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BIO Position on Proposals to Provide for Export Manufacturing Exemption during Patent Term Restoration

Export manufacturing exemptions weaken the IP protections afforded by Supplementary Protection Certificate and Patent Term Restoration.

Issue: Proposals1 are being advanced globally to allow generic and biosimilar producers to manufacture pharmaceutical products during the Supplementary Protection Certificate (SPC) and the Patent Term Restoration (PTR)2 term for export to countries where no patent or other relevant intellectual property rights protecting concerned products are available, or where these rights have expired.

BIO Statement –

BIO is concerned that proposals such as export manufacturing exemptions weaken the IP protections afforded by SPC/PTR and therefore opposes them.  SPC/PTR mechanisms are designed to compensate for the erosion of the standard patent term due to the lengthy development and regulatory approval timelines in the pharmaceutical sector. Such policies acknowledge the need of innovators to recoup R&D costs and fund future biomedical research. The protections afforded during the SPC/PTR term should be the same as those afforded during the regular patent term.

The proposed export manufacturing exemptions could have detrimental effects on biomedical competition and trade policy that deserve careful consideration.  These proposals would weaken patent exclusivity rights – which create incentives needed for innovation - by impairing the right to exclude others from manufacturing. 

Exporting innovator companies would also face significant challenges – and perhaps impossible hurdles - to ensure that potentially infringing products manufactured under this exemption are produced solely for export and are only exported to countries without patent protection. For example, it would be difficult to distinguish whether manufacturing activities are being carried out for export to countries without IP protection or in support of export to countries where there is still IP protection or to impermissibly stockpile products to be launched in the domestic market immediately upon protection expiry. Proof of infringement will be more difficult to provide, making the enforcement of IPRs more burdensome.  

Moreover, such proposals significantly enhances the risk of facilitating infringement and costly litigation in export markets, e.g., where there may be patents or pending applications that are not known to the manufacturer attempting to exploit the exception or where appropriate enforcement mechanisms are not available. 

There is also potential for unexpected economic effects.  In countries that enact export exemptions, high-value exports of innovative biomedical products would potentially be displaced by low-value exports of generic products, with attendant negative effects on national trade balances in the pharmaceutical sector.

About BIO

The Biotechnology Innovation Organization (BIO) is a non-profit organization with a membership of more than 1,000 biotechnology companies, academic institutions, state biotechnology centers, and related organizations in almost all of the 50 States and a number of foreign countries.

BIO’s members research and develop health care, agricultural, industrial, and environmental biotechnology products. The U.S. life sciences industry, fueled by the strength of the U.S. patent system, supports more than 7.5 million jobs in the United States, and has generated hundreds of drug products, medical diagnostic tests, biotech crops, and other environmentally-beneficial products such as renewable fuels and bio-based plastics.

The vast majority of BIO’s members are small and medium sized enterprises that currently do not have products on the market, yet hold a majority of the industry’s innovative clinical pipeline. As such BIO’s members rely heavily on the strength and scope of their intellectual property (IP) to generate investment to take their technologies to commercialization.

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1 For instance, see EGA’s statement: http://www.egagenerics.com/index.php/press-room/press-releases/2015/487-spc-manufacturing-waiver-urgently-needed-to-stimulate-pharmaceutical-manufacturing-in-europe . Considerations by IP Australia: http://www.pc.gov.au/__data/assets/pdf_file/0006/194469/sub023-intellectual-property.pdf , pp 9-10.

2 Many countries provide similar mechanisms. For instance, Japan and Australia afford Patent Term Extension (PTE). Although each mechanism is slightly different, they all have the same policy objective: to provide incentives for the research and development of medicines by extending the exclusivity period for innovative companies to partially offset the complex regulatory requirements inherent to obtaining marketing approval of pharmaceutical products.