78   See MPI study (2018). 
79    The  MPI  study  analyses  in  detail  the  CJEU  jurisprudence  related  to  the  SPC.  An  updated  analysis  of  the 
SPC  jurisprudence  analysed  in  the  MPI  study  can  be  found  at:  Roberto  Romandini,  ‘Art.  3(a)  SPC 
Regulation:  An  analysis  of  the  CJEU’s  ruling  in  Teva  (C-121/17)  and  a  proposal  for  its  implementation’, 
Journal  of  Intellectual  Property  Law  &  Practice,  Volume  14,  Issue  3,  March  2019,  pp.  230-251, 
https://doi.org/10.1093/jiplp/jpz016. 

41 

 
 
 
                                                           
discusses in  detail  the potential ways to  re-establish this principle (i.e. by  correcting the 
teleological interpretation of Article 3(c)). 

(2) Where  an  SPC  is  granted  for  a  certain  product  it  may  happen  that  another  protection 
measure  expires  after  the  SPC80  (see  Annex  10).  A  consequence  of  this  is  that  SPC 
protection does not always have a decisive influence on the moment from which generics 
may  be  placed  on  the  market,  and  thus  on  the  accessibility  and/or  affordability  of  SPC-
protected medicines, as other protection measures could apply. 

(3) SPC  protection  cannot  prevent  the  market  of  competing  medicines  that  are  based  on 

different active substances. It allows for competition by innovation.  

(4) Only active substances whose development time is more than 5 years are entitled to SPC 
protection.  Development  times  that  go  beyond  10  years  cannot  be  translated  into  an 
additional SPC term (i.e. the SPC term is capped at 5 years). The Commission’s findings, 
based on data from the Alice de Pastors database, suggest that 45% of the medicines faced 
a delay of more than 10 years between the filing of the application for a basic patent and 
the  grant  of  the  first  marketing  authorisation  in  the  EU.  This  means  that  the  effective 
protection  period  of  these  medicines  was  less  than  15  years.  This  is  consistent  with  the 
findings of the CE study (2018) and the Kyle study (2017)81. The average duration of the 
SPC protection in  the EU is  3.5  years.  Furthermore, according to  the CE study82, in  the 
period  between  2010  and  2016  the  SPC  added  on  average  2.6  years  of  protection  to 
products where the SPC was the last protection to expire. 

-  The  average  duration  of  the  effective  protection  period  of  medicines  is  decreasing 

over time 

The  Kyle  study  (2017)  and  CE  study  (2018)  studies  suggest  that  the  development  of  new 
medicines is  taking longer and becoming more complex83. The CE study concludes that the 
importance of the SPC for the effective protection of medicinal products  has increased over 
time, in a context where the average ‘effective protection period’ for medicinal products has 
been  decreasing  over  time84.  Therefore,  the  role  of  SPCs  in  ensuring  that  research-based 

80   Within  the  dataset  of  medicinal  products  built  and  analysed  in  the  CE  study  (2018),  the  SPC  was  the  last 
measure  to  expire  for  10%  of  the  products,  if  secondary-medical-use  patents  are  considered  (the  scope  of 
secondary medical use patents is limited). 

81   Table 7 of Kyle study (2017). 
82   Page 252. 
83   The  median  number  of  procedures  per  clinical-trial  protocol  increased  from  98  to  158  between  1999  and 

2005, and the median length of clinical trials increased from 460 to 780 days during the same period. 

84    The  CE  study  stated  the  following:  When  looking  at  the  entire  period  in  our  dataset  and  across  all  28 
countries where the 558 unique medicinal products have been made available, we find that the bulk of the 
medicinal products enjoy an effective protection period of between 10 and 15 years. This is the case for 62% 
of them. Very few (4%) enjoy less. It makes sense that 10 years is a minimum since the [market protection] 
MP always provides 10 years of protection (the reason that 4% in our dataset enjoy fewer than 10 years of 
protection  reflects  the  regime  prior  to  the  introduction  of  the  MP  incentive  in  2005).  An  additional  24% 
enjoy  an  effective  protection  period  between  15  and  20  years,  the  20  years  being  the  original  patent 
protection period. Then comes the last 10%, which enjoy more than 20 years of protection. At first this is 
surprising  as  the  maximum  period  of  protection  is  20  years  offered  by  the  original  patent.  However,  the 
explanation  is  the  existence  of  the  so-called  secondary  patents.  A  secondary  patent  is  a  patent  taken  out 
after  the  initial  patent.  The  secondary  patent  is  just  like  any  other  patent  and  provides  20  years  of 
protection.  But  since  it  is  taken  perhaps  years  after  the  initial  patent  it  effectively  pushes  the  effective 
protection period beyond 20 years. 

42 

 
                                                           
industry has market protection of sufficient length to permit recovery of investments appears 
to have become more important.  

-  There are elements built into the SPC system that foster quicker market entry, such as 

the Bolar exemption and the SPC waiver 

The  SPC  has  been  designed  and  amended  to  minimise  its  expected  adverse  impact  on  the 
entry of generics.  

Firstly, the SPC is one of the few intellectual property rights the duration of which is not fixed 
but varies on a case-by-case basis, as explained above, according to each particular situation. 

In the field of pharmaceutical products, the SPC protection does not impede the development 
and  registration  of  competing  generics  and  biosimilars  in  the  EU,  because  the  EU  Bolar 
exemption  also  applies to  SPC  protection.  In  this  regard,  the  CE  study  states  that  the  Bolar 
exemption  has  allowed  generics  manufacturers  to  better  maintain  their  activities  within  the 
EU because it has allowed research on generics before the expiry of the protection. 

Until  the  recent  introduction  of  Regulation  (EU)  No  2019/933  on  an  SPC  manufacturing 
waiver,  the  SPC  was  causing  unintended  adverse  effects  for  EU-based  manufacturers  of 
generics and biosimilars seeking: (i) to export to non-EU countries during the SPC term; or 
(ii)  ‘day  one’  entry  onto  the  EU  market85.  Thus,  the  recent  legislation  on  the  SPC 
manufacturing  waiver  is  expected  to  also  accelerate  the  market  entry  of  generics  and 
biosimilars in the EU.  

-  Question 7: Is the maximum duration of the SPC appropriate ? 

There are several studies and stakeholders’ views on the duration of the SPC. 

The  Commission’s  cost-benefit  analysis  for  medicinal  SPCs  in  Annex  4  shows  that,  for  a 
significant number of active ingredients, the SPC’s duration might not be enough to recover 
R&D  investment.  Indeed,  using  information  on  sales  and  costs,  internal  Commission 
calculations show how many medicinal products break even over 12.5 years (see Annex 4 for 
methodology)  with  and  without  SPC  protection.  The  Commission  concludes  (see  table  3 
below) that the SPC might have helped increase the number of medicines that have reached 
break-even for their investments in R&D by 4 percentage points. 

Table 3: Percentage of SPC-protected medicines that break even (Source: Commission’s 
own calculations.) 

Level of medicine 
development 
expenditure 

(low) 

(high) 

With 

SPC 

42% 

32% 

Without 

SPC  

38% 

28% 

85   Before the SPC  manufacturing  waiver (Regulation (EU) 2019/933) was introduced, generics  makers  were 
prevented from manufacturing and storing generics in the EU (in those Member States where SPCs were in 
force) until the expiry of the SPCs,  with the  consequence that these generics  were not able to reach these 
markets for several days or weeks (or months, for biosimilars), while generics made in countries not having 
an SPC-like protection could be placed on the EU market from ‘day one’, i.e. immediately after SPC expiry. 

43 

 
 
                                                           
SPC holders claim that the development of new medicinal products has become lengthier and 
more expensive in recent decades86. Associations representing SPC holders that replied to the 
Commission public consultation warned that a reduction in the term of SPC protection would 
have  a  direct  negative  impact  on  the  ability  of  SMEs  active  in  R&D  and/or  manufacturing 
original products to secure sufficient funding.  

Some  studies  argue  that  the  duration  of  SPCs  is  in  some  cases  too  generous  and  even 
question87 the need for an SPC framework (as discussed in the analysis of Question 2 above in 
Section 5.1.1).  

The  CE  study  (2018)  points  out  that  cutting  the  duration  of  the  SPC  would  come  at  the 
expense of innovation, especially for product categories where: (i) the requirements for R&D 
efforts  are  particularly  high;  (ii)  the  diseases  are  particularly  complex;  or  (iii)  the  affected 
stakeholders  have  limited  advocacy  power.  However,  the  same  study  also  highlighted  that 
economic theory suggests that, given the competitive status of the market, SPC holders will 
charge  the  highest  price  possible  for  a  longer  period,  and  at  the  expense  of  public  payers 
(impacting  affordability).  The  2018  CE  study’s  statistical  modelling88  suggests  a  positive 
relationship between the IP protection period and the level of pharmaceutical R&D in general 
(i.e.  not  only  on  new  active  pharmaceutical  ingredients).  This  study  suggests  that  when 
medicinal products are granted a longer effective protection period in the markets where they 
are sold, pharmaceutical companies increase their innovation efforts. It also concludes that the 
global reach of medicinal products implies that a reduction of the IP protection period to pave 
the way for faster entry of generics would negatively affect investments in R&D, both within 
and  outside  the  EU.  However,  the  same  study  also  noted  that  quantifying  the  value  of  the 
extra innovation (which might be linked to the incentives) is a challenging task.  

86   See reports by Phillips McDougall cited in Section 5.1.1 above for how this discussion relates to PPPs, and 
the  two  points  of  reference  of  the  DiMasi  et  al.  methodology  published  in  2003  and  2016  for  how  this 
discussion relates to medicines. The DiMasi et al. studies of 2003 and 2016 are the most widely cited studies 
of the cost of developing a new medicine. Comparing both subsequent studies, in the decade from 2003 to 
2013, the mean cost of developing a single new therapeutic agent has almost tripled (from USD 1.1 billion 
to USD 2.8 billion in 2018 USD). 

87   For  example,  this  criticism  was  raised  by  Médecins  Sans  Frontières.  See:  https://msfaccess.org/briefing-

note-supplementary-protection-certificates-spcs. 

88    This modelling has some limitations. It is based on looking at the trade-weighted mean effective protection 
period (in the EU and USA) with a not very extensive sample, in a context where EU companies that spend 
a lot on R&D are geographically clustered (trade gravity). 

44 

 
 
 
 
 
 
 
 
 
 
 
 
                                                           
Table 4: Cost - benefit analysis per stakeholder (Source: Commission own calculations, 
see Annex 4) 

Stakeholders 

Cost (in EUR) 

Benefits (in EUR) 

Result 

Innovators 
(SPC users) 

Patent & SPC Protection: 
Patent (EP): EUR 0.15 m 
SPC (4y):    EUR 0.14 m 
Attorney:     (NDA) 
Litigation (one case): 
EUR 0.05- 0.2 m 
SPC search & monitoring:             
(NDA) 

The profitability is 
skewed and half of 
this additional cash 
flow is due to the Top 
10% of APIs of our 
sample (in terms of 
sales). 

Additional cash flow 
generated due to the 
SPC would suffice to 
cover the research and 
development costs of 
between 39 and 62 
new treatments. 

Treatment foregone 
concerns high 
profitable APIs only. 

SPC protection adds 13% to the 
turnover during the first 12.5 
years after market launch of a 
medicine in the EU. For 232 
APIs in the sample this amount 
to a total of EUR 37 051 m. 

The cash flow increases as 
market potential (turnover) 
increases: 
Median:   EUR      55 m 
Average:  EUR    160 m 
Top 5% selling medicines in our 
sample:   EUR    740 m 
Top 1%:  EUR  1 063 m 
Introduction of new products 
creates new markets for generic 
and biosimilar products. 

Litigation (cost per case): 
EUR 0.1- 0.5 m  
Attorney fees for managing 
patents and SPC applications:     
(NDA) 

The new medicine launches 
have reduced years of life lost 
(YLL) before three different 
ages (85, 70, and 55) from 34% 
up to 42%. Furthermore, the 
introduction of a new cancer 
medicine in a country was 
associated with a decline in 
cancer mortality of 8% for men 
and 9% for women.89 
Improved quality of life in 
respect of chronic diseases.90 

Treatment foregone seems to be 
is limited to high profitable 
APIs only. For 25 high 
profitable APIs that saw 
generics entry, 7.6% more 
patients could be treated during 
2.5 years if there was no SPC 
protection.  

Generics/biosimilar  Litigation (one case): 

Legal profession 

Public Authorities 
and Society 

EUR 0.05- 0.2 m  
SPC search & monitoring: 
(NDA) 
Familiarisation with SPC 
rules and legal system, 
including cross-border 

Patent offices 
SPC application account for 
> 10% of the patent 
examination workload in 
small MS and < 1% in 
largest MS. 

Public health budgets 
SPC protection adds 13% to 
the total spending on SPC 
protected pharmaceuticals 
during the first 12.5 years 
after market launch in the 
EU. 

89 Dubois, P., & Kyle, M. (2016). The Effects of Pharmaceutical Innovation on Cancer Mortality Rates. 
90 OECD Health Policy Studies (2018) Pharmaceutical Innovation and Access to Medicines.  

45 

 
 
 
 
 
 
 
 
 
 
                                                           
Note:  See  Annex  4  for  details  on  the  analysis  of  the  impact  on  innovators  (SPC  holder)  as 
well  as  calculations  on  treatment  foregone.  Additional  sales  due  to  SPC  are  in  relation  to 
counterfactual  scenario  of  having  no-SPC  protection.  See  Annex  7  for  the  workload  of 
national patent offices. 

5.2.2  Cost of a fragmented SPC system  

-  Question 8: What are the costs to stakeholders of the fragmentation of the SPC system? 

Costs of fragmentation for SPC users (pharmaceutical and PPP originators) 

The  SPC  framework  does  not  consist  of  a  unitary  title  granted  by  a  centralised  agency  and 
maintained  in  a  single  register.  In  the  absence  of  a  unitary  SPC,  innovators  must  pursue 
multiple  national  filing  procedures  and  pay  administrative  fees  in  each  EU  Member  State 
where  they  seek  protection.  Likewise,  pending  the  start  of  operation  of  the  Unified  Patent 
Court (UPC), enforcement is conducted at national level only. 

This  fragmentation  causes  legal  uncertainty  (as  reported  by  60  out  of  71  innovators 
responding  to  the  Commission  consultation)  because  grant  and  litigation  decisions  can 
conflict across Member States (see Section 5.1.3).  

This fragmentation causes significant additional costs and red tape in getting SPC protection 
in the EU. For example, 60 out of 71 innovators responding to the Commission consultation 
agreed (10) or strongly agreed (50) that a unitary SPC would bring less red tape. This is also 
the conclusion of respondents to Question 62 of the Allensbach survey conducted as part of 
the  MPI  study  (2018).  Those  respondents  said  that  the  lack  of  uniformity  across  Member 
States in the SPC-granting procedures – and the results of this lack of uniformity – constitute 
a  serious  administrative  burden  for  SPC  applicants,  and  especially  for  start-ups  and  SMEs. 
SPC protection is typically sought in 20 to 24 EU Member States (Kyle and Mejer studies of 
2017).  

Annex 4 analyses  additional  costs for the SPC holders  for patent  and SPC protection in  the 
current fragmented SPC system. It also analyses the cost of enforcing these rights. The cost of 
patent protection in all EU-27 countries is EUR 152 765, and for SPC protection it is 137 610. 
This  is  not  including in-house and outsourced patent-lawyer  fees  (which  can largely  exceed 
the administrative fees). For litigation, parties might face a cost of between EUR 50 000 and 
EUR 250 000 per jurisdiction. This could adds up to a cost of approximately EUR 500 000 for 
patent and SPC protection (without attorney fees). This cost is relatively small (0.08%) when 
compared to the lowest overall cost of EUR 600 million for bringing a new medicine to the 
market, but it can still considerable for EU-based SMEs or universities. 

Application and renewal fees for SPCs vary greatly across EU Member States. Table 5 below 
shows  the  approximate  average  total  cost  of  applying  for  an  SPC  in  all  EU-24  Member 
State91, and the subsequent annual renewal fees. To these costs must also be added significant 
additional legal representation costs (outsourcing to specialised patent agents) to conduct the 
administrative proceedings in each Member State. 

91   The EU-24, includes the EU-28 Member States but excludes the Member States with the lowest number of 

SPC applications in 2018, i.e. Croatia, Latvia, Lithuania and Malta. 

