On 28 April 2006 the EU Council adopted a Regulation on the compulsory licensing of patents and supplementary protection certificates (SPCs). The Regulation establishes a procedure for the grant of licenses covering all acts necessary for the purpose of manufacturing pharmaceutical products and exporting them to (broadly) developing and least developed countries affected by public health problems.

The Regulation makes significant changes to the compulsory licensing regimes currently in place across the EU. Applicants seeking a compulsory licence would need to identify the non-proprietary name of the product(s) for which a licence is sought, the country or countries to which the product is to be exported and (except in cases of national emergency, other circumstances of extreme urgency or cases of public non-commercial use) evidence of unsuccessful prior efforts to obtain a licence from the right holder. However in such prior negotiations the applicant is not required to accept reasonable commercial terms for a licence and its efforts need only be made for a period of 30 days.

Right holders will be compensated for compulsory licences granted. The level of compensation is not fixed in the Regulation. In cases of national emergency, extreme urgency or public non-commercial use the remuneration “shall be a maximum of 4%”. In other cases it shall be determined taking into account the economic value of the use authorised and the humanitarian or non-commercial circumstances. In such cases the 4% figure “could be used as a reference point for deliberations”.

Products manufactured under a compulsory licence will need to be clearly identified and their re-import into the EU is prohibited. It remains to be seen, however, whether the system will prove sufficiently robust against abuse. For example, it may prove difficult to establish that a consignment of active ingredient was not produced under a compulsory licence, and the application of Community customs legislation in relation to suspected re-importation of compulsory licensed products is dependent on the proactive involvement of the authority responsible for the grant of the compulsory licence.

The regime established by the Regulation potentially offers an economic advantage to generic manufacturers looking to bring products onto the market in the EU on expiry of the relevant patent(s) or SPC(s). Indeed a generic manufacturer with a compulsory licence for export of a pharmaceutical product may rely on data submitted by the marketing authorisation holder of the originator product to obtain a scientific opinion and/or an export certificate. Once the relevant period of regulatory data protection (under the “old regime”) has expired, the generic manufacturer may, therefore, be in position to obtain marketing authorisation for the EU more quickly, as in practice a dossier would already have been considered.

The Regulation entered into force on 29 June 2006. Its provisions need to be clarified, from an administrative perspective, at the national level. Guidance from the UK Patent Office is awaited.

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