Source: EURLEX
Language: en
Format: md

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| CALL FOR EVIDENCE  FOR AN IMPACT ASSESSMENT | |
| This document aims to inform the public and stakeholders on the Commission's future legislative work so they can provide feedback on the Commission's understanding of the problem and possible solutions, and give us any relevant information that they may have, including on possible impacts of the different options. | |
| Title of the initiative | Medicinal & plant protection products – single procedure for the granting of SPCs |
| Lead DG (responsible unit) | GROW C4 – Intangible economy |
| Likely type of initiative | Legislative proposal(s) |
| Indicative timetable | Adoption of the proposal(s) by the Commission by Q4 2022 |
| Additional information | Dedicated website of the European Commission-DG GROW on SPCs |
| This document is for information purposes only. It does not prejudge the final decision of the Commission on whether this initiative will be pursued or on its final content. All elements of the initiative described, including its timing, are subject to change. | |

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| A. Political context, problem definition and subsidiarity check |
| Political context |
| As underlined in the Commission’s intellectual property action plan [1](#footnote3)  (‘the IP action plan’), intangible assets are the cornerstones of today’s economy. An effective intellectual property (‘IP’) framework needs to strike a balance between promoting innovation by protecting IP on the one hand and not blocking companies’ access to IP and to the single market on the other. Of all the types of IP, patents are the most powerful. Patents are key to supporting the EU in its work to build a European health union and in related initiatives such as the new European Health Emergency Preparedness and Response Authority (HERA), and the pharmaceutical strategy for Europe. Patents affect investment decisions across all industrial ecosystems, such as decisions on the roll-out of green and digital technologies. They are therefore one of the most critical tools in the EU’s industrial policy toolkit and will also play a critical role in the upcoming European Chips Act. Despite the strategic importance of patents, EU patent law is fairly limited and fragmented. EU patent law therefore needs to be recalibrated to boost the resilience of our patent system and support the EU’s twin transition (digital and green). The imminent launch of the unitary patent system also makes this the perfect time to enhance EU patent law and facilitate access to critical technologies. The Commission will therefore develop a coherent and balanced package comprising three patent-related proposals. These proposals, announced in the IP action plan, will cover supplementary protection certificates, compulsory licensing and standard-essential patents (‘SEPs’). They share common objectives such as: (i) increasing legal certainty and transparency; and (ii) reducing fragmentation and transaction costs.  Supplementary Protection Certificates (SPCs) are a sui generis IP right that extend, by up to five years [2](#footnote4) , the term of a patent. SPCs apply to innovative medicinal products and plant protection products (PPPs). SPCs aim to offset the loss of effective patent protection that occurs due to the lengthy testing that these products require prior to regulatory marketing authorisation. The relevant EU legislation is Regulation (EC) No 469/2009 and Regulation (EC) No 1610/96 on SPC covering medicinal products and PPPs respectively.  In the EU, SPCs are available for patents that are governed at two – and soon three – levels.  1.National legislation of the 27 Member States for national patents – filed and granted in each Member State in which protection is sought – to be enforced by national courts.   2.The European Patent Convention, which establishes a one-stop shop for the filing, examination and granting of European patents by the European Patent Office. Once granted, a European patent must be validated in each EU Member State in which protection is sought. It confers on its owner the same rights as a national patent and is to be enforced before national courts.  3.The unitary EU patent package [3](#footnote5) , which will soon introduce a European patent with unitary effect (the unitary patent) and a single jurisdiction, namely the Unified Patent Court (UPC), for the participating EU Member States. Once this system becomes operational, unitary patents, European patents (under point 2 above) and SPCs based on them will be able to be enforced before the UPC.  The IP action plan highlighted the need to tackle the remaining fragmentation of the EU’s IP system. To start with, SPCs are only available nationally. The pharmaceutical strategy for Europe emphasised the importance of investing in R&D in order to develop innovative medicines, while stressing that the differences across the Member States in the implementation of IP rights – especially SPCs – protecting such innovative products result in duplication and inefficiency. This affects the competitiveness of the pharmaceutical industry. As announced in these strategies, the Commission is exploring measures to optimise the SPC system to make it more transparent and efficient.   The Council conclusions on IP policy of 10 November 2020 encouraged the Commission to present initiatives to make IP protection more effective, including the SPC system. The European Parliament resolution of 11 November 2021 on an IP action plan (2021/2007(INI)) calls on the Commission to address the SPC fragmentation, and on the Member States to support the establishment of a unitary SPC title.  The 2020 Commission evaluation of SPC legislation confirmed the effectiveness of SPCs as incentives for the development of medicinal products and PPPs. It also highlighted a number of problems (see below).  Finally, the COVID-19 pandemic has underscored the importance of having a strong and balanced IP system to provide incentives to develop new treatments and vaccines, and the need for transparent and easily accessible information on the status of IP rights protecting critical technologies, in order to facilitate collaboration. |
