The SPC Manufacturing Waiver: competition through certainty?

Introduced as an amendment to the existing SPC Regulation (Regulation (EC) 469/2009) by new EU Regulation (EU) 2019/933 (the “Amendment Regulation”), the SPC Manufacturing Waiver (“SPC MW”), which came into effect on 1 July 2019, aimed to create a level playing field between EU and non-EU based generic and biosimilar medicines manufacturers, promote competition within the EU and offer benefits to national healthcare budgets and patients by facilitating quicker access to cheaper medicines, whilst continuing to incentivise innovation and protect rights holders.

Inevitably, the SPC MW – a derogation from acts that would normally amount to SPC infringement – was hailed as a positive development for EU-based generic and biosimilar manufacturers to enable quicker market entry, introducing export and stockpiling waivers (Article 5(2)(a) SPC Regulation) to enable those companies to manufacture SPC-protected medicines for export outside the EU, or to stockpile those medicines for launch on day 1 post-SPC expiry.

Balancing this with the need to protect SPC holders’ rights and continue to incentivise innovation within the EU, the SPC MW provisions sought to provide rights holders with information relating to competitor activities to enable them to take action if attempts were made to circumvent the SPC MW requirements.  This information is provided by the generic or biosimilar manufacturer in the form of a notification to the rights holder and relevant patent office, no less than three months before making (or carrying out a related act that would ordinarily amount to SPC infringement) the competitor product (Article 5(2)(b) SPC Regulation).  Article 5(5)(e) SPC Regulation sets out the information that must be contained within the notification, including the name and address of the manufacturer, whether the notification relates to export or stockpiling (or both), the SPC number, and “the reference number of the marketing authorisation, or the equivalent of such authorisation in each country of export, as soon as it is publicly available”.

How flexibly these provisions should be interpreted to achieve the waiver’s overarching aims of improving the competitiveness of EU-based manufacturers, and in particular whether the marketing authorisation number (“MA”) for the country of export is required at the time of filing the notification, is now being tested before the national courts. While a number of issues have arisen, the one that has generated the most attention, and has so far come before the courts in four different jurisdictions, is whether the notification must include the MA number  for the export country, or whether the notification can be updated with this information later, once the MA number becomes publicly available.  On one hand, submitting a notification without this information has led to concerns amongst originator pharmaceutical companies that existing rights – and revenues – may be eroded.  On the other hand, as it can take some time to obtain such information, waiting until it is available before filing the notification, then waiting another three months before commencing manufacture, can cause significant delays for generic and biosimilar manufacturers wishing to launch their products and obtain that ever important first mover advantage.

Germany: a strict interpretation in Janssen Biotech v Formycon

The Munich Regional Court issued the first decision on the interpretation of the SPC MW in preliminary injunction (PI) proceedings in Janssen Biotech v Formycon (case ID 21 O 12020/23, decision of 20 October 2023, unpublished).  The dispute related to Formycon’s intentions to manufacture its ustekinumab biosimilar in Germany to stockpile and export it to third countries and launch in the EU immediately after expiry of Janssen’s SPC.

As required by Article 5(5) of the SPC Regulation, Formycon notified Janssen of its plans, but did not provide a valid MA number for the intended country of export.  Janssen argued that Formycon had to provide an MA number for at least one third country in which the SPC does not apply in order to produce the biosimilar for export, and should have done so upon notification of the planned production.  Without the MA number, Janssen argued that Formycon’s waiver was deficient and therefore invalid so any manufacture would be an infringement of the SPC.

Formycon argued that, to start production for export, it is sufficient to communicate the MA number for a third country as soon as it becomes available.  It said that this is specifically provided for by the wording of Article 5(5)(e) of the SPC Regulation, and would be a pragmatic interpretation of the notification provisions bearing in mind the fact that obtaining an MA, particularly for biosimilar medicines, may take some time and any delay to market entry can result in a loss of first mover advantage, thus thwarting the intention of the SPC MW to promote competition.

The court agreed with Janssen, interpreting the SPC MW requirements narrowly and emphasising the need for SPC holders to be able to determine whether their rights are being infringed.  It considered that an MA number for at least one export country must be included in the notification in order for it to be effective.  Formycon’s notification did not include this information, and the court issued a PI preventing Formycon from manufacturing its biosimilar in Germany before SPC expiry.  The court also agreed with Janssen that Formycon should be required to identify the export countries in the notification, despite there being no such requirement in Article 5(5) (this having been removed during the legislative development process).  Evidently prioritising SPC holder rights, the court emphasised that the SPC MW is a derogation from acts that would normally amount to SPC infringement, which must therefore be interpreted restrictively and cannot be invoked if the manufacturer has not conveyed the MA number for at least one country and has not identified any export country.

Further, reinforcing this strict, pro-rights holder approach, the Munich Regional Court found that the SPC MW requires that third countries receiving exported products must be free of conflicting patent rights.

