Brexit & Life Sciences
Here we consider the potential impact of 'Brexit' on IP rights in the Life Science sector.
Applicability of EU Law in the UK Post-Brexit
At present, EU law has direct effect in the UK by virtue of the 1972 European Communities Act. The UK government has announced that, upon exit from the EU, it intends to repeal this Act and, at the same time, convert existing EU law into domestic law “wherever practical”. The government says that parliament will then be free to “amend, repeal or improve” any of these laws at a later date. Repeal of the Act will also mean that the UK will no longer fall within the jurisdiction of the Court of Justice of the European Union (“CJEU”).
UK Patent Applications
UK national patents will be unaffected by UK exit from the EU. All UK patents, whether obtained by application to the UKIPO or the EPO, will continue to have full effect in the UK.
For the most part, the UKIPO currently adapts its practices to follow those of the EPO and in harmony with applicable EU law. An example of the effect of EU law on UKIPO practice is European Directive 98/44/EC on the legal protection of biotechnological inventions (“the Biotech Directive”), which was implemented into UK law by amendment of the Patents Act 1977. The Directive seeks to clarify which biotechnological inventions are patentable on ethical grounds.
Currently, any interpretation of the Biotech Directive by the CJEU is binding on the UK. For example, the UKIPO brought its practice into line with CJEU rulings C-34/10 (“Brüstle”) and C-364/13 (“International Stem Cell Corporation”) on the patentability of human embryonic stem cells. However, post-Brexit, it will be the UK courts, rather than the CJEU, who will rule on such matters and therefore there could be divergence in UK and EU law. This may lead to a more favourable environment in the UK for innovators in this field.
Supplementary Protection Certificates (SPCs)
Pharmaceutical and plant protection products require regulatory approval before they can be marketed in the UK, but the approval process can delay exploitation of patent rights. SPCs can compensate for these delays by providing up to an additional five years of protection for the pharmaceutical or plant protection product, following patent expiry. In the case of pharmaceutical products, the five year term may be extended by an additional six months if the product has completed agreed clinical trials in the paediatric population. SPCs are national rights, therefore SPCs granted by the UKIPO can only be enforced in the UK.
In the UK, the grant of SPCs is governed by Regulation (EC) No 469/2009 and Regulation (EC) No 1901/2006 for pharmaceutical products and Regulation (EC) No 1610/96 for plant protection products. Post-Brexit, these Regulations will be converted into UK law.
The government has stated that any EU laws converted to UK law post-Brexit may be subject to amendment, repeal or improvement by parliament. Given the significance of these rights to the pharmaceutical and agrochemical industries, it is likely that the UK government will retain a system for the maintenance and grant of SPCs. However, some amendments to the legislation in its current form are likely to be necessary because, for example, it may no longer be appropriate the use the date that a product is first authorised in the European Economic Area (EEA) to calculate the duration of an SPC. Similarly, it may no longer be appropriate to require that a product be authorised in all EU member states in order for the award of a six-month extension of the SPC term to apply.
Amendment of the legislation would also offer an opportunity to resolve some of the issues stemming from CJEU case law in this area and also offers the possibility of extending SPC protection to other products that suffer regulatory delay, such as medical devices. Any changes are likely to face strong lobbying from both the innovator and generics industries as both seek to protect their conflicting interests in this area.
Even if the government does not choose to amend the legislation, it seems inevitable that UK law will diverge from EU law on SPC matters because it will be the UK courts, rather than the CJEU, who will rule on interpretation of the legislation post-Brexit.
The Unitary Patent (UP) will also have an influence on SPC policy. The preparatory documents for the UP do not, unfortunately, deal with SPCs. However, it seems likely that a UP would be considered a “basic patent” under Regulation (EC) No 469/2009 and, if so, it should be possible to base national SPC applications on a UP, in EU states at least. The European Commission is currently “working on the articulation of unitary patent protection and SPC legislation” and issued a call for tenders entitled “Study on the legal aspects of the supplementary protection certificates in the EU” earlier this year. Some stakeholders, including the European Federation of Pharmaceutical Industries and Associations, have called for a Unitary SPC system to be set up. However, this very much remains a hypothetical possibility, which will require resolution of difficult issues (such as identifying a body that would be responsible for the examination and grant of unitary SPCs) before it can become a reality.
EPC-contracting states that are not members of the EU (such as Switzerland and Norway) will not be participating in the UP system (e.g. Spain and Poland). Accordingly, even if a unitary SPC system is eventually put in place, there will still be a need for national SPC rights in non-EU and non-UP states.