46 

 
 
                                                           
Table 5: Cost of SPC filing and renewal in EU-24 as of 2016 (Source: National patent 
offices’ websites; details in Annex 6) 

  Application 
Fees 
(EUR)  
7 939 

1st year 
25 787 

Renewal fees (EUR) 
2nd 
year 
28 458 

3rd year  4th year  5th year 
37 105 
34 045 
31 199 

EU-24 

These  costs  are  significant  for  SMEs92,  which  have  less  financial  resources,  fewer  in-house 
specialists, and limited geographical presence. In this regard, only one patent office in the EU 
told  the  Commission’s  survey  on  transparency  of  the  SPC  system  that  it  provided  reduced 
administrative  fees  for  SPCs  to  SMEs.  Innovative  SMEs  play  a  significant  role  in  the 
pharmaceutical sector. In 2009, the Commission’s pharmaceutical-sector inquiry reported that 
approximately  25%  of  molecules  in  clinical  development  were  acquired  from  other 
companies,  including  SMEs.  EMA  statistics93  show  that  44%  (15  out  of  34)  of  priority-
medicine (PRIME) applications granted in 2017 came from SMEs.  

In  a  SPC  system  with  27  distinct  jurisdictions,  originators  are  likely  to  find  it  difficult  to 
monitor the use of the SPC manufacturing waiver by generics manufacturers. 

Red tape and costs due to fragmentation reduce the positive impact of the SPC framework in 
encouraging  innovation.  For  example,  52  out  of  71  of  the  innovators  responding  to  the 
Commission  consultation  reported  that  a  unitary  SPC,  i.e.  a  less  fragmented  system,  would 
make  licensing  activities  easier.  In  both  the  Commission’s  public  consultation  and  the 
Allensbach  survey  (Question  69),  a  very  large  majority  of  the  respondents  across  all 
categories  favoured  the  creation  of  a  unitary  SPC.  The  CE  study  (2018)  concludes  that  a 
scheme  like  a  unitary  SPC  covering  all  EU  Member  States  would  increase  spending  on 
pharmaceutical R&D within Europe. 

The fact that the SPC extension reward is granted by independent NPOs makes it difficult for 
companies to predict whether they will be granted an SPC extension.  

In summary, the Commission consultation asked innovators about the advantages of a unitary 
SPC, i.e. a less fragmented SPC system. The originators (71) were asked if a unitary system 
would bring: 

- 

- 

a boost to the value of their investments (57 out of 71 agreed or strongly agreed); 

a reduction in red tape relating to litigation (60 out of 71 agreed or strongly agreed; 44 
strongly agreed); 

92   One  of  the  three  originator  SMEs  that  replied  to  the  Commission  consultation  reported  that  the 
administrative burden to register and maintain the SPC in all EU countries is high. The other 2 respondents 
did not comment on this issue. 

93   The register of the EMA’s ‘SME office’ contains more than 1 500 companies with SMEs status registered as 
active  in  the  pharmaceutical  sector  in  the  European  Economic  Area  (EEA).  This  is  a  sharp  increase  over 
recent  years  (10  times  more  SMEs  than  in  2006).  There  were  185  SMEs  registered  with  a  focus  on  new 
formulations/delivery methods, and 256 SMEs specialised in orphan treatments. Pharmaceutical enterprises 
can  apply  for  SME  status  at  the  EMA  before  requesting  financial  or  administrative  assistance  from  the 
EMA. The EMA SME register is at: https://fmapps.ema.europa.eu/SME/search_advanced2.php . 

47 

 
 
 
 
 
                                                           
- 

- 

- 

- 

a reduction in red tape relating to registration (60 out of 71 agreed or strongly agreed; 
50 strongly agreed); 

increased legal certainty (60 out of 71 agreed or strongly agreed); 

reduced  maintenance  costs  (49  out  of  71  agreed  or  strongly  agreed;  45  strongly 
agreed);  

easier licensing activities (52 out of 71 agreed or strongly agreed). 

Cost of fragmentation for manufacturers of generic medicines and PPPs 

The fragmentation of the SPC framework causes legal uncertainty for companies dealing with 
generic products (55 out of 63 makers of generics that responded to the Commission public 
consultation agreed or strongly agreed that a unitary SPC would bring more legal certainty). 
This is because SPC grant procedures must be monitored in multiple EU Member States (55 
out  of  63  generic-maker  respondents  to  the  consultation  agreed  or  strongly  agreed  that  a 
unitary  SPC  would  reduce  costs  and  red  tape  related  to  the  monitoring  of  SPC-protected 
products, i.e. when conducting freedom-to-operate analyses, and enforcement can take place 
in  multiple  jurisdictions  (56  out  of  63  generic-maker  respondents  to  the  public  consultation 
agreed or strongly agreed that a unitary SPC would reduce the cost of SPC-related litigation). 

Pharmaceuticals  and  biotechnology  patents  have  the  highest  litigation  intensity  across  all 
technical sectors (the sector sees 3 patent cases for every 1 000 patents filed in the aggregate 
EU-6  (Belgium,  Germany,  Spain,  France,  UK  and  the  Netherlands)).  In  addition,  18%  of 
pharmaceutical patent litigation cases are litigated across borders94, which entails even higher 
costs (Helmers (2018)). The high costs of litigation directly influence generics makers, with 
some refraining from launching certain generics solely to avoid any risk of potential litigation 
that might result from divergent decisions rendered by national courts.  
Generics and biosimilars do not enjoy the same scope of Bolar exemption95 in all EU Member 
States.  Moreover,  they  can  face  complex  requirements  for  using  the  SPC  manufacturing 
waiver (see glossary) if they need to perform cross-border activities (e.g. import of substances 
or cross-border outsourcing of activities). 

As  discussed  in  Section  5.1.3  above,  the  current  fragmentation  of  the  SPC  system  causes 
uncertainty in the business plans of makers of generics and biosimilars. For example, it causes 
uncertainty  over  whether  and  when  they  will  be  allowed  to  launch  their  products  in  the 
respective Member States.  

In  summary,  the  Commission  public  consultation  asked  makers  of  generics  about  the 
advantages  of  a  unitary  SPC, i.e.  a  less  fragmented  system.  54  out  of  the  63  generic-maker 
respondents  (including  10  out  of  13  SME  generic-maker  respondents)  to  the  Commission 
public  consultation  said  they  favoured  the  creation  of  a  unitary  SPC  for  the  unitary  patent 
(only 1 opposed). In addition, they were asked if a unitary SPC system would: 

94    Graham,  S.  J.,  &  Van  Zeebroeck,  N.  (2013).  ‘Comparing  patent  litigation  across  Europe:  a  first  look’, 

Stanford Technology Law Review, 17, 655. 

95  The Bolar exemption is regulated at EU level for the pharmaceutical industry only; namely through Article 
10(6)  of  Directive  2001/83/EC  and  Article  13(6)  of  Directive  2001/82/EC  (replaced  by  Article  41  of 
Regulation (EU) 2019/6). The scope of the EU Bolar exemption has been updated in the national legislation 
of  some  Member  States  (e.g.  Germany,  Ireland  and  Spain),  inter  alia  to  meet  new  pharmaceutical-related 
requirements. 

48 

 
                                                           
- 

- 

- 

reduce costs and red tape for monitoring SPC-protected products (freedom to operate) 
(55 out of 63 agreed or strongly agreed);  

reduce the cost of SPC-related litigation (56 out of 63 agreed or strongly agreed); 

increase legal certainty (55 out of 63 agreed or strongly agreed); 

-  make licensing easier (42 out of 63 agreed or strongly agreed). 

Costs of fragmentation for consumers, patients, and (indirectly) health authorities 

Fragmentation  can  have  an  adverse  impact  on  the  availability  of  innovative  medicines, 
because  the  uncertainty  and  high  cost  of  filing  patent  and  SPC  applications  in  multiple  EU 
Member  States  can  lead  SPC  holders  to  neglect  protection  in  less  attractive  EU  Member 
States’  markets.  This  can  mean  that  they  postpone  launches  of  their  innovative  products  in 
those  markets  (although  a  number  of  additional  factors,  such  as  national  pricing  and 
reimbursement decisions, may also play a significant role). The CE study96 sees potential in a 
unitary SPC to overcome this issue. Indeed, 11 out of the 15 respondents to the Commission 
consultation in the group of patients and consumers of SPC-protected products favoured the 
creation of a unitary SPC for the unitary patent (i.e. a less fragmented SPC system). 

An additional adverse impact is that the current SPC system can hamper the accessibility of 
medicines. This is because fragmentation and a lack of transparency on the status and scope 
of SPC protection across EU Member States cause delays in the entry of generics into the EU, 
especially in smaller national markets. Joint public-procurement initiatives by a group of EU 
Member States could be hampered if the SPC scope or duration varied across the participating 
Member States (see the opinion of stakeholders on this issue below). 

The Commission public consultation asked the stakeholders group (consisting of patients and 
consumers  of  SPC-protected  products)  about  the  advantages  of  a  unitary  SPC,  i.e.  a  less 
fragmented system. They responded as follows: 

- 

- 

- 

- 

a unitary SPC would reduce costs and red tape for monitoring SPC-protected products 
(freedom to operate) (10 out of 15 respondents gave 4 or 5 points on a scale of 5 (the 
maximum score) signalling they mostly agreed);  

a  unitary  SPC  would  reduce  the  cost  of  SPC-related  litigation  (10  out  of  15 
respondents gave 4 or 5 points signalling they mostly agreed); 

a  unitary  SPC  would  increase  legal  certainty  (11  out  of  15  respondents  gave  4  or  5 
points signalling they mostly agreed); 

a unitary SPC would make joint procurement by a group of EU countries easier (6 out 
of 15 gave 4 or 5 points on the five-point scale, while 4 respondents gave 3 points on 
the 5-point scale). 

Costs of fragmentation for national patent offices and national courts  

In all EU Member States, national patent offices (NPOs) have been entrusted with examining 
and  granting  SPC  applications,  while  national  courts  deal  with  enforcement97.  The  NPOs 

96   e.g. page 224 of the CE study (2018). 
97   The  Technopolis  study  (2018)  recommends  improvements  in  the  ‘proper  staffing  of  patent  offices  and 
training  of  the  patent  examiners,  but  also  supporting  the  development  towards  specialised  courts  with 
respective know-how in both IP and regulatory measures’. 

49 

 
                                                           
charge fees that cover the costs of registration and maintenance of the SPC system. The SPC 
applications added little workload to the overall workload of patent examiners, especially in 
large patent offices, considering that on average only a few dozen SPC applications are filed 
every year. However, it can amount to more than 5% of the patent workload for the NPOs of 
smaller  Member  States  (Annex  7  for  details).  In  addition,  for  those  NPOs  conducting 
substantive  examinations,  the  complexity  of  the  examination  has  increased  due  to  the 
increasing  complexity  of  the  state  of  the  art  and  the  CJEU  jurisprudence.  Many  smaller 
offices seem to have insufficient administrative capacity to conduct substantive examination 
of the SPC applications98.  

Since each national  SPC system can be funded by  administrative fees (e.g. SPC application 
and  maintenance  fees),  the  duplication  of  work  does  not  neccesarily  strain  public  finances. 
However, this cost is nevertheless borne by the users of the innovation system. 

5.2.3 

Impact of suboptimal transparency  

Suboptimal transparency – and especially suboptimal cross-border transparency – is a major 
concern at several levels and for several stakeholders. 

In particular, the fact that the full file of an SPC application may not be available from certain 
NPOs (or not available rapidly, or only available in a national language), prevents other NPOs 
from  analysing  the  reasoning  (objections,  etc.)  of  their  peers.  This  hampers  the  ‘informal 
alignment’ of the various national decisions on identical SPC applications, and thus increases 
the risk of divergences in the scope of the resulting SPCs. 

Furthermore, although the EPO publishes the SPC-related information it receives from NPOs, 
it appears that only a slight majority of NPOs provide the EPO with such information. 

As a result, it is not always easy for generics manufacturers to analyse conveniently the legal 
situation  of  a  certain  medicine  across  the  EU  (as  regards  SPCs).  This  may  create  legal 
uncertainty in certain cases, which may adversely affect the swift entry of generics onto the 
market, because most generics makers wish to  avoid any risk of (very costly) litigation that 
might result from that legal uncertainty. 

The  current  lack  of  transparency  may  also  be  detrimental  to  legal  certainty  for  the  SPC 
manufacturing  waiver  introduced  in  2019.  This  is  because  this  waiver  has  a  cross-border 
dimension and requires even more clearly that information about the legal situation in other 
Member States be readily available. 

According  to  the  Mejer  study  (2017)  more  consistency  and  transparency  would  reduce  the 
discrepancies in the scope of protection for originators, and might also improve legal certainty 
for generic entrants. 

The  current  fragmentation  and  suboptimal  transparency  of  the  SPC  system  limits  the 
effectiveness of its objectives. It also limits the availability and accessibility of medicines in 
the EU. By distorting the delicate balance aimed for by the SPC regime between the interests 
of originators and of generics makers, this hampers the effectiveness of the SPC system, and 
renders it less fit for purpose than expected (see Section 5.3). 

98   The  Technopolis  study  (2018)  even  mentions  ‘a  shortage  of  experts  with  sufficient  understanding  of  both 
patent and regulatory systems’ and says that ‘the increased workload entails a risk that  – absent reforms to 
simplify  the  system  –  overburdened  examiners  may  opt  to  just  ‘rubberstamp’  SPC  applications  without 
proper scrutiny of the claims.’ 

50 

 
                                                           
Table 6: Summary table of conclusions on fragmentation and transparency 

Stakeholder 

Main drawbacks of fragmentation and suboptimal transparency 

SPC holders 
(originators) 

-  Redundant  granting  procedures  resulting  in:  (i)  legal  uncertainty;  (ii) 
additional red tape; and (iii) additional administrative and legal costs.  
-  Redundant litigation and abundant national case-law, which increase legal 

uncertainty, costs and red tape. 

Companies 
dealing with 
generic 
products 

Consumers, 
patients, and 
health 
authorities 

-  Difficult to monitor the national use of the SPC manufacturing waiver by 

competing generics/biosimilars. 

-  Uncertainty about obtention of the SPC paediatric extension. 
These  costs  could  be  significant  for  SMEs,  which  have  less  financial 
resources,  fewer  in-house  specialists  and  limited  geographical  presence. 
Licensing can be more complex to handle. 

Innovative  SMEs  play  a  significant  role  in  the  pharmaceutical  sector.  In 
2009,  the  Commission’s  pharmaceutical-sector  inquiry  reported  that 
approximately  25%  of  molecules  in  clinical  development  were  acquired 
from  other  companies,  including  SMEs.  More  recently,  EMA  statistics 
show that 44% (15 out  of 34) of priority-medicine applications granted in 
2017 came from SMEs. 

-  Expensive search for  – and monitoring of  – SPCs in  force/or  expired in 

multiple EU Member States.  

-  Monitoring  difficulties  are  exacerbated  in  the  absence  of  proper 

transparency (different publication practices across Member States). 

-  Redundant and cross-border litigation – and abundant national case-law – 

cause increased legal uncertainty, costs and red tape. 

-  Different scope of the Bolar exemption across EU Member States. 
-  Complex use of the SPC manufacturing waiver if cross-border activities 

(e.g. logistics and outsourcing of production) are necessary. 

These are especially challenging for SMEs. 

-  Limits the availability of innovative medicines. 

The  uncertainty  and  high  cost  of  filing  patent  and  SPC  applications  in 
multiple EU Member States can lead SPC holders to neglect protection in 
less attractive EU Member State markets and therefore postpone launches 
of their innovative products in those markets. A unitary SPC could help 
overcome this issue. 

-  Adverse impact on the accessibility of medicines. 

Fragmentation and a lack of transparency on the status and scope of SPC 
protection across EU Member States cause delays in the entry of generics 
into the EU, especially in less profitable EU Member States. 

-  Could  hamper  joint  public-procurement  initiatives  by  groups  of  EU 
Member States (e.g. where the SPC scope or duration is not the same in 
all of these Member States). 

51 

 
 
-  The  increasing  complexity  of  the  state  of  the  art  and  the  lack  of 
transparency  make  it  more  difficult  for  NPOs  and  national  courts  with 
fewer resources to examine SPCs.  

National 
patent offices 
and national 
courts 

5.3  Relevance 

The  relevance  criterion  assesses  whether  the  SPC  Regulations  are  still  fit  for  purpose,  i.e. 
whether the objectives and tools in the Regulations were and are appropriate to tackle: (i) the 
problems that existed; (ii) the issues that are being faced now; and (iii) the challenges in the 
near future. The criterion looks at the relationship between the reasons for the Regulations and 
the current needs and problems in society. 

-  Question 9: How well do the original objectives of the SPC Regulations still correspond 
to  the needs  within the EU (i.e.  are the objectives  of  more innovation  in  new products, 
more  innovation  activities  in  the  EU,  prevention  of  delocalisation,  and  promotion  of  a 
homogenous SPC system in the EU still relevant)?  

Our findings show that all the objectives of the SPC Regulation remain relevant and high on 
the agenda of the EU institutions and Member States.  