While the restrictive approach taken by the court was viewed by many as being contrary to the aims of the SPC MW, it is perhaps unsurprising in a jurisdiction that is largely known for its pro-patentee stance.  Interestingly, the court also considered that the provisions did not intend to put manufacturing within the EU on completely equal footing with manufacturers in third countries, a surprising finding particularly in the light of the Recitals of the SPC Regulation which highlight the need to create a “level playing field between makers established in the Union and third-country makers” (see for example Recitals (5) and (9)).

The dispute settled before appeal.

A more pragmatic approach?  Guidance from The Netherlands

The decision of the Munich Regional Court caused much concern for EU-based generic and biosimilar manufacturers, particularly given the size and value of the German pharmaceutical market.  However, so far it appears to be an outlier following a series of decisions that take a far more measured approach to the interpretation of the SPC MW provisions in the context of their aims.

In another PI decision, in proceedings also brought by Janssen against Samsung Bioepis (Janssen v Samsung Bioepis, District Court of The Hague, C/09/657817 / KG ZA 23-1039, decision dated 23 January 2024), and also in relation to ustekinumab, the District Court of The Hague found in favour of the biosimilar manufacturer.

Samsung Bioepis notified Janssen that it intended to manufacture and stockpile its biosimilar in Denmark and Italy (in which SPCs were in force) for export to the UK, Canada and South Korea.  Whilst export countries were provided Again, it did not provide MA numbers for those export countries, but stated that it would provide them as soon as they were publicly available.  Janssen took the same approach as before the Munich Regional Court and again argued that this was not enough; the MA number for the country of export should be provided upon filing the SPC MW notification.

This time, however, the court disagreed with Janssen and the ruling of the Munich Regional Court. It found that the wording of Article 5(5)(e) was clear and specifically allows the EU-based manufacturer to provide the MA number as soon as it is publicly available. The court stated that when interpreting EU law, the literal wording of the specific rule should be taken into account, but importantly in its context, the Recitals and the developmental history of the rules.  For the SPC MW, the District Court stressed the important ambition of needing to create a level playing field for manufacturers of generic and biosimilar medicines in the EU compared to manufacturers in non-EU countries, with the aim of improving the competitiveness of the EU.

With that in mind, the District Court stated that the notification does not require an MA number to be provided when submitted, but noted that according to the wording of the relevant rule, Article 5(5)(e), a manufacturer is obliged to provide this reference number as soon as it is publicly available.

Unlike the Munich Regional Court, the District Court also considered that there was no requirement for manufacturers to include the identity of third countries to which products would be exported in the notification on the grounds that such information is likely to be commercially sensitive.  It found the Munich Court’s findings in this respect to be wrong, noting that such a restrictive approach places manufacturers in the position that they have to share confidential information with a competitor before it is publicly available.  This could not, the District Court found, be the intention of the SPC Regulation, as is also evident from the legislative history, which shows that a clear information obligation was chosen, not requiring manufacturers to provide right holders with any confidential or commercially sensitive information.

Further, and again disagreeing with the Munich Regional Court, the District Court said there is no requirement that export countries are free of IP rights.  If the manufacturer subsequently chooses to place the biosimilar on the market in a third country where patent rights apply, enforcement is the responsibility of the patent holder in the export country.

Although only a PI decision, this pragmatic approach, prioritising the spirit of the SPC MW provisions, was met with some relief by EU-based generic and biosimilar manufacturers.  It was subsequently upheld by the Dutch Court of Appeal, which again interpreted Article 5(5)(e) in the context of the overarching aims of promoting competition and facilitating generic and biosimilar market access whilst ensuring third party rights are respected.   Janssen continues to fight on,  having filed an appeal with the Dutch Supreme Court.

A decision on the merits in Belgium

The decisions of the German and Dutch courts related to PI applications, but in the first decision on the merits of a dispute relating to the SPC MW in Amgen v Samsung Bioepis (decision dated 23 December 2024), the Brussels Enterprise Court agreed with the biosimilar manufacturer on the requirements of Article 5(5)(e).

SPC holder Amgen challenged Samsung Bioepis’ SPC MW notification to the Belgian Intellectual Property Office that it intended to manufacture and stockpile biosimilar denosumab, on the basis that it did include the reference number for the MA for the countries to which Samsung Bioepis wanted to export its product as required by Article 5(5)(e).  Amgen also objected to the fact that the notification did not include the names of the third countries for export.

Aligning with the approach taken in The Netherlands, the Brussels Enterprises Court dismissed Amgen’s claims, and agreed with Samsung Bioepis’ interpretation of notification requirements under Article 5(5)(e).  It confirmed that the notification does not require a manufacturer to already hold an MA in a third country at the time of issuing an SPC MW notification.  In the court’s view, the text of the SPC Regulation is clear and only requires a reference number for an MA to be communicated “as soon as it is publicly available”.  The court went on to further align with the comments of the Dutch courts that the objective of the provisions are to seek a level playing field for EU-based manufacturers with those in third countries, noting also that the wording of Article 5(5)(e) provides an opportunity to amend or update the notification with the MA details once they become available.

