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01 July 2020
The legislature has been forced to legally safeguard the healthcare of German citizens due to the COVID-19 crisis. Part of this process includes securing the availability of potential COVID-19 treatments and vaccines. However, pharmaceutical companies enjoy different forms of investment protection for their research and development.
The considerable time and money which pharmaceutical companies invest in developing new medicines can be protected by patents, depending on whether the new medicinal product is based on a patentable invention.
Moreover, pre-clinical and clinical test data submitted for new medicinal products is protected by an eight-year data exclusivity period, followed by two years' market exclusivity.
As part of its effort to secure potential COVID-19 treatments and vaccines, the government has introduced several amendments to the Infection Protection Act, most recently on 23 May 2020.
One of the amendments addresses the compulsory licensing of patents to ensure the supply of pharmaceuticals, medical devices and products for disinfection and laboratory diagnostics. Specifically, Section 5(2)(5) of the Infection Protection Act states that, under Section 13(1) of the Patent Act, an invention relating to one of the abovementioned products "shall be used in the interest of public welfare or in the interest of the security of the Federal Republic".
According to Section 5(2)(5) of the Infection Protection Act read with Section 13(1) of the Patent Act, patents granted by the German Patent and Trademark Office and European patents granted under the European Patent Convention (EPC) with effect for the Federal Republic of Germany can be used by a third party (eg, by licence). This means that rights holders must tolerate their patent's use by licenced third parties; however, the rights holders can also use the patent and are entitled to appropriate remuneration under Section 13(3) of the Patent Act. That said, compulsory licensing orders can be challenged before the Federal Administrative Court. As such challenges have, in principle, a suspensive effect unless immediate enforcement has been ordered (ie, the order for use would not be effective until a binding decision has been made).
The mere possibility of using a patent does not exempt a third party from complying with the necessary regulatory requirements relating to the product in question. These requirements differ depending on the product's regulatory qualification.
For products that qualify as pharmaceuticals, the question remains as to what impact compulsory licensing will have on the data exclusivity provided by EU laws and regulations on pharmaceuticals – namely, Article 10(1) of the EU Directive on the Community Code relating to Medicinal Products for Human Use (2001/83/EC) and Article 14(11) of EU Regulation 726/2004 implemented by Section 24b(1) of the German Act on Pharmaceuticals (AMG).
Regarding generic pharmaceuticals, Section 24b(1) of the AMG states that reference can be made to market authorisation application documents such as expert reports on previous applicant's pharmaceuticals (so-called 'reference pharmaceuticals') without the previous applicant's consent provided that the reference pharmaceutical's marketing authorisation was granted at least eight years beforehand.
In other words, the documents used in a reference pharmaceutical's marketing authorisation cannot be referred to while obtaining marketing authorisation for a generic pharmaceutical. The competent authority can consider said documents only if the previous applicant has provided consent or the reference pharmaceutical's marketing authorisation was granted at least eight years beforehand.
Therefore, where a reference pharmaceutical's marketing authorisation was granted less than eight years prior, the wording of Section 5(2)(5) of the Infection Protection Act read with Section 24b(1) of the AMG creates a situation where a third party can use the patent due to compulsory licensing but cannot obtain marketing authorisation for a generic pharmaceutical because it either lacks the previous applicant's consent or the eight year period has expired. Parties cannot place a generic on the market without marketing authorisation (Section 21(1) of the AMG).
Although the above situation contradicts the German legislature's intention, the government measures will apply unless an exemption to Section 24b(1) of the AMG is given.
The EU and German laws and regulations that apply to pharmaceuticals (eg, the EU Directive on the Community Code relating to Medicinal Products for Human Use (2001/83/EC)) provide no exemptions to data exclusivity under Section 24b(1) of the AMG. Further, EU Regulation 816/2006 on the compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems would not apply, since it addresses only exported pharmaceuticals. While Section 24b of the AMG itself contains no exception, it remains to be seen whether the amended Infection Protection Act will. Further, as Section 5(2)(5) of the Infection Protection Act addresses neither Sections 24b(1) of the AMG nor the respective legal grounds, it must be assumed that Section 5(2)(5) intends to address only the patent side of compulsory licensing. Therefore, Section 5(2)(5) will most likely not be used to justify an exemption to Section 24b(1) of the AMG.
Under Section 5(2)(4)(a) of the Infection Protection Act the Federal Ministry of Health can issue exemptions from the laws and regulations on pharmaceuticals by ordinance to ensure proper supplies of pharmaceuticals (eg, pharmaceutical authorisations). From a mere structural perspective, it seems likely that Section 5(2)(4)(a) could be used to issue exemptions to 24b(1) of the AMG by ordinance.
Chapter 4 of the AMG ("Authorisation of Pharmaceuticals") sets out that Section 5(2)(4)(a) also provides for exemptions to be issued by ordinance in the context of (for example) pharmaceutical authorisations and Section 24b(1) of the AMG. However, the legal grounds of Section 5(2)(4)(a) of the Infection Protection Act are silent on this point. Even if the possibility to do so is assumed, it is questionable whether such possibility complies with EU laws and regulations, which do not specifically provide for such a possibility. Further, it is questionable whether the legal grounds of Section 5(2)(4)(a) of the Infection Protection Act's reference to uncertain exceptional provisions of the Treaty on the Functioning of the European Union is sufficient.
In principle, it is to be welcomed that the German legislature wishes to ensure the supply of pharmaceuticals, whether for public welfare or national security purposes. However, it seems that the amended provisions (eg, Section 5(2)(4)(a) of the Infection Protection Act) do not take data exclusivity into consideration. Additional guidance is therefore required to clarify the aspects of compulsory licensing that remain unclear.
For further information on this topic please contact Caroline von Nussbaum or Fabian Huber at Simmons & Simmons LLP by telephone (+49 2 11 4 70 53 0) or email (firstname.lastname@example.org or email@example.com). The Simmons & Simmons LLP website can be accessed at www.simmons-simmons.com.
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