On  objective  1,  innovation  in  the  pharmaceutical  and  PPP  sector  remains  of  the  utmost 
importance  for  society.  The  fast-growing  economies  of  Asia  and  Latin  America,  combined 
with ageing populations in the EU, USA and Japan, have driven massive global demand for 
medicines and new treatments in recent decades. 

In 2009, the Commission launched an inquiry into the pharmaceutical sector, stating that: ‘the 
lack of adequate treatment for many diseases requires continuous innovative efforts in order 
to  find  new  medicines.  Without  the  very  significant  research  and  development  efforts  of 
originator  companies  and  other  stakeholders  (e.g.  universities)  these  benefits  would  not  be 
possible’.  

In addition, beyond the EU, pharmaceutical and PPP-related innovation provides solutions to 
the major challenges of the UN’s Sustainable Development Goals, such as improving health 
and the environment or reducing hunger.  

The  solutions  to  the  current  COVID-19  pandemic  will  be  found  in  pharmaceutical 
innovations, from diagnostic tests to antivirals and vaccines. 

On  objective  2,  attracting  innovation  to  the  EU  and  preventing  delocalisation  of  EU  R&D 
remain major priorities for the EU, and not only in the pharmaceutical and PPP sectors. Since 
1992, the Commission and several EU Member States have repeatedly stressed99 the need for 
the EU to further develop its knowledge-based economy with a target of investing 3% of its 
GDP in research and development to remain internationally competitive. The pharmaceutical 
and PPP industries remain central to this general innovation objective100.  

99   In June 2010, the European Council adopted the Europe 2020 strategy, which included a goal of investing 

3% of EU GDP in R&D. 

100   Roadmap  for  a  pharmaceutical  strategy  at:  https://ec.europa.eu/info/law/better-regulation/have-your-
say/initiatives/12421-Pharmaceutical-Strategy-Timely-patient-access-to-affordable-medicines, and the 2019 
European Innovation Scoreboard at: https://ec.europa.eu/docsroom/documents/38781.  

52 

 
 
                                                           
The  current  COVID-19  pandemic  has  shown  the  importance  of  having  both  R&D  and 
medicine manufacturing in the EU. In this regard, the biologics sector is R&D-intensive, and 
the manufacturing of biologics tends to be located where R&D takes place101. Therefore, any 
contribution of the SPC to attract  EU investment in R&D on biologics might indirectly attract 
more manufacturing centres to the EU. 

It  is  also  likely  that  the  SPC  has  helped  EU-based  contracting  manufacturing  organisations 
(CMOs) to attract foreign-technology transfer, because foreign innovators can rely on patent 
and  SPCs  protection  int  the  EU.  For  example,  the  report  Vaccine  Contract  Manufacturing 
Market,  2nd  Edition,  2019-2030  has  the  following  advice:  it  is  important  to  consider  the 
approach to protecting intellectual assets of the country in which the CMO is based.(…)upon 
outsourcing,  the  customer  company  is  required  to  divulge  a  lot  of  intellectual  property,  in 
terms  of  development  formulas,  technologies  and  protocols,  to  the  service  provider…  It  is 
also worth highlighting that joint venture companies are generally granted access to certain 
capabilities and intellectual properties of their parent companies.  

On objective 3, creating a uniform SPC system in the single market remains a major goal for 
the EU. Pharmaceutical and PPP sectors are cross-border in nature in their supply chains, their 
research activities (clinical and field trials), and the way they launch their products. One of the 
three drivers of the Commission’s new industrial strategy102 is about strengthening the single 
market to improve the EU’s competitiveness in the world. Future initiatives to jointly procure 
medicines  by  EU  Member  States  can  be  hampered  if  SPCs  are  granted  across  the  EU  with 
different  scopes  or  durations.  Some  respondents  in  the  group  of  consumers/purchasers  of 
SPC-protected  products  responding  to  the  Commission  consultation  said  that  a  less 
fragmented  SPC  system  would  make  joint  procurement  by  a  group  of  EU  Member  States 
easier. 6 out of 15 respondents gave a response of 4 or 5 points out of a maximum of 5 points 
(indicating strong agreement with this assessment), while 4 respondents gave 3 points out of 5 
(indicating moderate agreement with this assessment). 

-  Question 10: To what extent have the original objectives proven to have been appropriate 

for the SPC Regulations?  

The SPC mechanism, broadly speaking, appears to be an appropriate intervention to tackle the 
objectives of promoting innovation in new active ingredients; and create a uniform solution at 
EU  level. However, the effectiveness and efficiency of the SPC Regulations are undermined 
by the fact that SPCs are administered and managed at national level and in a very divergent 
manner  (see  in  particular  Section  5.1.3  above).  The  SPC  Regulations  themselves  appear  to 
have had a limited effect in tackling the objective of attracting R&D to the EU and preventing 
delocalisation,  as  other  factors  have  a  significant  influence  on  the  geographical  location  of 
innovation (see Annex 9).  

The  amendment  of  Regulation  469/2009  in  2019  introduced  an  SPC  manufacturing  waiver 
(see glossary) that recalibrated the EU intervention. The EU intervention was also recalibrated 
by  the  introduction  of  the  Bolar  patent  and  SPC  exemption  (see  glossary)  in  the 

101   Alcacer, J. and Delgado M. (2016).  ‘Spatial organization of  firms and location choices through the value 
chain’,  Management  Science,  62(11),  pp.  3213-3234.  Analysing  the  locations  of  new  establishments  of 
biopharmaceutical firms in the USA from 1993 to 2005, the authors show that collocation of activities varies 
in the value chain. Although present in all activities, colocation is greater for R&D and manufacturing than 
for sales. 

102   https://ec.europa.eu/commission/presscorner/detail/en/ip_20_416  

53 

 
                                                           
the  operations  of  generics  and  biosimilar 
pharmaceutical 
manufacturers  in  the  EU.  These  recalibrations  were  made  to  re-balance  the  interests  of 
innovators and generics makers in the pharmaceutical field.  

to  facilitate 

legislation 

-  Question  11:  How  well  adapted  are  the  SPC  Regulations  to  new  technological 

developments?  

The SPC system was introduced to target a specific type of innovation: new active ingredients 
that  required  lengthy  development  periods.  This  subsection  analyses  how  the  SPC  system 
interacts with four other types of innovation. 

(1) New  models  of  research  into  pharmaceuticals  and  PPPs  that  are  based  on  incremental 
innovation  (e.g.  repurposing  of  existing  molecules  to  address  new  and  challenging 
therapeutic areas).  

As discussed in Section 2.2, it was not among the objectives of the SPC Regulations to 
promote  incremental  innovation  based  on  existing  products,  but  rather  to  promote 
research  on  new  active  ingredients.  Other  IP  incentives  such  as  secondary-medical-use 
patents  and  regulatory  incentives  (additional  market  exclusivity  is  one  such  regulatory 
incentive)  are  available  for  incremental  innovation.  However,  an  SPC  applicant  can 
decide, under certain conditions, to choose a secondary-medical-use patent (and only one) 
from  its  portfolio  as  the  basic  patent  for  an  SPC  application,  as  long  as  the  active 
ingredient concerned has not yet been protected by an SPC. 

The issue of the eligibility of SPC protection for incremental innovations has been taken 
to the CJEU on a number of occasions as analysed by the MPI study (2018). The CJEU 
decisions confirm that SPC protection is not available for new indications or for uses of 
known active ingredients (Santen SAS C-673/18). 

(2) Since  the  introduction  of  SPCs  in  1992,  there  have  been  major  new  developments  in 
pharmaceutical  and  health  innovation  such  as:  (i)  biotechnology  techniques  (including 
recent gene-editing techniques); (ii) the development of complex molecules, personalised 
medicines  and  companion  diagnostics;  (iii)  applied  nanotechnology;  and  (iv)  the 
increasing role of medical devices or ‘smart health’.  

On  biological  products,  the  qualitative  interviews  conducted  for  the  MPI  study  (2018) 
with  stakeholders  did  not  reveal  significant  difficulties  in  the  application  of  the  SPC 
Regulations  to  biological  medicines.  The  CJEU  has  dealt  with  a  number  of  SPC  cases 
related to biological products. Annex 4 discusses the dynamics of the entry of biosimilars 
and generics in the market. 

The CJEU in  case  C-527/17  confirmed that  SPCs are not  available for medical  devices 
per se. However, it is possible to get an SPC for the development of a medicinal product 
to  be  incorporated  in  a  medical  device.  Respondents  to  Question  40  of  the  Allensbach 
survey,  when  asked  whether  they  would  favour  or  oppose  extending  SPC  protection  to 
other fields of technology, such as medical devices, cosmetic products, or food products 
and food additives, were divided on the question: 28% supported such  extensions, 36% 
opposed  them  and  36%  found  it  impossible  to  say  or  had  no  opinion.  Out  of  those 
respondents  favouring  an  extension  to  other  fields  of  technology,  91%  favoured 
extending the current SPC protection to medical devices (Question 41 of the Allensbach 
survey). 

Personalised medicines,  according to  the MPI  study  (2018),  can rely on  already  known 
active ingredients protected by second-medical-use patents, requiring an amended or new 

54 

 
marketing  authorisation.  In  this  regard,  and  in  view  of  the  case  law,  personalised 
medicines  covered  by  a  second-medical-use  patent  and  which  are  the  subject  of  a 
marketing  authorisation  could  be  eligible  for  an  SPC  provided  that  the  marketing 
authorisation  can  be  considered  as  the  first  marketing  authorisation  falling  under  the 
scope of the basic patent.  If the active substance  was  already authorised  as a medicinal 
product,  it  is  not  eligible  for  further  certificates.  Therefore,  the  relevant  question  is 
whether the application for a certificate relies on the first marketing authorisation granted 
for  the  active  substance  at  issue.  The  scope  of  SPC  in  the  EU  does  not  encompass 
companion  diagnostics,  with 
that  are 
administered in vivo. 

the  exception  of  companion  diagnostics 

Nano-medicine  promises  many  advances  in  diagnostics,  therapeutics  and  regenerative 
medicine. According to the MPI study (2018), although these advances are patentable as 
a general rule, SPC protection is not available for many of them. 
(3) Challenges posed by unmet medical needs103, including antibiotics104. 

The  SPC  is  an  incentive  based  on  prolonging  a  period  of  exclusivity  of  sales.  In  this 
respect, it is similar to patents or regulatory market protection. For this reason, the SPC is 
not  expected  to  be  efficient  in  encouraging  research  in  areas  where  there  is  a  lack  of 
commercial viability. 
Some  research105  has  proposed  the  possibility  that  the  SPC  granted  to  a  non  profitable 
product  (e.g.  an  antibiotic)  becomes  a  ‘wild  card’  or  ‘transferrable’  SPC  that  could  be 
applied  to  extend  the  marketing  exclusivity  of  other  profitable  medicines.  This  has  the 
potential to encourage research in antibiotics. Since June 2018, the US Congress has been 
considering  a  bill106  that  proposes  a  transferable  IP-exclusivity  extension  period  to 
encourage the development of antimicrobial products. 

(4) Safeners and PPP SPCs 

Safeners are essential to modern agriculture. In cereal crops, for example, more than 80% 
of herbicides  are used in combination with  a safener107 to  reduce adverse  effects  of the 
herbicide on crop plants, and to improve selectivity between crop plants vs. weed species 
being  targeted  by  the  herbicide.  The  CJEU,  in  case  C-11/13,  accepted  safeners  as 
products eligible for SPC protection under Regulation 1610/96.  

103   See glossary. Unmet medical needs frequently arise where there is a lack of commercial viability for certain 
medicines, i.e. cases of market failure. This is the case for medicines targeting rare and neglected diseases, 
and to some extent for antibiotics, which represent a major challenge for the health system (see MPI study). 
104   In  response  to  Question  35  of  the  Allensbach  survey,  49%  of  respondents  opposed  an  amendment  of 
Regulation  469/2009  in  response  to  the  low  levels  of  investment  in  R&I  for  new  antibiotics.  Such  an 
amendment is supported by 23% of respondents. 

105   Batista et al., ‘IP-Based Incentives Against Antimicrobial Crisis: A European Perspective’, published online, 

16 January 2019, IIC (2019) 50:30–76. 

106    H.R. 6294 REVAMP Act. In this regard, the GAIN and FDASIA Acts have been in place in the USA for 

antibiotics since 2012. 

107   Zeitschrift für Stoffrecht, Volume 11(2014), issue 6, pp. 249-252, Frank Gerhards et al.  

55 

 
                                                           
5.3.1  The COVID-19 pandemic and EU recovery 

-  Question 12: How well is the SPC Regulation adapted to public health crises, such as the 

COVID-19 pandemic, and how it can contribute to the EU recovery?  

The COVID-19 crisis shows the need for innovative medicines (ranging from repurposing of 
existing medicines to new vaccine technologies that can be produced in massive quantities in 
a  short  period  of  time).  It  also  shows  the  importance  of  keeping  R&D  in  Europe.  R&D  is 
often co-located with manufacturing, especially in the biotechnology field.  

As shown in recent cases, patents and SPCs have not hampered access to protected medicines 
for the purpose of conducting emergency clinical trials and tests related to COVID-19. Patent 
and  SPC  holders  have  collaborated  with  health  authorities  and  researchers108.  The  patent 
flexibilities  introduced  for  shortages  of  supplies  in  health  crises  (emergency  compulsory 
licences109 and government patent use) also apply to SPCs. 

The  SPC  regime  may  not  have  prevented  delocalisation  of  the  manufacturing  of  innovative 
medicines  and  their  active  pharmaceutical  ingredients.  However,  this  was  never  the  SPC 
regime’s intended objective. The focus of the SPC regime was preventing the delocalisation 
of R&D. The SPC is granted without any condition imposed on the place where the protected 
medicine, or active ingredient, is to be developed and manufactured. 

Improvements in the SPC system that can tackle its fragmentation can help strengthen the EU 
health and agri-food industrial ecosystems110 (see Annex 11). 

5.4  Coherence 

The  coherence  criterion  assesses  how  well  different  interventions  work  together  (e.g.  in 
achieving common objectives or as complementary actions). It also assesses areas of tension 
that need to be identified. 

The legal regime of SPCs is complex for two main reasons set out below: 

-  Unlike patent rights, SPCs have their basis not in national or international law, but in 
EU regulations that are directly applicable in EU Member States. However, unlike EU 
trade marks or Community designs, SPCs are not EU [unitary] titles of protection, but 
national rights administered by national institutions. 

-  Although  SPCs  are  separate  and  autonomous  sui  generis  rights,  their  existence, 
validity  and  operation  are  contingent  on  the  existence  of  a  [basic]  patent  and  a 
marketing authorisation, which are regulated by laws external to the SPC Regulations.  

-  Question 13: Are the SPC Regulations internally coherent in their respective provisions?  

The existing literature and practice seem  to  indicate that the SPC Regulations are internally 
coherent.  Regulation  1610/96  on  SPCs  for  PPPs  mirrors  many  provisions  and  recitals  of 

108   Financial Times, ‘Pandemic reopens wounds on IP rights’, 18 June 2020. 
109   Financial Times, ‘AbbVie drops patent rights for Kaletra antiviral treatment’, 23 March 2020.  
110   2020 Commission industrial strategy: https://ec.europa.eu/info/sites/info/files/communication-eu-industrial-

strategy-march-2020_en.pdf.  

56 

 
                                                           
Regulation  469/2009  on  SPCs  for  medicines  (codified  version  of  Regulation  1768/92)  (see 
recital 17 of Regulation 1610/96).  

The  CJEU  has  now  provided  greater  certainty  on  the  interpretation  of  the  SPC  Regulations 
and more recently has refined its earlier case-law on those provisions which had provoked the 
most references. As a result there are now fewer references from national courts. 

-  Question  14:  To  what  extent  is  the  SPC  framework  externally  coherent  with  EU 
legislation  on  regulatory  pharmaceutical  legislation,  patent  law,  the  unitary  patent 
package and the Bolar exemption? Are there any gaps, overlaps or inconsistencies? 

(1) The SPC framework  and patent law, including the future unitary  patent and the Unified 

Patent Court 

Aspects  such  as  the  SPC’s  duration,  expiry  and  application  procedure  are  linked  to  its 
basic patent. The SPC’s subject-matter of protection lies within the limits of the protection 
conferred by its basic patent and its related marketing authorisation(s). On the effects of 
the SPC, the SPC confers the same rights as conferred by the basic patent. In this regard, 
Regulation (EU) 2019/933 recently introduced a manufacturing SPC exception for export 
and stockpiling purposes. However, this manufacturing exemption is not applicable to the 
basic patent, and only concerns SPCs for medicinal products. 

The  current  SPC  system  will  inevitably  inter-link  with  the  future  EU  patent  package  
establishing  a  European  patent  with  unitary  effect  (Regulation  (EU)  No  1257/2012  and 
Regulation (EU) No 1260/2012) and a centralised jurisdiction through the Agreement on a 
Unified  Patent  Court  (UPC)111.  The  future  UPC  will  resolve  disputes  over:  (i)  unitary 
patents;  (ii)  classic  European  [bundle]  patents;  and  (iii)  related  SPCs  for  those  Member 
States which have ratified the Agreement on a Unified Patent Court.  