The court also agreed with the Dutch courts that the waiver notification does not require a list of countries where the product will be exported, which it acknowledged is potentially sensitive information.

The court also rejected Amgen’s argument that countries receiving exported products must be patent-free to rely on the SPC MW, stating that such a requirement would be contrary to the SPC Regulation’s objective of creating a level playing field between EU and non-EU manufacturers.

In its decision, the court said that its approach took account of the context and the objectives of the SPC Regulation, as well as its genesis, and highlighted that, in its view, the Munich Regional Court’s interpretation was too strict.  Like the Dutch court, the Brussels Enterprise Court adopted a broad interpretation of the SPC MW, prioritising the ‘greater good’ to promote the competitiveness of the EU market in contrast to the approach taken by the Munich Regional Court to prioritise protection provided to rights holders.

Post-Brexit alignment by the UK High Court

Although the UK is no longer part of the EU, the SPC MW provisions were incorporated into UK law before Brexit.  This means that the UK SPC MW provisions are the same as the EU (however, whilst the UK can be an export country for EU based manufacturers, this is not reciprocal), although will be interpreted by the UK courts which may lead to some diverging decisions.  For the first time, the UK High Court recently ruled on the interpretation of the SPC MW in Regeneron & Bayer v Alvotech & Fisher ([2025] EWHC 3050 (Pat)), and has aligned with the approach taken by the Dutch and Belgian courts, making the Munich court’s decision the outlier.

SPC holders Regeneron and Bayer sought an injunction to restrain Alvotech and Fisher’s activities in respect of their biosimilar aflibercept in expedited proceedings on the merits.  Regeneron and Bayer argued that the notification provided by Alvotech and the update notification provided by Alvotech and Fisher did not contain a reference number for an MA for Japan, the proposed country of export, and were invalid.

In a robust decision, Meade J found in favour of Alvotech and Fisher, and refused the claim for an injunction.  Whilst, of course, reaching the decision on the evidence before him, he reached the same conclusion as the Dutch and Belgian courts.  He found that the notification requirements were clear as a matter of interpretation, as well as in the context of the overall purpose of the SPC Regulation.  In his view, the ordinary meaning of Article 5(5) is that certain information is mandatory, but the information required by Article 5(5)(e) i.e. the reference number for the MA for the export country, only has to be provided once it becomes publicly available.   He went on to say that there is nothing to say that a notification is not valid until this information is given, nor is there anything to say that the three month notice period in Article 5(2)(b) does not run until the reference number of the MA of the export country is provided, which would place EU and UK based manufacturers at a competitive disadvantage compared with those in third countries who could start manufacturing earlier.

His conclusion was, he said, supported by Recital 17 of the Amendment Regulation, which states that “the notification should be promptly updated to include the reference number of that marketing authorisation … as soon as it is publicly available.” (emphasis added).  In the judge’s view, “This clearly connotes that the notification is valid when given but may be updated later, not that it is invalid until then.”  Had the legislators intended that the waiver should only be available once an MA was actually obtained, he said that “it would have been spelled out in much clearer terms and not by this extremely oblique wording in a provision which is about the detail of what information should be provided and not the more basic questions of whether and when a waiver should be available at all.” He also rejected Regeneron and Bayer’s argument that the wording in Article 5(5)(e), specifically the use of the phrases “the marketing authorisation” and “such authorisation” (emphasis added) implied an MA must already exist.

Like the Dutch and Belgian courts, he referred to the underlying purpose of the SPC MW to level the playing field between EU and UK manufacturers, and those outside the EU and UK.  Requiring EU and UK based manufacturers to obtain an export country MA prior to obtaining a waiver would put them at a competitive disadvantage which, he said, would be contrary to the purpose of the legislation.  He also found that EU and UK based manufacturers should not be required to apply for an MA in export country early.  This again aligns with the decisions of the Dutch and Belgian courts that there is nothing in the SPC Regulation to support the argument that generic and biosimilar manufacturers should be forced to reveal their confidential commercial plans.

A new SPC-focused CJEU preliminary reference?

Germany’s ruling took a restrictive view towards the SPC MW notification requirements and scope of permissible stockpiling, an approach that creates practical hurdles for manufacturers and stood apart from the waiver’s rationale to level the playing field, i.e. that EU manufacturers should not be disadvantaged compared to competitors in third countries where the same SPC protection does not apply. This restrictive view has been rejected by Belgium and Dutch courts, which have shown a more pragmatic and purpose-driven interpretation of the SPC MW, while at the same time not losing sight of SPC holders’ interests. The UK High Court has also now aligned with Dutch and Belgian reasoning, reinforcing a practical approach to the SPC MW.  Despite growing convergence, the economic importance of the pharmaceutical market in the EU and the UK means that further challenges to the validity of SPC MWs are likely, with industry bodies on both sides emphasising the need for certainty.  As such, the pattern of national litigation so far makes a preliminary reference to the CJEU likely.