SPC and modern medicine

Bringing a new medicine to the market is not simply a matter of scientific discovery. The product exists for several years without bringing in revenue, as it takes a significant amount of time to obtain both a patent and a marketing authorisation. This reduces the effective period of patent protection to a term insufficient to recoup research investments, creating a clear need for a legal framework to compensate for that lost time. 

The SPC system was developed in response to this problem, under EU Regulation 469/2009. An SPC can extend the protection of an existing medical patent, giving the pharmaceutical company behind the product additional years to recoup its investment. The objectives behind the system are to protect public health by encouraging new research, as well as creating predictability in the pharmaceutical industry, while at the same time ensuring that the extended exclusivity does not delay generic competition for longer than is justified. 

The result is a careful balance, where the maximum period of extra protection is capped at five years, reflecting the ethical tension that sits at the heart of the pharmaceutical market: innovation must be incentivised, but monopolies on medicines cannot be allowed to run indefinitely. 

The provision sets out four cumulative conditions that must be satisfied before an SPC can be granted, and it is the interpretation of these conditions that has produced an extensive (and at times incoherent) body of case law from the CJEU. 

1. The product must be protected by a basic patent in force
   A literal reading of the first condition might suggest a complete overlap between the product in described in the patent claims and the product for which an SPC is sought. However, the picture in practice is considerably more complex. 
    
2. A valid marketing authorisation (MA) for the product has been granted
   The second condition ties the SPC to a specific regulatory approval issued by the European Medicines Agency (EMA). 
    
3. No earlier SPC has been granted for the product 
   This is a straightforward principle: only one SPC may be granted per product. Yet, this generates issues when combination products are involved, as it is not always clear whether the relevant unit of analysis is the product, the active ingredient, or the patent. 
    
4. It is the first authorisation to place the product on the market 
   The fourth condition requires that the product is new in the sense that it has never previously received a marketing authorisation in any Member State. This does not require chemical or patent-law novelty; what matters is only that the product has never been authorised for marketing in the EU. 

The most contested of the four conditions has been the requirement that the product must be protected by a basic patent in force. The CJEU's inconsistent approach to this condition illustrates the difficulties of applying rules designed for simple, single-molecule drugs to the complex products that now dominate pharmaceutical development. 

• Medeva established that the product must be "specified in the wording of the claim", as the identification requirement means that the product must be explicitly covered by the basic patent
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• Eli Lilly softened the approach by recognising that a strict structural identification requirement is unworkable for certain medicines. A functional description could be sufficient, if the claims relate "implicitly but necessarily and specifically" to the active ingredient in question. 
   
• Teva v Gliead then consolidated these strands into a two-step test. First, the active ingredient must either be expressly (structurally) mentioned, or specifically identifiable from the patent claims. Second, a person skilled in the art must be able to understand that the product falls under the invention covered by that patent and must do so without any doubt. 
   
• MSD v Teva and MSD v Clonmel recently confirmed the two-step test and drew a sharp distinction between the assessment under Article 3 (a) and Article 3 (c). The court also confirmed that a combination product (A+B) is a different product from a product consisting of only one of its active ingredients (A or B), such that a prior SPC for A alone does not bar an SPC-application for the combination A+B. 

The evolution from Medeva to MSD illustrates a fundamental tension. The initial restrictive approach proved unworkable for more complex drugs, such as biological medicines that are too complex to be structurally defined in the basic patent. Combination products face related difficulties: it is not sufficient that the individual active ingredients are mentioned in isolation, as the combination itself must appear as a necessary and specific element of the patent. 

The deeper problem is structural. The SPC Regulation was designed for synthetic drugs, and the rules are not calibrated for the full spectrum of modern pharmaceutical innovation. This creates a distorted incentive that disadvantages complex drugs, namely biologics and combination therapies, where much future development lies. 

For companies developing or licensing pharmaceutical products, the current SPC framework has several practical implications worth bearing in mind: 

• File patents with SPC eligibility in mind. When filing a patent, companies should ensure that the active ingredient or combination of active ingredients in the product for which an SPC will eventually be sought is expressly and specifically identifiable from the patent claims as granted — a mismatch between the patent claims and the product covered by the marketing authorisation will bar SPC protection under Article 3(a) of the SPC Regulation.
   
• Combination products require dedicated attention. For an SPC to be granted, the combination itself must appear as a necessary and specific element of the patent.
   
• Biological medicine face heightened risk. Companies developing biologics should assess SPC eligibility at an early stage and factor in the possibility that later-developed compounds may not qualify for SPC protection.
   
• The legal framework can change. Companies should monitor legislative developments at EU level and factor potential changes to the product definition and SPC duration into their IP strategies.