| Problem the initiative aims to tackle |
| The 2020 Commission evaluation of SPC legislation concluded that the current system’s main shortcoming is the fact that SPCs are granted and administered nationally. SPC applications are currently filed at the national patent office of each EU Member State where protection is sought and in which a basic patent, to be extended, has been granted. This undermines their effectiveness and efficiency. The following problems have been identified.  1. Divergent outcomes of the grant procedures across EU countries  The SPC Regulations set out uniform eligibility criteria. However, it often happens [4](#footnote6)  that some Member States have granted SPCs but others have refused identical applications, or granted the SPCs with a different scope. This creates legal uncertainty and undue obstacles to the entry of competing generics. [5](#footnote7)    2. Lack of unitary SPC protection for the future unitary patent  Under current SPC legislation, future unitary patents could only be extended by national SPCs. This would make unitary protection unavailable over the whole protection period of medicinal products or PPPs.   3. Suboptimal transparency of SPC-related information  The SPC Regulations set out rules for the publication of registration data. However, several problems with and national discrepancies in the transparency of SPC-related information have emerged. Stakeholders confirm that this causes legal uncertainty, e.g. manufacturers of generics often face difficulties in assessing whether the product they aim to compete with is still protected by SPC or not in various Member States.  4. High cost and administrative burden for SPC users  Each national patent office examines SPC applications. It may then decide to grant an SPC for its territory in line with the requirements of the SPC Regulations. Over 20 000 SPCs have been granted since 1993. Multiple national SPCs (see section C below) result in high registration and maintenance costs for SPC users, as well as a heavy administrative burden, especially affecting innovative small and medium-sized enterprises (SMEs). SPCs are to be enforced before national courts.  These problems affect the following stakeholders.  -Companies that develop innovative medicinal products and PPPs (originators), including SMEs, face an additional administrative burden and costs arising out of the current fragmented SPC system. The Commission public consultation of 2018 confirmed that fragmentation causes legal uncertainty because decisions about granting SPCs, and SPC-related litigation may diverge across Member States.  -The European-based generics industries and active pharmaceutical ingredients suppliers, especially SMEs, find themselves at a disadvantage in their business predictability across the single market due to the fragmentation of the SPC system and its suboptimal transparency. They also have high costs of monitoring national SPCs.  -Some national patent offices reported in the Allensbach survey that the growing complexity of SPC application examination was problematic, especially for offices with limited administrative resources. National courts face this complexity too.  -IP agents/attorneys, who deal with the registration, monitoring and enforcement of SPCs, face the challenges described for originators and generics industries, if they deal with IP protection in several Member States.  -The fragmentation and lack of transparency of SPC-related information mean that healthcare sectors, patients and users of PPPs in one Member State can benefit from timely entry into the market of affordable generics and biosimilars, while in another country they cannot. Joint purchasing of a given medicine for several EU Member States may also be hampered if the scope and/or duration of the relevant SPCs vary in those Member States. |
| Basis for EU action (legal basis and subsidiarity check) |
| Legal basis |
| The envisaged EU actions aim to remove single market barriers covered by Article 114 of the Treaty on the Functioning of the EU (TFEU). EU action is justified to ensure the uniform and effective functioning of the single market for the products concerned. SPCs are regulated by secondary EU legislation based on Article 114 TFEU. The first paragraph of Article 118 TFEU, on the creation of European IP rights, is the legal basis for Regulation 1257/2012 on unitary patent protection. It could therefore be a legal basis for the creation of a unitary SPC. |
| Practical need for EU action |
| Amendments to the SPC Regulations can only be adopted by the EU legislator. A system of recognition of EU SPCs granted by national authorities or by a centralised/virtual grant authority could only be set up at EU level. |
| B. Objectives and policy options |
| This initiative aims to promote innovation and competitiveness in the EU, as well as to improve the healthcare system, by ensuring that the SPC system is fit for single market and digital age purposes, and that it becomes much more predictable, transparent and efficient for its users (including SMEs and start-ups).  Specific policy objectives:  1.increase legal certainty about the procedure for granting SPCs;  2.provide unitary SPC protection in relation to unitary patents;  3.make SPC-related information more transparent (e.g. clearer, more easily accessible, more comprehensible and easier to understand);  4.reduce the cost and burden of obtaining and maintaining SPC protection in the EU.  To achieve these policy objectives, the Commission is considering the following options.  a)Baseline scenario: no policy change. The SPC system would continue to operate on the basis of existing EU and national rules. Member States might continue in an uncoordinated manner to recalibrate their SPC practices, with different approaches persisting across the single market. The problems identified in section A would persist, even if the Commission continues to promote better implementation of the SPC Regulations. Future unitary patents could only be extended by national SPCs.  b)Non-legislative instruments: guidelines based on the best practices of national patent offices and the case law of the Court of Justice of the European Union (CJEU), aimed at further harmonising the current SPC system (this would help achieve objectives 1 and 3). However, this would not reduce the cost or burden of multiple parallel national procedures (objective 4), or provide unitary SPC protection in relation to unitary patent (objective 2).  