Most  respondents  to  the  Commission  public  consultation  (2017)  were  of  the  view  that 
NPOs  would  be  entitled  to  grant  –  under  the  current  legislation  –  national  SPCs  for 
products covered by future unitary patents. According to the MPI study (2018), the SPC 
Regulations will be coherent with – and complement – the unitary patent system, once the 
latter enters into force.  

(2) The SPC framework and regulatory legislation on pharmaceuticals and PPPs 

The  issue  of  the  application  of  regulatory  law  or  of  the  plant  protection  product  law  to 
supplement the SPC framework is not always simple as analysed by the MPI study (2018). 
This  study  recalls  that  the  regulatory  framework  provides  for  several  types  of 
authorisations and modifications (variations) of existing authorisations, and in this regard 
the  study  states  that    it  is  not  clear  whether  the  variation  of  an  existing  marketing 
authorisation can be used to apply for an SPC112 (i.e. whether it is an authorisation within 
the meaning of Articles 2 and 3(1)(b) of Regulation 1610/96, or of Article 2 and Article 
3(b) Regulation 469/2009)).  

111   Details about this international treaty, including its ratification status, can be found at: https://www.unified-

patent-court.org/.   

112  The  CJEU in Neurim did not take a  position on the question  whether a variation of an existing  marketing 
authorisation can support the application for a certificate. This issue was not relevant for the factual scenario 
discussed in the referal proceedings. 

57 

 
                                                           
It  is  accepted  that  centralised  authorisations  for  medicinal  products  (granted  under 
Regulation 726/2004) can be used to apply for an SPC (i.e. centralised authorisations fall 
under the scope of Article 2 of Regulation 469/2009).  

(3) The SPC framework and the Bolar exemption 

The Bolar exemption applies to patents and SPCs for pharmaceutical products. Most EU 
Member  States  provide  for  a  Bolar  exemption  that  might  be  broader  than  the  acts 
explicitly  exempted  in  EU  pharmaceutical  legislation113  (and  that  will  apply  to  unitary 
patents under the Unified Patent Court Agreement).  

According  to  the  Allensbach  survey  (Question  65)  conducted  as  part  of  the  MPI  study 
(2018),  most  (61%)  stakeholder  groups  represented  (law  firms,  associations,  originator 
companies and generic companies) favoured a broad Bolar exemption over a narrow one. 
Only 18% of the respondents preferred a narrow exemption. 

-  Question 15: To what extent is the SPC coherent with other EU pharmaceutical and PPP-

specific incentives for innovation?  

In  the  EU,  in  addition  to  patents  and  SPCs,  regulatory  incentives  are  provided  under  EU 
pharmaceutical  legislation,  running  from  the  date  of  the  marketing  authorisation.  EU 
pharmaceutical  legislation  also  provides  incentives  for  orphan  medicinal  products  and 
paediatric  rewards.  As  explained  in  the  CE  study  (2018),  the  regulatory  incentives  and 
rewards run in parallel to – and independently from – the patents and SPCs (see Annex 10). 
The study shows that only 18% of the observations with granted SPCs enjoyed a regulatory 
data protection period that was longer than their SPC duration.  

The  SPC  framework  may  not  provide  sufficient  incentives  to  invest  in  innovation  in  some 
products that have very long development times. However, such innovative products would 
qualify for regulatory data protection and market protection (see glossary) that guarantee 10 
years of market protection. The CE study (2018) shows that 18% of the observations with a 
granted SPC enjoyed a regulatory data exclusivity and market protection that was lengthier 
than  their  SPC  duration.  Therefore,  it  can  be  concluded  that  the  SPC  and  regulatory  data 
protection can complement and mutually strengthen each other. 
The SWD on the evaluation of the orphan and paediatric rewards114 (see glossary) finds that 
the  Paediatric  Regulation  (Regulation  (EC)  No  1901/2006)  mostly  works  in  a  coherent 
manner with related EU and national legislation and actions. However, the fact that the SPC 
extension reward is granted by independent NPOs makes it difficult for companies to predict 
whether they will be granted an SPC extension.  

-  Question  16:  To  what  extent  are  the  SPC  Regulations  coherent  with  international 

law/obligations? 

SPCs constitute a sui generis right that is not directly addressed in the Paris Convention for 
the Protection of  Industrial Property115  or in  the TRIPS Agreement  (see  glossary), the main 
international  IP-related  treaties  that  regulate  the  substantive  aspects  of  IP  rights  at 

113    Article 10(6) of Directive 2001/83/EC and Article 13(6) of Directive 2001/82/EC. 
114    SWD(2020) 163 final. 
115   https://www.wipo.int/treaties/en/ip/paris/ 

58 

 
                                                           
international level. Nevertheless, the obligations stipulated in these treaties may apply insofar 
as  the  principles  of  national  treatment,  non-discrimination  and  most-favoured-nation 
treatment are concerned.  

The  EU-level  SPC  legislation  has  facilitated  the  inclusion  of  SPC-related  provisions  in 
bilateral trade agreements concluded by the EU. This has increased pharmaceutical and PPP 
protection in non-EU countries. The provisions in the EU bilateral trade agreements on SPCs 
were modelled on SPC Regulations 469/2009 and 1610/96. 

5.5  EU added value 

This  subsection  aims  to  assess  the  additional  value  brought  by  the  SPC  Regulations  in 
comparison to what would have been achieved by the actions of EU Member States alone.  

-  Question 17: What is the additional value resulting from the SPC Regulations, compared 
to  what  would  reasonably  have  been  expected  from  Member  States  acting  at  national 
level? 

As discussed in Section 5.1.3 above, promoting a homogeneous SPC system at EU level was 
one  of  the  main  legislative  objectives  of  the  SPC  legislators  (recital  7).  Before  1992,  only  a 
few  EU  Member  States  had  adopted  national  legislation  on  SPCs.  These  EU  Member  States 
granted national SPCs with significantly different durations.  

A  number  of  arguments  underpin  the  value  of  the  EU  intervention  providing  for  SPC 
protection:  

(1)  medicines and PPPs are developed, tested, approved, produced and marketed along 
global value chains, with stakeholders favouring uniform, EU-wide regulatory and IP 
legal  frameworks  (that  could  not  have  been  achieved  by  a  bundle  of  independent 
pieces of national legislation); 

(2) 

(3) 

the EU is committed to establishing and ensuring the functioning of the single market 
with free movement of medicinal products and PPPs (Article 26 TFEU); 

the two points above help support patients across borders, who suffer from the same 
medical  conditions  and  need  the  same  treatments,  subject  to  the  same  quality  and 
safety requirements (the same applies to farmers in relation to PPPs). 

The impact assessment conducted for the proposal for an SPC waiver (SWD(2018) 240 final) 
states  that  ‘EU-level  action  would  bring  significant  added  value  compared  to  national-level 
action to the extent that it would preserve the integrity of the single market, by providing for a 
uniform, transparent and fair approach’.  

The  Commission  public  consultation  showed  that  respondents  broadly  support  the  way  in 
which  SPCs  are  regulated  at  EU  level.  On  this  issue,  an  overwhelming  percentage  of  the 
innovators (80.28%) and a clear majority of generics manufacturers (63.49%) participating in 
the Commission public consultation considered that the SPC brought added value compared 
with  national  initiatives116  (only  2.82%  of  the  originators  and  15.87%  of  the  generics 
indicated  the  contrary).  5  out  of  15  respondents  in  the  health-user  groups  replied  positively 

116   Considering  both  the  few  actual  national  initiatives  taken  before  EU  legislation  was  introduced,  and  the 
foreseeable  consequences  of  the  introduction  of  additional  similar  national  initiatives  in  the  remaining 
Member States. 

59 

 
                                                           
too, with 9 out 15 responding that they did not know. This shows that, from the stakeholders’ 
point  of  view,  legislation  at  EU  level  is  also  the  right  vehicle  to  regulate  supplementary 
protection  in  the  pharmaceutical  and  PPP  sectors.  However,  a  number  of  issues  (such  as 
fragmented  application)  may  still  need  to  be  addressed  –  as  observed  in  the  responses  by 
innovators  and  generics  manufacturers  to  the  Commission  public  consultation  reflected  in 
Section 5.1.3.1. 

The EU legislation on SPCs served as a basis for including SPC protection in bilateral trade 
agreements agreed by the EU.  

6  CONCLUSIONS 

This evaluation covers the EU Regulations governing SPC protection for both pharmaceutical 
products and PPPs117. It concludes that both SPC Regulations appear to support research on 
new active ingredients and are still fit for purpose (i.e. relevant) and coherent with the patent 
and  related  pharmaceutical  legislation  in  the  EU.  Both  SPC  Regulations  appear  to  have 
brought EU added value. 

However, it is challenging to establish a clear link between SPC protection and the location of 
R&D, because many other factors unrelated to the SPC play a significant role in the location 
of  R&D.  In  this  regard,  as  reported  by  industry  associations,  patents  and  SPCs  can  be 
especially  helpful  in  supporting  innovative  EU  pharmaceutical  companies  and  in  particular 
SMEs and start-ups, which have fewer resources to embark on lengthy product development 
cycles.   

The  main  shortcoming  of  the  existing  SPC  systems  is  the  fact  that  SPCs  are 
administered  and  managed  at  national  level  undermines  their  effectiveness  and 
efficiency. This creates significant red tape and entails extra costs for businesses, especially 
challenging  for  SMEs.  National  grant  procedures,  including  transparency  obligations,  also 
entail  extra  costs  and  administrative  challenges  for  national  administrations  (especially  for 
those with  reduced  administrative capacity).  In addition,  different  approaches and outcomes 
across  EU  Member  States  undermine  legal  certainty  and  therefore  hamper  the  proper 
functioning  of  the  single  market.  This  reduces  innovation  and  the  availability  of  new 
medicines, and also limits access to affordable generic products, due to the uncertainty faced 
by generics manufacturers. 

In  addition,  the  overall  transparency  of  the  SPC  system  is  suboptimal,  especially  in  a 
cross-border perspective. This is detrimental to innovators and generics manufacturers alike. 

More specific findings of the evaluation are set out below.  

117   Regulation (EC) No 469/2009 of the European Parliament and of the Council of 6 May 2009 concerning the 
supplementary  protection  certificate  for  medicinal  products  (Codified  version),  and  Regulation  (EC)  No 
1610/96  of  the  European  Parliament  and  of  the  Council  of  23  July  1996  concerning  the  creation  of  a 
supplementary protection certificate for plant protection products. 

60 

 
 
                                                           
6.1  Effectiveness 

The SPC Regulations aim to achieve three objectives: (i) promote innovation for new active 
ingredients;  (ii)  attract  R&D  centres  to  the  EU,  thereby  preventing  delocalisation;  and  (iii) 
build a uniform SPC framework at EU level.  

The  SPC  system  appears  to  support  research  on  new  active  ingredients.  There  has  been 
growing  investment  in  R&D  in  the  pharmaceutical  and  PPP  sectors  as  well  as  increasing 
approvals of pharmaceutical products – both in the EU and globally – can be observed since 
the SPC system started. This assessment is also supported by the views of stakeholders. At the 
same  time,  the  evaluation  shows  that  it  is  difficult  to  measure  the  exact  effect  of  the  SPC 
system on innovation, because decisions to invest and innovate are driven by a large number 
of  factors,  including:  other  regulatory  incentives,  global  demand,  new  technological 
breakthroughs  (biotechnology), public and private funding, and the regulatory framework in 
general. An increasingly strict regulatory environment in Europe – for pharmaceuticals but in 
particular  for  PPPs  –  may  have  offset  some  of  the  positive  effects  of  the  SPC  system  on 
innovation.  

Together with other factors, the SPC system appears to have helped attract research centres to 
the  EU  and  prevent  delocalisation  of  R&D  outside  the  EU.  However,  limited  evidence  has 
been found to support this issue. Localisation of R&D heavily depends on many other factors 
such as: skilled labour, a sound health infrastructure, life-science universities, the availability 
of public and private funding, tax schemes, and the level of expenditure on health/medicines 
in general. All of these factors fall outside the remit of the SPC Regulations. It is likely (and 
this  is  confirmed  by  industry  associations)  that  the  prospect  of  getting  SPC  protection  is 
especially  helpful  in  supporting  innovate  EU  pharmaceutical  SMEs  and  start-ups  when 
undergoing lengthy development pathways for their products. 

The SPC Regulations introduced SPC protection across the EU that is based on a uniform set 
of rules. However, in practice the fact that SPCs are granted and enforced at national level has 
resulted  in  a  significant  fragmentation.  This  in  turn  undermines  the  efficiency  of  the  SPC 
system. In fact, there are increasing differences across EU Member States in areas such as the 
length  of  procedures,  the  substantive  criteria  applied,  and  the  outcomes  of  the  procedures 
(duration,  scope  of  protection,  etc.).  The  transparency  of  the  current  SPC  system  is  also 
suboptimal, as shown by the evidence gathered. There is no EU-wide information system, and 
the  information  published  by  public  authorities  is  not  always  comprehensive,  up-to-date  or 
accessible  in  foreign  languages.  Moreover,  access  to  private  databases  that  monitor  SPC 
status can be costly, especially for SMEs and start-ups. This has a negative impact on some 
stakeholders, especially manufacturers of generics. 

Diverging  practices,  suboptimal  transparency  and  the  increasing  complexity  of  the 
technologies  make  the  granting  and  enforcement  of  SPCs  more  challenging,  especially  for 
national  patent  offices  and  national  courts  with  limited  resources.  These  issues  further 
aggravate the fragmentation of the current SPC framework. 

6.2  Efficiency  

The benefits of the SPC system are mostly associated with its role in supporting innovation. 
This is because the SPC increases sales for innovators, and therefore reduces the risk of not 
breaking even on the upfront expenditure in R&D. More innovation is expected to bring about 
greater availability of medicines. Other factors can impact  the  availability  of SPC protected 
medicines in the EU such as the speed of their regulatory approval, on which the SPC has no 

61 

 
influence. In the same vain, the SPC has no impact on the duration of price and reimbursment 
procedures  which  take  place  at  national  level  and  can  significantly  hamper  accessibility  to 
medicines in the EU. The costs related to the SPC’s role in delaying the entry of generics and 
biosimilars  is  proportional  when  compared  to  the  gains  from  increased  innovation.  This  is 
because: (i) the SPC has a limited scope (SPCs protect only a fraction of all medicines118 and 
PPPs); and (ii) the SPC is often not the last protection to expire (medicines and PPPs also tend 
to be protected in parallel – during a significant part of their SPC protection – by other EU-
specific  incentives  such  as  regulatory  market  protection).  For  medicines,  the  effective 
protection period119 has been decreasing over time (without SPCs that decrease in protection 
would have been more acute), and the SPC system provides targeted features to promote the 
entry  of  generics.  These  features  include  the  Bolar  exemption  and  the  SPC  manufacturing 
waiver120.  

Additional costs, as mentioned above, stem from the fact that the SPC system is implemented 
in  different  ways  across  EU  Member  States,  with  suboptimal  transparency.  This  greatly 
affects  innovators,  especially  SMEs,  start-ups  and  generics  makers  (e.g.  the  cost  of 
monitoring for generics makers), thereby undermining the efficiency of the SPC system. 

The  current  SPC  regime  therefore  appears  to  ensure  that  research-based  industry  benefits 
from a greater length of effective protection to increase the chances of recovering their R&D 
investments, without disproportionately delaying the entry of generics.  

6.3  Relevance 

The SPC system remains relevant today. Its key objectives – to promote innovation, prevent 
delocalisation  of  R&D  and  provide  for  a  uniform  framework  –  are  of  major  political 
importance.  The  SPC  mechanism  appears  to  be  an  appropriate  intervention  to  tackle  the 
objectives of promoting innovation in new active ingredients and creating a uniform solution 
at  EU  level.  However,  it  appears  to  have  had  a  limited  effect  in  tackling  the  objective  of 
attracting  R&D  to  the  EU  and  preventing  delocalisation,  as  other  factors  have  a  significant 
influence on the geographical location of innovation. 

Innovation in the pharmaceutical and PPP sectors remains of  utmost importance for society. 
The fast-growing economies of Asia and Latin America, combined with ageing populations in 
the  EU,  USA  and  Japan,  have  driven  the  global  demand  for  medicines  and  new  treatments 
upwards  in  recent  decades.  Further,  pharmaceutical  and  PPP-related  innovation  provides 
solutions  to  the  major  challenges  of  the  UN’s  Sustainable  Development  Goals,  such  as 
improving health and the environment as well as reducing hunger.  

