Market Exclusivity Provisions in the European Union

Marketing exclusivity in Europe is linked to patent protection. Extensions are possible through grants of supplementary protection certificates (SPCs), which are comparable to U.S. patent "term restorations'' and have the same maximum length of five years beyond the original expiration date. However, there are several important differences in the European SPC system. SPC extensions apply to any and all approved forms of a product (e.g., salts and metabolites) protected by the basic patent, whereas U.S. extensions are granted only for the form of the drug as originally approved—and only one patent per product is eligible. In contrast, when a product is covered by more than one patent, each is eligible for an SPC under European patent law. In addition, the SPC system offers the potential for full recovery of the patent term lost (in the commercial sense) during the pre-market testing and regulatory review phase. The U.S. Patent Office's formula used for calculation of "restoration days'' enables only partial recovery of time elapsed from IND filing to NDA approval. Refer to Chapter 10, "Intellectual Property,'' for further discussion.

As in the United States, there is another, nonpatent-related, legal mechanism controlling generic drug introductions in Europe: data exclusivity provisions. In order to take advantage of the "abridged application'' procedure (comparable to the U.S. ANDA), prospective generic competitors need authorization to refer to data generated by the originating, innovator company for the "reference drug" that they plan to copy. EU regulations grant exclusive rights to the use of these data to original marketing authorization holders for specified time periods. A drug approved under the Centralized Procedure is entitled to 10 years of data protection following the date of first registration. Products authorized for marketing under the Mutual Recognition system are granted 6 to 10 years of data exclusivity (terms vary from country to country). Under new regulations (adopted in March 2004 and effective by the end of 2005), both routes to drug approval will earn the same exclusivity rights. According to the new "8 + 2 +1'' rule, each new chemical entity approved will have eight years of data protection and two additional years of market exclusivity. If a product represents a new use, its exclusive marketing rights will be extended one further year. Reading between the lines, these new provisions prohibit the launch of an "essentially similar'' drug for 10 to 11 years following initial registration, although generic companies can apply for and gain tentative approval of their bioequivalent copies eight years after an original marketing authorization.

At the local level, other factors can undermine the competitive advantages of market exclusivity granted under EU legislation. Individual national governments control the price of products sold in their jurisdiction. Each country has the authority to grant licenses to independent distributors, who purchase branded drugs in lower-priced markets and import them for discounted sale. These "parallel imports'' are promoted as alternatives to the same products being sold at a higher price by their original marketing authorization holders. European court decisions have repeatedly upheld the legality of this commercial practice, notwithstanding possible trademark infringements when a competing parallel import product has been repackaged for distribution under the original brand name.

Another loophole in EU market exclusivity rights is compulsory licensing. When deemed necessary "in the public interest,'' national governments can compel a drug patent owner to grant a license to another company for production of a less expensive copy. The owner is entitled to royalties, but has no legal means of refusing permission to grant the license.

Books

Kanavos P. Globalisation in Pharmaceutical Markets: Legal and Economic Implications of Parallel Trade. Richmond, Surrey, U.K.: PJB Publications, 2001. Part of PJB's Scrip Reports series, this book provides a legal history of parallel imports and compulsory licensing worldwide. The author examines current practices on a country-by-country basis, includes detailed statistics illustrating the growth of parallel trade, and discusses intellectual property rights and court decisions. As an alternative to hardcopy format, PJB also offers electronic (HTML or PDF) subscriptions to this publication.

Kanavos P. Pricing and Reimbursement in Europe. Richmond, Surrey, U.K.: PJB Publications, 2002. In this Scrip Report, Kanavos analyzes important trends in healthcare financing provisions and reform. Coverage includes a critical appraisal of regulations affecting pricing and reimbursement in both EU and other countries in the region. The book is published in both hardcopy and electronic format (HTML or PDF subscriptions).

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