Regulatory Data Protection (RDP)
A medicinal product must obtain a marketing authorisation (MA) from an appropriate regulatory body before it can be sold in the UK. For a “stand-alone” or “full” application, an applicant for an MA must provide a technical dossier to the regulatory body that includes data from clinical trials. For a “generic” or “abridged” application, rather than produce its own technical dossier, the applicant can instead refer to the dossier of a reference medicinal product that has already been authorised following a “stand alone” application.
RDP prevents generic products authorised by the abridged procedure from being placed on the market until ten years have elapsed from the initial authorisation of the reference product. This ten year period includes a period of eight years of “data exclusivity”, after which valid applications for generic products can be submitted, and a period of two years of “market exclusivity” after which generic products authorised in this way can be placed on the market. An additional year of market exclusivity can be awarded in certain circumstances, such as if, during the first eight years from initial authorisation of the reference product, the marketing authorisation holder obtains an authorisation for one or more new therapeutic indications which are held to bring a significant clinical benefit in comparison with existing therapies.
This so-called “8+2+1” system of RDP is provided for in UK law by the Medicines Act. The UK also has its own regulatory body, the Medicines and Healthcare products Regulatory Agency (MHRA), which deals with applications for authorisations of medicinal products. However, current EU law means that the MHRA does not have authority to grant MAs for all medicines. Moreover, EU law takes precedence in areas such as orphan medicinal products and paediatric medicines.
Regulation (EC) No. 726/2004 established the European Medicines Agency (EMA), which allows for the grant of a centralised (or ‘Community’) MA and replaces some of the functions of existing national regulatory bodies. For example, Regulation 726/2004 made it compulsory for certain types of medicines to be evaluated by the EMA, including cancer treatments and medicinal products that are designated as orphan medicinal products under Regulation (EC) No 141/2000.
Orphan medicinal products have their own RDP regime, which is different from the 8+2+1 system. When an MA is granted for an orphan medicinal product, regulatory authorities cannot, for a period of ten years, accept an application for an MA, grant an MA, or accept an application to extend an existing MA for the same therapeutic application in respect of a “similar medicinal product”, even if the new applicant submits its own dossier (i.e. makes a stand-alone application). The period of orphan market exclusivity can be extended by a further two years if agreed paediatric studies are performed.
Regulation (EC) 1901/2006 introduced paediatric use marketing authorisations (PUMAs), which are granted by the EMA in respect of medicinal products specifically developed for children that are not protected by a patent or an SPC. When a PUMA is granted, the product benefits from an 8-year period of data protection with an additional two years of market exclusivity. PUMAs were designed to encourage companies to develop new paediatric uses and formulations for older (particularly off-patent) medicines, but few PUMAs have been granted due to low uptake.
Post-Brexit, these Regulations will be converted into UK law. However, amendment will be necessary if the government wishes the MHRA, rather than the EMA, to be responsible for the assessment of cancer treatments or orphan medicinal products, for example. The government will also need to decide whether MAs issued by the EMA will continue to be automatically valid in the UK.
Brexit is likely to place significant burden on the regulatory authorities and their users. The EMA is based in London, but will likely be moved to an EU state post-Brexit. This will entail the relocation of nearly 900 staff (assuming all are willing to relocate), which will inevitably cause delays in the approval system and disadvantage users.
Should MAs issued by the EMA no longer be automatically be valid in the UK, the MHRA will need to recruit more staff in order to be in a position to examine applications relating to orphan medicinal products and other medicinal products that currently fall under the EMA’s authority. Again, this will inevitably cause delays to users. However, perhaps of greater concern to users will be the prospect of needing to make separate applications for marketing authorisations in the EU and the UK, which would further increase the administrative burden the approval system places on its users.
The EU operates a principle of “exhaustion of rights”, whereby IP rights holders cannot use their rights to prevent free movement of goods within the EEA in circumstances where a product has been placed on the market by the rights holder or with its consent. In the pharmaceutical sector, medicinal products are frequently traded between member states after they have been placed on the market. This “parallel trade” is driven by the fact that medicinal products are sold at different prices in different member states. Thus, parallel traders are able to buy medicinal products in member states with lower prices and then market them at a discounted price in member states where the medicinal products are sold at a higher price.
For innovator pharmaceutical companies, parallel trade produces the effect that, in member states where medicinal products are sold at higher prices, they are faced with competition from their own products which are imported by parallel traders and marketed at a lower price. Nevertheless, the system has advantages for healthcare providers, who are able to reduce the proportion of their budget spent on drugs. In the UK, parallel imports make up an important part of the NHS supply chain.
Post-Brexit, current indications are that the UK will not remain a part of the EEA. Should this be the case, the UK will no longer be bound by the principle of free movement of goods and parallel imports between the EU and the UK may cease unless the UK government chooses to enact its own “exhaustion of rights” legislation.)
If you have any questions or concerns about IP Rights in the UK outside the EU, or would like further advice on this matter, please contact your usual HGF attorney.