The  pharmaceutical  and  PPP  industries  remain  central  to  the  EU’s  overarching  political 
objective of becoming a knowledge based economy. More recently, the COVID-19 crisis has 

118  The  ‘products’ protected by the  SPCs are  active ingredients. In  addition, even for eligible products, SPCs 
are  not  granted  for  products  with  short  development  times  (less  than  5  years),  and  no  additional  SCP 
protection is given for development times exceeding 15 years. On average, a few dozens of products (active 
ingredients for either medicinal or plant protection products) are the subject of SPC applications each year. 
119  The ‘effective protection period’ is the time from marketing authorisation until the expiration of the last form 
of  protection  in  the  form  of  patents,  SPCs,  or  regulatory  incentives  (i.e.  the  effective  protection  period 
measures the time a product is on the market and enjoys protection from generic competition via either IP 
rights  or  regulatory  incentives  and  rewards).  The  effective  protection  period  for  medicinal  products  has 
decreased from 15 to 13 years (see page 21 of the CE study). 

120   Introduced by Regulation (EU) 2019/933. See Glossary. 

62 

 
                                                           
highlighted  the  need  for  Europe  to  have  a  strong  pharmaceutical  sector,  and  for  Europe’s 
pharmaceutical industry to remain a world leader in terms of innovation and manufacturing.  

An SPC is granted without any condition imposed on the place where the protected medicine 
or PPP, or its active ingredient, is to be developed and manufactured. However, examples of 
the relevance of the SPC (and other IP rights) in supporting manufacturing location decisions 
has been found: contribution of the SPC in attracting R&D centres for biologics can indirectly 
attract manufacturing capacity in biologics, and the SPC system (and other IP rights) can help 
build trust among EU-based contracting manufacturing organisations.  

Creating a uniform SPC system in the single market remains a major goal for the EU, because 
the  pharmaceutical  and  PPP  sectors  are  cross-border  in  their  supply  chains,  their  research 
activities (clinical and field trials), and the way they launch their products. One of the three 
drivers  of  the  Commission’s  new  industrial  strategy  is  strengthening  the  single  market  to 
improve the EU’s competitiveness in the world. 

The SPC is well adapted to support innovation related to major technical  developments that 
have emerged since 1992, such as biotechnology techniques. However, it was not designed as 
an  incentive  for  research  models  based  on  incremental  innovation  (e.g.  repurposing  of 
existing molecules to address new and challenging therapeutic areas), but instead its purpose 
is to encourage innovation in novel active ingredients. Nor is the SPC, at least in its current 
form, expected to  encourage  R&D in areas where there is a lack of commercial viability, in 
particular  on  medicines  for  orphan  and  paediatric  conditions  (major  areas  of  unmet  health 
needs).  This  is  because  the  SPC,  the  same  as  patent  protection  and  regulatory  market 
protection, is an incentive prolonging a period of exclusivity of sales of a product. SPC is not 
available for medical devices per se, but it can protect the active ingredient incorporated in a 
medical device. 

6.4  Coherence 

The provisions of the SPC Regulations are coherent internally , and the CJEU recently refined 
its  earlier  case-law  on  those  provisions,  which  had  provoked  the  most  references.  The  SPC 
Regulations  are  also  coherent  with  the  future  unitary  patent  system,  and  with  regulatory 
legislation on pharmaceuticals and PPPs, even though some unclarity might remain over the 
latter  as  to  whether  SPCs  can  be  granted  on  the  basis  of  certain  categories  of  marketing 
authorisations. The evaluation of orphan and paediatric rewards121 finds that because the SPC 
paediatric extension reward is granted nationally, it makes it difficult for companies to predict 
whether they will be granted an SPC extension.  

The Bolar exemption applies to patents and SPCs for pharmaceutical products and provides a 
key  legal  framework  for  investment  in  development  of  generics  and  biosimilars  in  the  EU. 
Most EU Member States provide for a Bolar exemption that is broader than the acts explicitly 
exempted in EU pharmaceutical legislation (and that will apply to unitary patents under  the 
Unified Patent Court Agreement). This broader implementation, in some EU Member States, 
is preferred by the stakeholders consulted . 

121   SWD(2020) 163 final.  

63 

 
                                                           
6.5  EU added value 

The  SPC  legislative  action  taken  at  EU  level  creates  added  value  through  the  incentives  it 
provides to innovation in the fields concerned. This is largely confirmed by the stakeholders 
consulted.  The  alternative  of  purely  national  SPC  legislations  of  EU  Member  States  would 
have inherently suffered from various discrepancies, with a negative impact on the integrity of 
the EU’s single market. 

Medicines and PPPs are developed and marketed along global value chains, with stakeholders 
(including  patients,  who  suffer  from  the  same  medical  conditions  and  need  the  same 
treatments, subject to the same quality and safety requirements) that favour uniform, EU-wide 
regulatory  and  IP  legal  frameworks.  Further,  the  EU  is  committed  to  establishing  and 
ensuring the functioning of the single market with free movement of medicinal products and 
PPPs.  

64 

 
 
 
ANNEX 1: PROCEDURAL INFORMATION 

1.  Lead DG, Decide Planning 

Lead DG:   DG GROW  

Planning reference:   PLAN/2020/7977 

2.  Organisation and timing 

Following  several  studies  (see  Section  4.1  and  Annex  3)  the  Commission  published  an 
inception  impact  assessment  in  February  2017  announcing  possible  legislative  and  non-
legislative  proposals,  and  that  the  Commission  will  conduct  a  back-to-back  evaluation  and 
impact  assessment  of  all  relevant  provisions  and  options  for  modernising  the  SPC 
Regulations.  An  ad  hoc  inter-service  steering  group  (ISSG)  was  created  to  follow  the 
implementation of this Inception Impact Assessment and in particular the preparation of this 
evaluation. 

In October 2017, the Commission launched a 12-week online public consultation on the SPC 
system (see annex 2).  

On  11 June 2019,  the  OJ  of  the  EU  published  Regulation  (EU)  2019/933  of  the  European 
Parliament  and  of  the  Council  of  20 May 2019  amending  Regulation  (EC)  No  469/2009 
concerning  the  supplementary  protection  certificate  for  medicinal  products.  This  regulation 
introduced the “SPC manufacturing waiver” one of the key elements of the inception impact 
assessment above. 

This  evaluation  on  the  SPC  system  was  launched  in  June  2019  after  the  adoption  of 
Regulation  (EU)  2019/933  on  the  SPC  manufacturing  waiver  (which  was  a  Commission 
priority in 2018 and 2019). 

On 16 December 2019, the SPC  ISSG was convened to  discuss the detailed planning of the 
evaluation exercise. A second ISSG meeting took place on 11 May 2020, to discuss the first 
draft of the evaluation. Draft versions of this evaluation report were regularly shared with the 
ISSG, inviting comments and changes.  

An interservice consultation was launched in August 2020. 

3.  Exceptions to the Better Regulation guidelines 

No exceptions to the Better Regulation Guidelines 

4.  Consultation of the RSB (if applicable) 

N/A 

5.  Evidence, sources and quality 

This evaluation was based on the intervention logic of Regulations (EC) No 469/2009 and No 
1610/96 and a comprehensive analytical framework comprising the evaluation questions and 
their respective judgement criteria, indicators and information sources.  

65 

 
 
As detailed in section 4.1 of this report, the data collection tools used to gather the relevant 
information  consisted  of  a  document  review,  stakeholder  interviews,  Commission  public 
consultation, targeted survey, case studies, workshop, contracted and in-house studies.  

66 

 
 
 
ANNEX 2: STAKEHOLDER CONSULTATIONS 

Several  surveys  and  consultations  by  the  Commission  and  contracted  third  parties  were 
conducted, as well as a general public consultation. A summary of the main outcomes of these 
consultations/surveys are indicated below. 

  Commission public consultation 

An online public consultation on the SPC system and the EU Bolar exemption was conducted 
from 12 October 2017 to 4 January 2018. 
The outcomes of that consultation are summarised in the document SWD(2018) 242122.  

Its main findings directly related to the current SPC regime (i.e. other than those concerning 
for instance targeted issues such as a possible unitary SPC or SPC manufacturing waiver) are 
as follows: 

- 

Innovative  companies’  investment  decisions  (e.g.  regarding  R&D  location)  may  be 
influenced by the existence and features of the SPC regime, but are essentially driven by a 
combination of many factors including e.g. access to a highly skilled labour force and a 
well-developed health infrastructure. 

-  Respondents broadly support the way in  which SPC issues are regulated at  Union level, 
which is considered globally effective. However, most of them report diverging practices 
for registration and SPC enforcement across Member States, i.e. a fragmented application 
of the SPC regime. 

Comprehensive 
found 
https://ec.europa.eu/info/consultations/public-consultation-supplementary-protection-certificates-spcs-and-
patent-research-exemptions_en. 

consultation 

information 

public 

this 

can 

on 

be 

at: 

  Allensbach surveys  

Two detailed surveys (the so-called Allensbach surveys) were conducted in the context of the 
MPI study mentioned below. One survey was addressed to patent offices and IP practitioners 
(including judges) and another one was address to the pharmaceutical industry. The outcomes 
can 
at 
https://ec.europa.eu/docsroom/documents/29524/attachments/4/translations/en/renditions/native. 

found 

be 

Its main findings directly related to the current SPC regime (i.e. other than those concerning 
for instance targeted issues such as a possible unitary SPC or SPC manufacturing waiver) are 
as follows: 

-  80%  of  the  respondents  consider  that  the  current  SPC  regime  fosters  the  investment  in 

research and development (R&D) activities; 

-  68% of the respondents consider that the current SPC Regulations act as an incentive to 
develop more products for which a longer time is needed until the marketing authorisation 
is obtained; 

-  62% of the respondents consider that, when it comes to examining SPC applications, the 
practice  and  procedures  of  the  national  offices  in  the  EU  Member  States  differ 
significantly in terms of predictability, transparency and quality of the rights granted. 

122   https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1593699690365&uri=CELEX:52018SC0242 

67 

 
                                                           
 

Inception impact assessment on the SPC and Bolar exemption 

No feedback123 was received regarding the inception impact assessment of 2017. 

  Commission’s survey on SPC transparency 

The Euroepan Commission launched a survey among national patent offices in early 2020 to 
obtain details on their transparency practices. Based on this survey, different practices across 
NPOs have been identified: 

-  Most national patent offices (NPOs) provide for an online searchable database, although 
the search criteria are very variable (in two MSs, only the SPC number can be used as a 
search criterion). 

-  Publishing  SPC-related  information  takes  varying  amounts  of  time,  ranging  from  a  few 

days to several months, and even more than a year in specific situations. 

-  Only  a  slight  majority  of  NPOs  (14)  publish  SPC-related  information  in  English  in 

addition to their official languages. 

-  Only about half of the NPOs make the documents of the file of a given SPC application 
accessible  online  (e.g.  in  PDF  format).  However,  the  other  ones  usually  provide  for  file 
inspection and/or are able to provide copies. 

-  Only  a  slight  majority  of  NPOs  (15)  provide  the  European  Patent  Office  with  detailed 

information on SPCs (which the EPO then publishes). 

-  When  asked  which  source  they  would  consider  to  be  the  most  suitable  for  providing 
centralised  access  to  SPC  information,  7  NPOs  mentioned  the  EPO  databases  (possibly 
with  improvements),  4  did  not  express  any  preference,  and  14  mentioned  a  new 
centralised website. 

123 https://ec.europa.eu/smart-regulation/roadmaps/index_en.htm  

68 

 
 
 
 
 
                                                           
ANNEX 3: METHODS AND ANALYTICAL MODELS 

The  evaluation 
consultations/surveys (detailed in Annex 2). 

is  based  on  a  number  of  studies  (see  detailed 

list  below)  and 

The table represents the evaluation matrix of this report.  

Objectives 

Objective 1 (more 
R&D on active 
ingredients) 

Objective 2 (more 
R&D in the 
EU/prevention of 
delocalisation) 

Objective 3 (EU 
harmonisation) 

Judgement criteria and 
indicators 

Data sources 

-  Global 

evolution 

of 
investments in pharma and 
PPP R&D  

-  Evolution  of  approvals  of 
new  active  ingredients  at 
global and EU level 

-  Evolution  of  pharma  and 
investment 

PPPs  R&D 
and jobs in the EU 

-  Registration 

and 
maintenance  cost  of  the 
SPC, degree of procedural 
complexity, 
conflicting 
grant  decisions,  pending 
SPC  applications  across 
EU  Member 
States, 
transparency/publication 
practices 

Mostly: OECD, US FDA and EMA 
data; Commission and MPI 
consultations; CE, Kyle and Mejer 
studies of 2017, EFPIA and Phillips 
McDougall consultants.  

Additional literature is mentioned 
throughout the corresponding sections. 

Commission  and  MPI  consultations, 
Alice de Pastors, CE, Kyle and Mejer 
studies of 2017. 

is  mentioned 
Additional 
throughout the corresponding sections. 

literature 

The  following  studies,  which  analyse  and  discuss  economic  and  legal  aspects  of  the  SPC 
system, have been taken into account for this evaluation (it is not an exhaustive list). 

a)  Studies contracted or conducted by the European Commission 

  A  study  contracted  by  DG  GROW124  to  Charles  River  Associates  on  ‘Assessing  the 
economic impacts of changing exemption provisions during patent and SPC protection 
in Europe’ (CRA study (2016));  

  A study ‘The economic impact of the Paediatric Regulation, including its rewards and 
incentives’ (December 2016) contracted to  Technopolis by DG SANTE125, including 
an analysis of the paediatric SPC extensions. 

124    Directorate General for the Internal Market, Industry, Entrepreneurship and SMEs (DG GROW). 
125   Directorate General for Health and Food Safety (DG SANTE). 

69 

 
 
 
 
                                                           
  An in-house DG GROW analysis of the SPC framework in the EU: ‘25 years of SPC 
protection  for  medicinal  products  in  Europe:  Insights  and  challenges’  (Mejer  study 
(2017));  

  A study on the economic aspects of the SPC: ‘Economic Analysis of Supplementary 
Protection Certificates in Europe’ (Kyle study (2017)) contracted by DG GROW; 

  A  study  on  the  legal  aspects  of  the  SPC  conducted  by  the  MPI  study  (2018)) 

contracted by DG GROW; 

  A  study  analysing  the  combined  effect  of  pharmaceutical  incentives  in  Europe, 
realised by Copenhagen Economics (CE study (2018)) contracted by DG GROW and 
DG SANTE; 

b)  Studies/research  conducted  by  various  stakeholders  (additional  studies  were  consulted 

during desk research) 

  R&D  trends  for  chemical  crop  protection  products  and  the  position  of  the  European 

Market, Phillips McDougall for ECPA, September 2013. 

  De  Pastors,  A.  “Latest  News  on  Medicinal  Product  SPCs  in  Europe”,  29  November 

2015. 

  V-Cumaran  Arunasalam,  Filip  De  Corte,  Supplementary  protection  certificates  for 
plant  protection  products:  the  story  of  ‘The  Ugly  Duckling’,  Journal  of  Intellectual 
Property Law & Practice, Volume 11, Issue 11, November 2016 

  Effects  of  supplementary  protection  mechanisms  for  pharmaceutical  products, 

Technopolis Group, May 2018 (Technopolis study (2018)) 

  Evolution of the Crop Protection Industry since 1960, Phillips McDougall, November 

2018. 

  Batista  et  al.,  “IP-Based  Incentives  Against  Antimicrobial  Crisis:  A  European 

Perspective”, published online, 16 January 2019, IIC (2019) 50:30–76. 

  Kyle,  M.K.  The  Single  Market  in  Pharmaceuticals.  Rev  Ind  Organ  55,  111–135 

(2019). https://doi.org/10.1007/s11151-019-09694-6 

  PricewaterhouseCoopers  (PwC)  study  for  EFPIA  on  the  economic  and  societal 

footprint of the pharmaceutical industry in Europe, June 2019 

  Biotech in Europe, Scaling Innovation, McKinsey, August 2019 

  Hu,  Y.,  Eynikel,  D.,  Boulet,  P.  et  al.  Supplementary  protection  certificates  and  their 
impact on access to medicines in Europe: case studies of sofosbuvir, trastuzumab and 
imatinib. J of Pharm Policy and Pract 13, 1 (2020).  

70 

 
 
 
ANNEX 4: COSTS AND BENEFITS ANALYSIS OF PROLONGED EXCLUSIVITY DUE TO SPC 

This annex provides qualitative and quantitative analyses of the costs and benefits of the SPC 
for medicinal products across different stakeholders. In this regard, the analyses below does 
not take the SPC in an isolated fashion, as its period of protection frequently runs in parallel 
with additional pharmaceutical-specific incentives such as the regulatory market protection. 