c)Legislative changes, possibly combined with non-legislative ones.  c.1) Creation of a centralised system for SPC protection in the EU, with a view to reducing the cost and burden (objective 4) and making the procedure for granting SPCs more predictable (objective 1). A centralised system would facilitate the setting up of standardised, common and publicly available digital databases (objective 3). This centralised system could consist of:  -a unitary SPC (also helping to achieve objective 2), complementing the future unitary patent;  -a unified procedure for granting (bundles of) national SPCs, without creating a unitary SPC;  -a combination of the two.  The detailed features of a centralised SPC system will be assessed in an impact assessment (e.g. an examining and granting authority (a virtual authority comprising SPC experts from Members States, or an EU authority), language arrangements (English-only or multilingual), judicial review, etc).  c.2) Targeted amendments of the SPC Regulations on the basis of the best practices of national patent offices and CJEU case law aimed at further harmonising the current SPC system (objectives 1 and 3). |
| C. Likely impacts |
| Likely economic impacts  The EU is the second largest world market for pharmaceuticals. Expenditure on medical goods represents 20% of EU healthcare expenditure, which itself represents about 10% of EU GDP7. Over 80% of this expenditure is borne by public budgets [6](#footnote8) . When the EU SPC was designed, it was expected to delay the market entry of generic medicines, making medicines less accessible and affordable [7](#footnote9) . However, this was expected to be offset by the need for innovative companies to recover R&D investments, against the backdrop of a steady increase in the time needed to, and costs of, developing new products, and rising global competition.  In 2019, 964 SPC applications were filed in the EU-27. Germany received the highest number, with 67 applications for medicinal products and 16 for PPPs. The geographical coverage of SPCs for medicinal products has been increasing over the years (SPCs were applied for in 20 EU Member States on average in 2014). [8](#footnote10)  The SPC evaluation of 2020 estimates that the cost, in terms of administrative fees, of patent protection in all EU-27 countries is EUR 152 765, and EUR 137 610 for SPC protection. The cost of in-house and outsourced patent lawyer fees can significantly increase those costs. For litigation, parties may face costs of between EUR 50 000 and EUR 250 000 per jurisdiction. This is relatively low (0.08%) compared to the low-range cost estimate of EUR 600 million for bringing a new medicine onto the market, but it can still be considerable for SMEs. A unitary SPC, or a unified grant procedure (option c.1 above), can be expected to significantly reduce the current burden of up to 27 parallel procedures and the multiplicity of associated administrative and agents’ fees.  The benefits of greater legal certainty resulting from a better SPC system for manufacturers of generics and biosimilars (accounting for about 67% of the volume of all prescribed medicines sold in the EU) would be significant, even if more difficult to quantify.  The potential budgetary and public health effects of a unitary SPC on smaller/lower income EU Member States needs to be assessed, as SPCs are less widely used in these countries.  Likely social impacts  This initiative aims to improve EU incentives for pharmaceutical and agrochemical innovation, meaning more and better products and services for individuals. These sectors provide large numbers of highly qualified and added value jobs in Europe [9](#footnote11) . In pharmaceuticals, better incentives, coupled with greater legal certainty, would enhance the availability of innovative and generic/biosimilar medicines for patients. The timely entry of generics/biosimilars is instrumental for the sustainability of public health budgets in the context of an ageing EU population. This initiative is unlikely to have a negative impact on fundamental rights or have any environmental impact.  A unitary SPC and a unified grant procedure would both simplify matters and reduce the administrative burden and costs for SPC applicants.  Any new costs as well as potential benefits stemming from the policy options will be assessed, with particular attention to the administrative burden. |
| D. Better regulation instruments |
| Impact assessment (IA) |
| The IA will assess the options outlined above in order to determine the most cost-efficient mix of options. Drafting of the IA would start in the first quarter of 2022. The Commission has had several economic and legal studies [10](#footnote12)  carried out to analyse (evidence base and data collection) the issues set out in this Call for Evidence. |
| Consultation strategy |
| In addition to this Call for Evidence, there will be no additional public consultation. Surveys and consultations [11](#footnote13)  of citizens and stakeholders, including a public consultation in 2018, have been concluded by the Commission and through contracted third parties. DG GROW co-sponsored and participated in two conferences on SPCs in Munich (2017 and 2018) with a broad set of stakeholders as identified in the stakeholder mapping above. The Commission participated in annual meetings of the Member States' SPC experts. The EU associations of pharmaceutical industries have issued position papers (e.g. EFPIA and Medicines for Europe) on the SPC. |
| Why did we consult? |
| The concluded surveys and consultations aimed at seeking the views of stakeholders on the recalibration of certain aspects SPC protection to tackle inter alia fragmentation and suboptimal transparency. |
| Targeted audience |
| Stakeholders (listed in section A) were invited to give their views on the problems and options above. |