This  annex  starts  by  analysing  the  additional  sales  obtained  by  the  SCP  protection  and  the 
cost associated, on the one hand, with developing and launching a medicine, and on the other 
hand, with maintaining and enforcing the SPC. The results of that initial analysis of sales and 
costs  are  used  to  calculate  the  costs  and  benefits  of  the  SPC  for  distinct  stakeholders  (see 
summary  in  table  4.5  below).  Table  4.6  depicts  costs  due  to  fragmentation  and  suboptimal 
transparency based on analysis of literature and consultations to stakeholders. 

SPC holders’ sales and cost of developing and launching a medicine 

The SPC for medicinal products has a potential to stimulate new research if additional sales 
during  the  SPC  help  to  recover  R&D  investments  needed  to  develop  and  protect  new 
therapies.  At  the  same  time,  as  also  analysed  further  down,  those  additional  sales  have  an 
impact  on  the  public  healthcare  budgets  of  the  EU  Member  States  and  on  accessibility  for 
patients. 

4.1. Data 

The  analysis  below  relies  on  the  Alice  de  Pastors  database  to  identify  medicinal  products 
based  on  active  pharmaceutical  ingredients  (APIs)  which  are  SPC-protected.  The  analysis 
focuses on APIs for which their SPC application refers to centralised marketing authorizations 
granted between 1996 and 2014. It has been cross-checked with the data from the European 
Medicines Agency (EMA) and products withdrawn from the market has not been taken into 
account. Furthermore, SPCs that were refused or withdrawn were disregarded, and the sample 
is  limited  to  those  medicines  for  which  an  SPC  application  was  filed  in  at  least  five  EU 
Member States. The analysis then merges this data with the IQVIA Midas data linking API 
information.  IQVIA  Midas  data  (MAT/Q3/2019)  reports  information  on  the  quarterly  value 
and volume of sales from Q1 2008 to Q3 2019. It covers all members of European Union as 
of 2018, excluding Denmark, Cyprus and Malta, i.e. EU25 Member States.  

The final sample covers information on 232 APIs to which an SPC was applied for and their 
sales information in the EU25. We further aggretate quarterly sales to annual series and focus 
on sales in years from 2008 to 2018. 

4.2. Sales: Impact of the SPC on the sales of the protected medicine 
According to Kyle (2017) the average duration of effective protection term is  12.5 years,126 
i.e.  9  for  a  basic  patent  protection  and  3,5  for  SPC.  The  impact  of  the  SPC  Regulation, 
however,  has  to  be  analysed  along  with  other  pharmaceutical  incentives  (see  CE  study 
(2018)). Innovative medicines benefit from regulatory market protection (see Annex 10) that 
is granted for 10 years and in some cases 11 years starting from their marketing authorization 
date. This reduces the effective time of SPC to 2.5 years. 

126   These numbers do not match the formula (article 13 of Regulation 469/2009) used to calculate the duration 

of SPC. This is because in the formula the SPC duration cannot exceed 5 years. 

71 

 
 
                                                           
In order to estimate the impact of SPCs it is needed first to understand market sales dynamics. 
For  232  APIs  in  the  sample,127  figure  4.1  below  shows  the  evolution  of  natural  log  of  total 
originators’  sales  in  EU25.  Uptake  of  new  medicinal  product  (volume  units)  is  gradual  and 
reaches its peak 8-10 years after the launch. The same holds for sales. This pattern is in line 
with previous findings in the literature.128 The sales and uptake pattern reflect both sequential 
launches in UN Member States (MS) as well as increased uptake within a given MS. 

Figure 4.1. Evolution of total sales and units in EU25, by number of years since EMA 
marketing authorization (natural log, constant prices 2018) 

Note(s): Figure plots the natural log of total value of sales (left panel) and volume units (right 
panel) in the EU25 by number of years since EMA marketing authorization. Sales and units 
are  those  of  innovator  (marketing  authorization  holder) only. Vertical  orange line indicates 
the end of market exclusivity period. 

In  order  to  measure  the  impact  of  the  SPC  on  sales,  the  analysis  below  proceeds  first  to 
approximate  the  level  of  sales  growth  with  the  difference  of  natural  logs  and  estimate  the 
following regression: 

127   APIs with marketing authorization granted before 2000 are excluded in order to cover at least five executive 

years of sales under IP protection. 

128 See for example Figure 4 in Lichtenberg, F. R. (2019). How many life-years have new drugs saved? A three-
way fixed-effects analysis of 66 diseases in 27 countries, 2000–2013. International Health, 11(5), 403-416. 

72 

05101520Natural log of sales05101520Years since EMA approvalln(sales)95% CIFitted valuesend MESales05101520Natural log of units05101520Years since EMA approvallunits_095% CIFitted valuesend MEUnits 
 
 
 
 
                                                           
ln⁡(𝑠𝑎𝑙𝑒𝑠𝑖𝑦)⁡ − ln⁡(𝑠𝑎𝑙𝑒𝑠𝑖𝑦−1) = ∑ 𝛽𝑦𝑑𝑦

+𝛾𝑡+𝑚𝑖 

(4.1) 

𝑦=1

𝑌=15

where 𝑠𝑎𝑙𝑒𝑠𝑖𝑦 is a value of sales for API 𝑖 in sale year 𝑦 ∈ [1,15] calculated from the year of 
EMA marketing authorization and 𝑑𝑦 is a dummy variable indicating a year of sale, 𝛾𝑡 and 𝑚𝑖 
are calendar year and API fixed effects. 

Table  4.1  shows  estimated  annual  sales  growth  rate  since  the  grant  of  EMA  marketing 
authorization. In the first six years, the annual growth of sales is above 10%. After the sixth 
year,  the  growth  slows  down  and  comes  to  a  halt  in  the  tenth  year  that  marks  the  end  of 
regulatory market exclusivity. 

SPCs  can  extend  market  protection  beyond  the  regulatory  market  exclusivity  of  10  years. 
Using estimated growth rates it is calculated the level annual sales by setting the level of sales 
in the second year equal to 100 monetary units (see column 3 in Table 4.1). Cumulative level 
of sales are shown in column 4. During the first ten years the total level of sales amount to 2 
804 monetary units. For the additional 2.5 years, it is calculated the level of sales that could 
have been attained with and without SPC protection, i.e. under the generic competition. It is 
assumed that the level of annual sales during the SPC is the same as in the last year of market 
exclusivity  period  i.e.  396,  which  with  SPC  protection  this  yields  to  25  *  396  =  990.  Total 
sales then equal to 3 794. In this case, the total sales during SPC protection account for 26% 
of total sales with SPC protection.  It is further assumed that loss of exclusivity leads prices to 
a drop of 50%.129 Thus the level of sales during 2.5 years without SPC equals 990 * 0.5 = 445 
and  the  total  sales  without  SPC  to  3  299.  Thus  it  can  be  concluded  that  the  SPC  protection 
adds 13% to the turnover when compared to scenario without SPC protection.  

Table 4.1. Evolution of sales during the regulatory market protection (with reference to 
year 2) 

Years since 
EMA 
authorisation 
2 
3 
4 
5 
6 
7 
8 
9 
10 

Estimated 
Annual 
Growth Rate 

92% 
40% 
23% 
10% 
 5% 
 2% 
 3% 
 0% 

Annual 
Sales 
100 
192 
267 
329 
362 
379 
385 
395 
396 

Cumulative Sales 
(monetary units) 

   100 
   292 
   559 
   888 
1 250 
1 629 
2 014 
2 409 
2 804 

Notes:  DG  GROW  Chief  Economist  Team  (CET)’s  calculations.  Annual  growth  rates  for 
sale  years  2-10  are  estimated  using  regression  (4.1).  The  level  of  annual  sales  is 
approximated by putting a value of 100 for sales in second year. 

129   Copenhagen  Economics  (2018)  Study  on  the  economic  impact  of  SPC  pharmaceutical  incentives  and 

rewards in Europe 

73 

 
 
 
 
 
 
                                                           
4.3. Costs of developing and selling a medicine for the SPC holder 

This section is focused on the costs and distinguishes three cost categories: cost of medicine 
development, cost of protection and cost of producing and selling goods. Additional costs, not 
taken into account, such as linked to regulatory pharmacovigilance apply. 

4.3.1. Cost of development of a medicine 

On the cost site, recent estimates by Wouters et al. show that the average capitalised research 
and development investment to bring a new medicine to market is EUR 1 122 million (95% 
CI: EUR 876 million – EUR 1 376 million).130 DiMassi et al.131 obtain average estimates in a 
similar range.  Deloitte (2020)132 shows that the average cost  increased from  EUR 917 m  in 
2009 up to EUR 1 656 million in 2019. 

Based on these findings, it is assumed two values for medicine development costs: EUR 1 000 
million  (low)  and  EUR  1  600    million  (high).  Furthermore,  as  in  the  recent  evaluation  of 
orphan  and  paediatric  legislation,133  it  is  assumed  that  sales  in  the  EU  and  USA  cover 
medicine development cost and that the share of medicine development cost to be recuperated 
in Europe is 60%.134 This leaves us a cost value between EUR 600  million (low) and EUR 
960 million (high) to be covered with European sales. 

4.3.2. Cost of protection 

The  cost  of  patent  protection  in  EU27  countries  amounts  to  EUR  152  765  and  for  SPC 
protection  EUR  137  610  (both  excluding  agent  fees).135  In  case  of  litigation,  right  holders 
need to account for EUR 50 000 - 250 000 cost per case per single jurisdiction.136 This results 
in approximately EUR 500 000 spent on patent and SPC protection excluding agent fees. This 
cost  is  relatively small (0,08%)  when compared  to  the low range  estimate cost  of EUR 600 
million overall for bringing a new medicine to the market. Still this can be a prohibitive cost 
for SMEs or universities. 

130   Wouters, O. J., McKee, M., & Luyten, J. (2020). Estimated research and development investment needed to 

bring a new medicine to market, 2009-2018. Jama, 323(9), 844-853. 

131   DiMasi, J. A., Grabowski, H. G., & Hansen, R. W. (2016). Innovation in the pharmaceutical industry: new 

estimates of R&D costs. Journal of health economics, 47, 20-33. 

132   Deloitte  (2019)  Ten  years  on.  Measuring  the  return  from  pharmaceutical  innovation.  Retrieved  from 

https://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/measuring-return-from-
pharmaceutical-innovation.html. 

133   Joint  evaluation  of  Regulation  (EC)  No  1901/2006  of  the  European  Parliament  and  of  the  Council  of  12 
December 2006 on medicinal products for paediatric use and Regulation (EC) No 141/2000 of the European 
Parliament and of the Council of 16 December 1999 on orphan medicinal products. SWD(2020) 164 final   
https://ec.europa.eu/health/human-use/paediatric-medicines/evaluation_en  

134   This share could go further down if one considers growing sales in Asia. 
135   The  evaluation  calculates  the  administrative  cost  of  protection  as  EUR  4  745  (EP  application,  search  and 
grant fees) + EUR 8 185 (EP renewal fees for 5-10) + 139 853 (renewal fees for 11-20 due at EU 27 national 
patent  offices)  =  EUR  152  765.  Validation  and  translation  cost  not  included.  Fee  data  comes  from 
https://www.epo.org/law-practice/unitary/unitary-patent/cost.html. Annex 6 shows  the levels of application 
and renewal fees for SPC protection. SPC application fee and renewal fees for up to four years for current 
EU27 are added. 

136   Cremers,  K.,  Ernicke,  M.,  Gaessler,  F.,  Harhoff,  D.,  Helmers,  C.,  McDonagh,  L.,  &  Van  Zeebroeck,  N. 

(2017). Patent litigation in Europe. European Journal of Law and Economics, 44(1), 1-44. 

74 

 
 
                                                           
4.3.3. Cost of placing the medicine in the market 

The analysis below focuses on EBITDA (Earnings Before Interest, Taxes, Depreciation, and 
Amortization).  Research  and  development  costs  in  EBITDA  calculation  are  excluded,  as  in 
the  cost-benefit  analysis  it  is  going  to  be  evaluated  whether  the  EBITDA  (surplus  in  cash 
flow) suffices to cover drug development cost at product-level. 

Since product-level accounting data is not available, the analysis proxys product costs using 
information on pharmaceutical company overall cost structure. EBITDA is calculated as gross 
profit - cash layout cost, i.e. cost of goods sold plus selling and administrative cost. For large 
pharmaceutical companies, cash layout cost represents 45% of profits137 and it is assumed that 
it does not change with generic/biosimilar entry. Still, with expected price decline  of 50% it 
keeps  generic  business  of  big  pharma  still  profitable.138  This  is  further  demonstrated  by  the 
fact  that,  in  addition  to  developing  and  marketing  new  treatments,  many  of  innovating 
pharmaceutical  companies  own  generic  subsidiaries,  and  develop  biosimilar  products  in 
addition to small molecules (see Kyle study(2017)). 

4.3.4. Cost and sales balance 

Using information on sales and costs as discussed above, it is calculated how many medicinal 
products breaks even during 12.5 years with and without SPC protection. Break-even means 
that  research  and  development  costs  (as  in  4.3.1)  and  cost  of  protection  (as  in  4.3.2)  are 
covered with EBITDA (as in 4.3.3): 

𝑅&𝐷 + 𝐼𝑃⁡𝑝𝑟𝑜𝑡𝑒𝑐𝑡𝑖𝑜𝑛⁡ ≤ 𝐸𝐵𝐼𝑇𝐷𝐴  

For  232  APIs  in  the  analised  sample,  Figure  4.2  shows  the  distribution  of  EBTIDA.  The 
distribution is skewed, dovetailing the fact that financial returns to pharmaceutical R&D are 
skewed  in  general.139  Companies  file  SPC  protection  for  a  range  of  products  with  different 
profitability,  plausibly,  for  each  product  that  falls  within  the  scope  of  SPC  protection  (as 
discussed in Kyle study (2017)). As profit potential of the API increases, the value of an extra 
year of market  exclusivity increases as well. It is observed EUR 55 million (constant prices 
2018)  for  a  median  APIs  in  terms  of  profits,  EUR  160  million  for  average  API,  EUR  740 
million for quantile 95 and EUR 1 063 million for quantile 99. 

137   McKinsey  &  Company 

(January  2017).  Rethinking  pharma  productivity.  Retrieved 
https://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/rethinking-
pharma-productivity. 

from 

138 5 pp, representing 10% of the remaining turnover after genericisation. 
139 It is also confirmed in: J. W. Scannell, S. Hindsc and R. Evansc (2015) Financial Returns on R&D: Looking 
Back at History, Looking Forward to Adaptive Licensing, Reviews on Recent Clinical Trials, 2015, 10, 28-
43. 

75 

 
 
 
   
                                                           
Figure 4.2. Distribution of EBITDA and R&D costs (Source: DG GROW CET 
calculations) 

For  two  levels  of  medicine  development  cost,  Table  4.2  shows  the  share  of  SPC  protected 
APIs  that  breaks  even  with  and  without  SPC  protection.  12.5  years  of  effective  protection 
allows  32%  to  42%  of  SPC  protected  products  to  break  even.  Without  SPC  protection,  the 
share  of  SPC  protected  medicines  breaking  even  is  about  4  percentage  points  lower  when 
compared to situation with SPC protection. But if incentives were to work at the product-level 
and via patent and SPC protection only, 60% of APIs would have never been developed and 
brought to the market.  

Yet other mechanisms are at work. First, there could be cross subsidisation whereby EBITDA 
generated  by  high  profitable  APIs  helps  to  finance  development  of  other  (less  profitable) 
APIs.  Second,  product-specific  development  cost  can  differ.  Furthermore,  there  are  orphan 
incentives  that  help  to  develop  niche  product.  Finally,  public  subsidies  for  research  and 
development  lower  drug  development  cost,  helping  to  bring  less  profitable  products  to  the 
market. 

Table 4.2: Percentage of medical products that break even (Source: DG GROW CET 
calculations) 

Level of 
medicine 
development 
expenditure 
(low) 
(high) 

Without 
SPC  

38% 
28% 

With 
SPC 

42% 
32% 

76 

02,0004,0006,0008,000Million of EUR (constant 2018).05.1.15.2.25.3.35.4.45.5.55.6.65.7.75.8.85.9.951EBITDA without SPCEBITDA due to SPC 
  
 
 
 
 
As per the above calculations, SPC protection adds 13% to the turnover during the first 12.5 
years after market launch in the EU when compared to scenario without SPC protection. For 
232 APIs in the analised sample, this amounts to additional total cash flow of EUR 37 billion. 
This amount would suffice to cover the research and development costs of between 39 and 62 
new  treatments  (assuming  high  and  low  R&D  costs  respectively).  Yet,  as  profitability  is 
skewed, half of this impact comes from the Top 10% of best-selling APIs.  

4.3.5. Market contestability 

it 

the 

is  assumed 

that  each  of 

innovative  medicines  sees 

So  far, 
the  entry  of 
generics/biosimilars at the end of its protection period. Yet, this may not be the case. Table 
4.3  below  replicates  Table  13  in  the  Study  to  support  the  evaluation  of  the  EU  orphan 
regulation (Final Report July 2019).140 It shows the number of medicines with generic entry 
as a function of the average turnover. For medicines with an average turnover below EUR 10 
million only 13% see generic entry and 64% do so for sales over EUR 1 billion. This indicates 
that markets gets more contestable as turnover increases.  

Table 4.3 Level of generic entry (average turnover 2008-2016 in European Economic Area) 

Non-orphan 
medicines 

With generic entry 

Share 

< EUR 10 
m 

132 

17 

13% 

EUR10-
100m 

81 

24 

30% 

EUR100m-
1b 

>EUR 
1b 

All 

76 

53 

342 

30 

39% 

34 

64% 

105 

31% 

Note:  This  table  replicates  Table  13  from  the  Study  to  support  the  evaluation  of  the  EU 
orphan regulation (Final Report July 2019). 

As part of the analysis, it is checked whether this pattern holds for SPC-protected products. 
The sample is constrained to those medicines that lost exclusivity before 2018, which leaves 
the calculation based on a sample of 69 APIs:  22 biologics and 47 non-biologics. Since the 
analysis  is  at  the  EU25  level,  for  each  API  the  analysis  takes  the  median  value  (across 
countries)  of  protection  expiry  year  reported  in  IQVIA  Midas  as  an  indication  for  EU25 
protection expiry.  

Table 4.4 reports the results on market contestability. Out of 69 medicines, 48 (70%) saw the 
entry of generics/biosimilars. Taking turnover in the last year of regulatory market exclusivity 
as an indication of profitability, it can be seen that the level of turnover is higher for APIs that 
saw  the  entry  (mean  =  EUR  372  million,  standard  deviation=  EUR  450  million)  when 
compared to no entry (mean = EUR 120 m, standard deviation = EUR 210 m). This is in line 
with the findings presented in table 4.3 that pharmaceutical market gets more contestable as 
profits increase. 

140 https://ec.europa.eu/health/sites/health/files/files/paediatrics/docs/orphan-regulation_study_final-report_en.pdf  

77 

 
 
 
 
 
 
                                                           
Table 4.4: Generic and biosimilar entry (Source: DG GROW CET calculations based on 
IQVIA Midas data) 

Not Biologic 

Biologic  

Total 

No Entry 

Entry 

Total 

7 

40 

47 

14 

8 

22 

21 

48 

69 

Table  4.3  indicates  that  the  entry  rate  of  generics  is  higher  for  non-biologicals  than  for 
biologicals.  In other words, markets  for biologics are less contestable than markets  for non-
biologics. This is not surprising as entry barriers for biosimilar are much higher than that for 
generic  drugs.  The  first  difference  comes  from  the  drug  development  costs.  Development 
costs of biosimilar products amount to a few hundreds of million EUR and are more than 10 
times  higher  than  development  costs  of  generic  products  i.e.  5  to  10  million  EUR. 
Furthermore,  timing  of  market  entry  also  differs  and  it  takes  5  to  9  years  to  develop  a 
biosimilar treatment compared to 6 months to 2 years for generics.141 Finally yet importantly, 
public procurement regulations and switching costs may inhibit entry.142 

The  turnover  for  generic  and  biological  medicines  that  saw  market  entry  can  be  observed. 
Indeed,  biosimilar  enters  into  markets  with  higher  turnover  (mean  =  EUR  683  million, 
standard deviation  = EUR 593 million) than generic (mean = EUR 310 million, SD = EUR 
397 million). 

Today, markets for biologics are less contestable than for generics. In the futre this situation  
may  change  as  development  cost  may  go  down  and  regulations  are  adjusted  to  promote 
uptakes put forward in EU Pharmaceutical strategy. 

4.4. Cost of the SPC for public authorities 

The  Regulation  on  SPCs  for  medicinal  products  generates  two  types  of  costs  for  the  public 
authorities: (i) administrative costs of granting SPC titles and (ii) costs to healthcare budget 
due  to  monopoly  pricing  during  the  SPC  protection  period  that  would  exceed  any  other 
protection (e.g. regulatory market exclusivity). 

As  explained  in  Section  5.2.2,  National  Patent  Offices  administer  SPC  and  national  courts 
deal with enforcement aspects. For large patent offices, SPC examination adds little work to 
patent  examiners  (see  Annex  7  for  details).  Small  offices,  however,  seem  not  to  have 
sufficient administrative capacity to conduct substantive examination of the SPC applications. 

As  concerns  impact  on  healthcare  budgets,  new  medicinal  products  are  in  general  more 
expensive.  The  cost  to  authorities  and  society  of  SPC  protection  is  equal  to  the  additional 
revenues pharmaceutical companies receive during the additional 2.5 years of SPC protection 
(if  it  is  considered  that  regulatory  market  protection  is  only  10  years,  and  not  11  years). 

141    See Annex 4 in Impact Assessment Accompanying the document Proposal for a Regulation of the European 
Parliament  and  of  the  Council  amending  Regulation  (EC)  No  469/2009  concerning  the  supplementary 
protection certificate for medicinal products SWD(2018) 240 final. 

142   c.f. Morton, F. M. S., Stern, A. D., & Stern, S. (2018). The impact of the entry of biosimilars: Evidence from 

Europe. Review of Industrial Organization, 53(1), 173-210. 

78 

 
 
 
 
                                                           
Governments  are  thus  spending  13%  more  on  SPC  protected  products  when  compared  to 
situation without SPC. 

4.5. Impact on patients 

By generating new sources of revenues, SPCs contribute to the development of new medicinal 
products. Recent evidence shows that new medicine launches have reduced years of life lost 
(YLL)  before  three  different  ages  (85,  70,  and  55)  from  34  up  to  42%.143  Furthermore,  the 
introduction of a new  cancer medicine in  a country  was associated with  a decline in  cancer 
mortality  of  8%  for  men  and  9%  in  women.  Improved  quality  of  life  was  also  reported  in 
respect of chronic diseases.144 

The  downside,  however,  could  be  that  extended  protection  due  to  SPC  protection  delay 
patient  access.  Governments  are  the  ultimate  buyers  of  innovative  pharmaceuticals.  Given 
limited financial resources, they may not afford serving all patients in needs. Figure 4.1 shows 
that the uptake of new treatments reaches its peak 8 to10 years from the market launch, i.e. at 
the end of regulatory market exclusivity period. 

Taking  48  APIs  in  the  analised  sample  for  which  there  was  a  generic/biosimilar  entry  (see 
Section 4.4 in this Annex), it is analysed the volume growth rate of total units sold in the three 
years  after  entry.  Total  units  sold  equal  units  sold  by  innovator  plus  units  sold  by 
generic/biosimilar. The analsyis relies on standard units reported in IQVIA Midas data. 

Figure  4.4  shows  the  results  of  our  analyses.  Median  annual  volume  growth  post-entry  is 
slightly above 0.3%. This indicates that in half of cases the total volume is increasing and in 
the other half decreasing. The analysis further differentiates between APIs with high and low 
gross  sales.  As  a  cut-off  point,  the  analysis  takes  average  turnover  in  the  last  year  of 
regulatory  market  exclusivity  (EUR  233  m).  For  23  APIs  with  high  gross  sales,  the  market 
volume  keeps  growing  annually  at  an  average  rate  of  3%  after  the  generic/biosimilar  entry. 
Calculations show that in these markets 7.5% more patients are treated during the period of 
2.5 years after the entry when compared to the end of market regulatory exclusivity. This is 
not the case for the remaining 23 less profitable APIs.  

143   Lichtenberg, F. R. (2019). How many life-years have new drugs saved? A three-way fixed-effects analysis 

of 66 diseases in 27 countries, 2000–2013. International Health, 11(5), 403-416. 

144   OECD Health Policy Studies (2018) Pharmaceutical Innovation and Access to Medicines.  

79 

 
 
 
                                                           
Figure 4.3. Volume growth rates post entry by value of gross sales. 

Notes:  Figure  plots  annual  growth  rates  for  the  first  three  years  post  entry.  Total  volumes 
represents  the  sum  of  innovators  volumes  and  that  of  generic.  The  first  bar  includes  all  48 
APIs  that  saw  generics  or  biosimilarsentry,  the  second  (third)  APIs  with  low  (high)  gross 
sales in the last year of regulatory market exclusivity. The cut-off point is given by EUR 233 
million. The horizontal line in the box represents the median value for each group. The upper 
(bottom) hinge of the box indicates the value for 75th (25th) percentile.  

80 

-.2-.10.1.2Volume growth rates after entryAll APIsAPIs with low salesAPIs with high salesexcludes outside values 
 
 
 
 
 
Table 4.5: Summary of Cost Benefit Analysis 

Stakeholders 

Cost (in EUR) 

Benefits (in EUR) 

Result 

Innovators 
(SPC users) 

Patent & SPC Protection : 
Patent (EP): EUR 0.15 m 
SPC (4y):    EUR 0.14 m 
Attorney:     (NDA) 
Litigation (one case): 
EUR 0.05- 0.2 m 
SPC search & monitoring:             
(NDA) 

The profitability is 
skewed and half of 
this additional cash 
flow is due to the Top 
10% of APIs of our 
sample (in terms of 
sales). 

Additional cash flow 
generated due to the 
SPC would suffice to 
cover the research and 
development costs of 
between 39 and 62 
new treatments. 

Treatment foregone 
concerns high 
profitable APIs only. 

SPC protection adds 13% to the 
turnover during the first 12.5 
years after market launch of a 
medicine in the EU. For 232 
APIs in the sample this amount 
to a total of EUR 37 051 m. 

The cash flow increases as 
market potential (turnover) 
increases: 
Median:   EUR      55 m 
Average:  EUR    160 m 
Top 5% selling medicines in our 
sample:   EUR    740 m 
Top 1%:  EUR  1 063 m 
Introduction of new products 
creates new markets for generic 
and biosimilar products. 

Litigation (cost per case): 
EUR 0.1- 0.5 m  
Attorney fees for managing 
patents and SPC applications:     
(NDA) 

The new medicine launches 
have reduced years of life lost 
(YLL) before three different 
ages (85, 70, and 55) from 34% 
up to 42%.Furthermore, the 
introduction of a new cancer 
medicine in a country was 
associated with a decline in 
cancer mortality of 8% for men 
and 9% for women.145 
Improved quality of life in 
respect of chronic diseases.146 

Treatment foregone seems to be 
is limited to high profitable 
APIs only. For 25 high 
profitable APIs that saw 
generics entry, 7.6% more 
patients could be treated during 
2.5 years if there was no SPC 
protection.  

Generics/biosimilar  Litigation (one case): 

Legal profession 

Public Authorities 
and Society 

EUR 0.05- 0.2 m  
SPC search & monitoring: 
(NDA) 
Familiarisation with SPC 
rules and legal system, 
including cross-border 

Patent offices 
SPC application account for 
> 10% of the patent 
examination workload in 
small MS and < 1% in 
largest MS. 

Public health budgets 
SPC protection adds 13% to 
the total spending on SPC 
protected pharmaceuticals 
during the first 12.5 years 
after market launch in the 
EU. 

Notes: See Annex 4 for details on the analysis of the impact on innovators (SPC holder) as well as calculations on treatment 
foregone. Additional sales due to SPC are in relation to counterfactual scenario of having no-SPC protection. See Annex 7 
for the workload of national patent offices. 

145 Dubois, P., & Kyle, M. (2016). The Effects of Pharmaceutical Innovation on Cancer Mortality Rates. 
146 OECD Health Policy Studies (2018) Pharmaceutical Innovation and Access to Medicines.  

81 

 
 
 
 
 
 
 
 
 
 
                                                           
Fragmentation & Transparency 

Table 4.6: Main costs due to fragmentation and suboptimal transparency based on 
analysis of literature and consultations to stakeholders 

Stakeholder 

SPC holders 
(originators) 

Companies 
dealing with 
generic 
products 

Consumers 
and patients, 
and health 
authorities 

Qualitative assessment of cost 

-  Redundant  granting  procedures  resulting  in  legal  uncertainty  and 

additional red tape, and administrative and legal counselling costs.  

-  Redundant  litigation  and  abundant  national  case  law,  increasing  legal 

uncertainty, cost and red tape. 

-  Difficult national monitoring of the use of the SPC manufacturing waiver 

by generics and biosimilars makers. 

-  Uncertainty about obtention of the SPC paediatric extension. 
Those costs could be significant for SMEs, which count with less financial 
resources,  reduced  in-house  specialists  and  limited  multi-geographical 
presence. Licensing can be more complex to handle. 

Innovative  SMEs  play  a  significant  role  in  the  pharmaceutical  sector 
(already in 2009 the Commission’s pharmaceutical sector inquiry reported 
that  approximately  25%  of  molecules  in  clinical  development  were 
acquired  from  other  companies,  including  SMEs.  More  recently,  EMA 
statistics  show  that  44%  (15  out  of  34)  of  priority-medicine  applications 
granted in 2017 came from SMEs). 

-  Expensive search and monitoring of SPCs in force/or expired in multiple 

EU Member States.  

-  Monitoring  difficulties  are  exacerbated  in  the  absence  of  proper 

transparency (different publication practices across Member States). 

-  Redundant  and  cross-border  litigation  and  abundant  national  case  law 

induce increasing legal uncertainty, cost and red tape. 

-  Different Bolar scope across EU Member States. 
-  Complex use of the SPC manufacturing waiver if cross-border activities 

(e.g. logistics and outsourcing of production) are necessary. 

Those challenges are especially negative for SMEs. 

-  Limit the availability of innovative medicines 

Uncertainty  and  high  cost  of  filing  patent  and  SPC  applications  in 
multiple EU Member States can lead SPC holders to neglect protection in 
less  attractive  EU  Member  States’  markets  and  therefore  to  postpone 
launches  of  their  innovative  products  in  those  markets.  A  unitary  SPC 
could help overcome this issue. 

-  Adverse impact on the accessibility to medicines 

Fragmentation  and  lack  of  transparency  on  the  status  and  scope  of  SPC 
protection across EU Member States cause delays in the entry of generics 
in the EU, especially in less profitable EU Member States. 

-  Could  hamper  joint  public  procurement  initiatives  by  a  group  of  EU 
Member States (e.g. where the SPC scope or duration is not the same in 
all of these Member States). 

82 

 
 
National 
patent offices 
and national 
courts 

-  The  increasing  complexity  of  the  state-of-the-art  and  the  lack  of 
transparency  make  it  more  difficult  for  national  patent  offices  and 
national courts with fewer resources to deal with examination of SPCs.  

83 

 
 
ANNEX 5: EVOLUTION OF THE APPROVAL OF NEW ACTIVE INGREDIENTS 

Taking  the  annual  approvals  of  “novel  drugs”147  by  the  Center  for  Drug  Evaluation  and 
Research of the US Federal Drug Administration as a proxy148 for the generation of “new 
active ingredients” at world level, it can be observed the following in the figures 5.1 and 
5.2 below149,150:  

-  From 1975 to 1994:  a moderate positive trend in the approvals of novel medicines, 

from 15 approved in 1975 up to around 20 in 1994 with a peak of 30 in 1991. 

Within this period, in  1984, the USA introduced  the patent term  extensions  (the US 
version  of  the  EU’s  SPCs)  along  with  other  measures151  through  the  US  Medicine 
Price Competition and Patent Restoration Act (Hatch-Waxman Act). South Korea and 
Japan introduced patent term extensions in 1987 and 1988 respectively. 

-  From  1994  to  1999:  a  surge  in  the  approvals  of  novel  medicines  is  observed,  from 

around 20 in 1994 to over 50 in 1999. 

Given the timing necessary to develop a new medicine, the measures introduced in the 
US,  Japan  and  South  Korea  in  the  previous  decade  (described  above)  likely 
contributed to the highly positive results in term of new medicines approvals seen in 
this  decade.  In  addition,  it  was  at  the  beginning  of  this  decade  that  the  Commission 
proposed legislation to introduce the SPC in the EU. 

Further,  this  spike  in  the  approvals  in  late  90s  has  to  be  seen  in  the  context  of  the 
adoption  of  the  Prescription  Drug  User  Fee  Act  (PDUFA)  in  1992.152  PDUFA 
introduced measures for the FDA to eliminate the backlog of un-reviewed applications 
within  24  months  of  the  establishment  of  an  user  fee  program.  In  2002,  the 
US Government  Accountability  Office reported  that  PDUFA  funds  allowed  the  FDA 
to increase the number of new drug reviewers by 77% in the first eight years of the act. 