:   [(1)](#footnoteref3)
     IP action plan, 
    <COM(2020) 760 final>
    <, 25.11.2020.>
:   [(2)](#footnoteref4)
     An additional extension of 6 months can apply to patented medicinal products if certain conditions for paediatric research are fulfilled.
:   [(3)](#footnoteref5)
     Regulation (EU) 1257/2012, Council Regulation (EU) 1260/2012 and the Unified Patent Court Agreement.
:   [(4)](#footnoteref6)
     Commission study: 25 years of SPC protection for medicinal products in Europe: Insights and challenges (2017).
:   [(5)](#footnoteref7)
     A generic is a medicinal or plant protection product that has the same qualitative and quantitative composition in active substances and the same pharmaceutical form as an originator’s reference medicinal product, and whose bioequivalence with the reference medicinal product has been demonstrated before getting a fast-track marketing authorisation.
:   [(6)](#footnoteref8)
     Page 142, OECD and Commission report 
    <Health at a Glance: Europe 2018, STATE OF HEALTH IN THE EU CYCLE>
    <.>
:   [(7)](#footnoteref9)
     For a sample of 232 medicines, the 
    <SPC evaluation>
     (page 41 and Annex 4) estimated that SPCs add 13% to total spending on SPC-protected medicines during the first 12.5 years after market launch, mostly at the expense of public budgets.
:   [(8)](#footnoteref10)
     Commission study: 25 years of SPC protection for medicinal products in Europe: Insights and challenges (2017).
:   [(9)](#footnoteref11)
     
    <EUIPO and EPO studies on IP>
    <->
    <intensive industries>
:   [(10)](#footnoteref12)

    See references listed at 
    <https://ec.europa.eu/growth/industry/strategy/intellectual-property/patent-protection-eu/supplementary-protection-certificates-pharmaceutical-and-plant-protection-products_en>
    <.>
:   [(11)](#footnoteref13)

    Surveys: 
    <The Commission public consultation of 2018>
    ; 
    <Allensbach survey>
    ; the Commission carried out an ad hoc survey on the transparency of the SPC system in 2020; ad hoc targeted surveys have been done as part of the study on the options for a unified SPC system in Europe contracted to the Max Planck Institute in 2020 and 2021.

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