147  According to the annual reporting documentation of the Center for Drug Evaluation and Research of US 
Federal Drug Administration (FDA), “novel drugs” are often innovative products that serve previously 
unmet medical needs or otherwise significantly help to advance patient treatments. The active ingredient 
or ingredients in a novel drug have never before been approved in the United States. These “novel drugs” 
are approved either as new molecular entities (NMEs) under New Drug Applications (NDAs), or as new 
therapeutic biologics under Biologics License Applications (BLAs)). In some cases an NME may have 
actions  similar  to  earlier  drugs  and  may  not  necessarily  offer  unique  clinical  advantages  over  existing 
therapies. (https://www.fda.gov/media/134493/download  ). 

148  The use of this proxy can be found in several studies. See pages 203 and 219 of CE study. Registrations 
in the EU can be done through decentralised procedures involving the national medicine agencies of EU 
Member States, and the centralised procedure with the scientific assessment of the European Medicines 
Agency. 

149  Munos B. (2009), Lessons from 60 years of pharmaceutical innovation. Nature Reviews Drug Discovery, 

8(12), 959. 

150   https://www.nature.com/articles/s41587-019-0021-6  
151  e.g. a  5-year period of data  exclusivity, and the establishment of the Orange Book  where the US FDA 

publishes the patents which originators believe cover their approved medicines. 

152   Mary  K.  Olson,  PDUFA  and  Initial  U.S.  Drug  Launches,  15  Mich.  Telecomm.  Tech.  L.  Rev.  393 

(2009). 

84 

 
 
 
 
                                                           
-  From 1999 to 2010 (Figures 5.1 and 5.2 below): a significant decline of approvals of 

novel medicines back to the levels of 1994. 

In  2008  the  European  Commission  launched  a  pharmaceutical  sector  inquiry  that 
concerned,  inter  alia,  obstacles  for  innovative  products,  i.e.  obstacles  to  competition 
between originator companies. 

-  From 2010 to 2019 (Figure 5.2): a new surge in approvals to a historic record of 59 
new  novel  medicines,  including  20  biologics,  in  2018.  Year  2019  concluded  with  a 
strong output of 48 novel medicine approvals, with 21 of them (44%) approved to treat 
orphan  diseases.  Medicines  with  orphan  indications  enjoy  specific  incentives  under 
provided by the Orphan Regulation.  

Specifically for biologicals, the figures below show a positive trend on the generation of 
new active ingredients since the emergence of biotechnology in the 1980s. 

Figure 5.1: US FDA approvals of new molecular entities (1950 – 2008) (Source: FDA 
databases) 

Figure 5.2: US FDA approvals of new molecular entities  (1988 – 2018) (Source: FDA 
databases) 

85 

 
 
 
 
 
 
 
ANNEX 6: LEVEL OF SPC APPLICATION AND RENEWAL FEES 

Level of SPC application and renewal fees as of April 2016 (in EUR) 

  Application 

Fees 

363 
200  
256  
100  
185  
300  
403  
105  
496  
450  
520  
305  
250  
398  
756  
95  
404  
115  
50  
120  
116  
544  
126  
418  
500  
528  
420  
166  
50  
756  
310  
8,384  
8,689  

AT 
BE 
BG 
CY 
CZ 
DE 
DK 
EE 
ES 
FI 
FR 
UK 
EL 
HR 
HU 
IE 
IT 
LT 
LU 
LV 
MT 
NL 
PL 
PT 
RO 
SE 
SI 
SK 
Min 
Max 
Average 
Total EU27 
Total EU28 

1st year 
 2,611 
650  
 1,023  
700  
962  
 2,650  
685  
630  
812  
900  
940  
732  
 1,200  
 1,593  
943  
468  
 1,011  
347  
410  
550  
245  
 1,600  
 1,375  
731  
 1,000  
 1,056  
 1,702  
996  
245  
 2,650  
 1,019  
27,789  
28,521  

Source: National patent offices’ websites. 

5th year 

 4,282  
850  
 2,045  
860  
 1,258  
 4,120  
685  
630  
991  
900  
940  
 1,220  
 1,800  
 3,186  
 1,695  
468  
 1,011  
347  
450  
550  
291  
 2,400  
 1,375  
941  
 1,400  
 1,056  
 3,404  
 2,324  
291  
 4,282  
 1,481  
40,259  
41,479  

SPC Renewal fees 
3rd year 

2nd year 

4th  year 

 3,029  
700  
 1,278  
740  
 1,036  
 2,940  
685  
630  
853  
900  
940  
854  
 1,300  
 1,991  
 1,130  
468  
 1,011  
347  
420  
550  
256  
 1,800  
 1,375  
784  
 1,100  
 1,056  
 2,102  
 1,328  
256  
 3,029  
 1,129  
30,749  
31,603  

 3,448  
750  
 1,534  
780  
 1,110  
 3,290  
685  
630  
896  
900  
940  
976  
 1,400  
 2,389  
 1,321  
468  
 1,011  
347  
430  
550  
268  
 2,000  
 1,375  
836  
 1,200  
 1,056  
 2,504  
 1,660  
268  
 3,448  
 1,241  
33,777  
34,754  

 3,864  
800  
 1,790  
820  
 1,184  
 3,650  
685  
630  
942  
900  
940  
 1,098  
 1,500  
 2,788  
 1,508  
468  
 1,011  
347  
440  
550  
280  
 2,200  
 1,375  
888  
 1,300  
 1,056  
 3,004  
 1,992  
280  
 3,864  
 1,357  
36,911  
38,009  

86 

 
 
 
 
ANNEX 7: SPC WORKLOAD AT NATIONAL PATENT OFFICES 

SPC workload at national patent offices 

1995 

2000 

2005 

2010 

2015 

2018 

(A) 
7 

(B) 
0.3% 

5 

0.5% 

(A) 
31 

28 

(B) 
1.3% 

3.3% 

(A) 
40 

39 

(B) 
1.6% 

5.9% 

16 

8 

0.0% 

0.5% 

8 

30 

21 

0.2% 

0.2% 

0.1% 

30 

21 

29 

14 

29 

28 

30 

0.0% 

1.1% 

0.9% 

0.5% 

0.2% 

0.1% 

8.1% 

8 

11 

2.2% 

0.1% 

27 

24 

5.8% 

0.3% 

8 

7.1% 

25 

12.4% 

17 

0.6% 

30 

1.0% 

19 

11.5% 

18 

0.4% 

31 

0.6% 

11 

18 

47 

50 

6 

43 

28 

44 

41 

30 

19 

31 

41 

8 

40 

8 

43 

15 

29 

37 

13 

11 

14.7% 

2.1% 

0.1% 

2.7% 

13.6% 

1.3% 

1.3% 

0.3% 

0.1% 

5.9% 

1.6% 

7.1% 

0.4% 

6.5% 

31.3% 

4.5% 

1.5% 

0.2% 

12.4% 

1.2% 

3.4% 

4.2% 

(A) 
43 

38 

9 

19 

18 

41 

35 

7 

38 

33 

47 

48 

33 

15 

35 

41 

11 

35 

12 

39 

16 

36 

15 

39 

15 

17 

(B) 
1.6% 

4.8% 

3.3% 

70.4% 

1.8% 

0.1% 

1.9% 

6.7% 

1.0% 

1.8% 

0.3% 

0.2% 

4.2% 

2.1% 

9.1% 

0.4% 

8.8% 

25.9% 

6.1% 

1.4% 

0.5% 

6.2% 

1.0% 

1.5% 

3.2% 

5.7% 

(A) 
38 

40 

24 

8 

27 

45 

40 

29 

38 

37 

46 

45 

32 

20 

38 

41 

45 

28 

26 

17 

3 

40 

27 

40 

30 

40 

33 

30 

(B) 
1.5% 

3.5% 

7.6% 

53.3% 

2.8% 

0.1% 

2.3% 

44.6% 

1.2% 

2.5% 

0.3% 

0.2% 

5.3% 

9.7% 

5.7% 

16.8% 

0.5% 

(A) 
50 

46 

43 

33 

52 

65 

41 

34 

61 

42 

59 

46 

52 

23 

47 

46 

63 

19.0% 

n.a. 

9.5% 

11.0% 

21.4% 

1.6% 

0.6% 

4.1% 

2.8% 

1.6% 

10.5% 

36 

32 

18 

n.a. 

58 

53 

45 

46 

36 

41 

(B) 
2.2% 

4.0% 

17.8% 

89.2% 

6.6% 

0.1% 

2.7% 

53.1% 

3.5% 

2.7% 

0.4% 

0.2% 

8.2% 

14.5% 

9.6% 

29.9% 

0.6% 

8.4% 

22.5% 

1.3% 

7.1% 

3.8% 

2.0% 

11.5% 

15.1% 

AT 

BE 

BG 

CY 

CZ 

DE 

DK 

EE 

ES 

FI 

FR 

GB 

GR 

HR 

HU 

IE 

IT 

LT 

LU 

LV 

MT 

NL 

PL 

PT 

RO 

SE 

SI 

SK 

Note: Column (A) shows the number of SPC applications and column (B) the share of SPC application in 
the total patent workload i.e. number of patent applications (direct and PCT national phase entries) plus SPC 
applications. 

Source:  Numbers  of  SPC  applications  come  from  Alice  de  Pastors  database  for  all  selected  years  except 
2018.  For  2018  information  comes  from  the  EPO  Document  No.  EPO  CA/36/19  –  ‘Exchange  on 
information on current trends in activity at the NPOs and at the EPO’. The numbers of patent applications 
(direct and PCT national phase entries) are from WIPO’s IP Statistics Data Center. 

87 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 8: THE QUESTIONS PER EACH OF THE FIVE EVALUATION CRITERIA 

Questions related to the effectiveness criterion: 

  Question 1: Has worldwide innovation in new active ingredients increased since the 

introduction of the SPC system? 

  Question  2:  Was  the  observed  increase  in  investment  in  research  on  new  active 

ingredients induced by the SPC system? 

  Question 3: Have more pharmaceutical and PPP investments and jobs in R&D been 
brought to the EU since the introduction of the SPC? How have those investments 
developed in other trading partners of the EU? 

  Question  4:  To  what  extent  did  the  SPC  Regulations  increase  investments  in 

pharmaceutical and PPP innovation in the EU?  

  Question  5:  Are  the  SPC  grant,  enforcement  and  publication  procedures/outcomes 

uniform across the EU?  

Questions related to the efficiency criterion: 

  Question  6:  What  is  the  impact  of  the  SPC  on  the  availability,  accessibility  and 

affordability of medicines?  

  Question 7: Is the maximum duration of the SPC appropriate ? 

  Question  8:  What  are  the  costs  to  stakeholders  of  the  fragmentation  of  the  SPC 

system? 

Questions related to the relevance criterion: 

  Question  9:  How  well  do  the  original  objectives  of  the  SPC  Regulations  still 
correspond to the needs within the EU (i.e. are the objectives of more innovation in 
new products, more innovation activities in the EU, prevention of delocalisation, and 
promotion of a homogenous SPC system in the EU still relevant)? 

  Question  10:  To  what  extent  have  the  original  objectives  proven  to  have  been 

appropriate for the SPC Regulations? 

  Question  11:  How  well  adapted  are  the  SPC  Regulations  to  new  technological 

developments? 

  Question 12: How well is the SPC Regulation adapted to public health crises, such 

as the COVID-19 pandemic, and how it can contribute to the EU recovery? 

Questions related to the coherence criterion: 

  Question  13:  Are  the  SPC  Regulations  internally  coherent  in  their  respective 

provisions? 

  Question  14:  To  what  extent  is  the  SPC  framework  externally  coherent  with  EU 
legislation  on  regulatory  pharmaceutical  legislation,  patent  law,  the  unitary  patent 
package and the Bolar exemption? Are there any gaps, overlaps or inconsistencies? 

  Question 15: To what extent is the SPC coherent with other EU pharmaceutical and 

PPP-specific incentives for innovation?  

  Question  16:  To  what  extent  are  the  SPC  Regulations  coherent  with  international 

law/obligations? 

88 

 
Question related to the EU added value criterion: 

  Question  17:  What  is  the  additional  value  resulting  from  the  SPC  Regulations, 
compared to what would reasonably have been expected from Member States acting 
at national level? 

89 

 
 
 
ANNEX  9:  SWOT  TABLES:  THE  EU  AS  A  LOCATION  OF  R&D  INVESTMENT  IN  THE 

PHARMACEUTICAL AND PPPS SECTORS 

The following SWOT (strengths/weaknesses/opportunities/threats) tables have been drawn 
using information extracted from the studies and consultations discussed in Section 5.1.2. 

SWOT table: the EU as a location of R&D investment in the pharmaceutical sector 

Weaknesses 
- Increasing private financing gap versus the US 
one  (pension  funds,  and  venture  capital), 
especially in late-stage. The average US initial 
public offering (IPO) is three times larger than 
on European markets. 
- Fragmentation of the Single Market for SPC. 
- Limitations  of  certain  labour  profiles  for 
biotech  and  related  start-ups  (e.g.  managers) 
and  difficulties  to  attract/retain  that  missing 
talent.  Higher  risk-aversion  comparing  to  the 
US. 
- Publications not always translated into patents 
(the  USA  and  China  perform  better)  and 
medicines  (in  biotech.  in  2017-2018.  the  US 
biotech  industry  registered  6  times  more 
medicines  at  the  US  FDA  than  EU  biotech). 
The  USA  originates  70%  of  the  publications 
with commercial potential. 

Threats 
- China  to  overtake  the  EU  as  the  2nd  largest 
pharma market. Korea and India are massively 
investing in the pharmaceutical industry.  
- US  private  funds  purchase  EU  startups  and 
delocalise their activities. 
- The  UK’s  withdrawal  from  the  EU  after 
having  built  a  critical  mass  with  35%  of  all 
new biotech in Europe. 
- Less  trials  in  Europe  (32%)  on  cell  and  gene 
therapy than the USA (50%). 

Strengths 

- Strong IP. 
- High level of labour skills. 
- World class science. 
- Strong  infrastructure.  leading  in  number  of 
trials.  
- 32%  of  the  top  50  life  science  universities 
were based in EU in 2019. 
- EU is leader in publications.  

a 

to 

of 

funds 

increase 

“European  Biomedical 
and  Development 

Opportunities 
- Internal  market:  potential  size  of  capital 
markets,  unitary  patent/SPC,  EU  public 
funding  (e.g.  Horizon  2020),  Commission 
start-up  initiatives  and  European  Scale-Up 
Action for Risk Capital (ESCALAR) to enable 
venture  capital 
their 
investment capacity. 
- Creation 
Advanced  Research 
Authority”. 
- The  COVID-19  pandemic  exposed 
the 
increasing dependency of the EU to imports of 
active  pharmaceutical  ingredients  from  Asia, 
especially for generics . 
- EU  biotechs  in  2018  were  stronger  than  the 
US biotechs in “early innovation”. 
- Increasing venture capital, especially for early 
stage venture rounds. 
- Promising biotech pipeline: European biotechs 
do better on emerging modalities, driving 32% 
of all phase 3s and registrations. 

SWOT table: the EU as a location of R&D investment in the PPPs sector 

Strengths 

- Strong IP protection. 
- High  level  of  labour  skills  and  world  class 

Weaknesses 
- Strict regulatory environment. 
- Fragmentation of the Single Market for SPC. 

90 

 
 
 
 
 
science. 
- Major  PPP  companies  are  headquartered  in 
the EU. 
- Leading export output. 

Opportunities 

- New R&D techniques. 
- Still  growing  market  in  the  EU-12  and  need 
for more added-value products in EU-12. 

- Mature nature of EU-15 markets.  
- Harsh European regulatory environment. 

in 

Threats 
- Asia has overtaken Europe as the first market 
for  PPPs 
the  world.  Attraction  of 
developing markets driven by volume growth.  
- Decline  of  the  number  of  active  ingredients 
developed for the European market. 
- Shift in investment to seeds & traits R&D for 
non-European markets. 
- Non-acceptance of genetically modified (GM) 
in 
seeds 
agrochemical  R&D  is  focusing  in  the  GM 
seed sector. 

the  EU  while 

investment 

in 

91 

 
 
 
 
ANNEX 10: PHARMACEUTICAL INCENTIVES IN THE EU 

The graphics below are obtained from the CE study of 2018, which further explains them. 

92 

 
 
 
 
 
 
93 

 
 
 
 
 
ANNEX 11: EU INDUSTRIAL ECOSYSTEMS AND  EU RECOVERY 

The  Commission  Communication  on  A  new  industrial  strategy  for  Europe  (COM(2020) 
102)  states that “ecosystems encompass all players operating in  a value chain: from the 
smallest start-ups to the largest companies, from  academia to research, service providers 
to suppliers”.  

The Commission has currently identified 14 preliminary ecosystems, which selection and 
definition  was  done  in  the  context  of  the  preparatory  work  for  the  Recovery  Plan 
Communication  “Europe's  moment:  Repair  and  Prepare  for  the  Next  Generation”.  The 
figure below shows the list of ecosystems and their indicative composition. 

The EU SPC system works directly with two of the ecosystems, Health and Agri-food. 

94