The fully harmonised Bolar exemption paves the way for the day-one market entry of generics and biosimilars to strengthen security of supply.
An important objective of the EU Pharma Package is to ensure security of supply, in particular through the availability of low-cost medicines immediately after the expiry of IP rights (patent or SPC protection). The expansion and harmonisation of the Bolar exemption for the day-one market entry of generics and biosimilars is a central building block for achieving this purpose.
The Bolar exemption has its roots as early as 1984
The Bolar exemption is derived from the 1984 decision Roche Products v. Bolar Pharmaceutical Co. of the US Court of Appeals for the Federal Circuit. In this case, the generic manufacturer Bolar Pharmaceutical Co. argued that conducting tests and studies in preparation for a marketing authorisation for a generic medicinal product should not be considered patent infringement. The rejection of this argument by the court prompted the US legislature to include such an exemption in federal patent law (the Hatch-Waxman Act). The European legislature followed this example some fifteen years later and incorporated its own version of the Bolar exemption into Article 10(6) of Directive 2001/83/EC.
What does the Bolar exemption regulate?
The Bolar exemption allows generic and biosimilar companies to undertake certain activities involving a patent-protected medicinal product before the expiry of the relevant patent or supplementary protection certificate, where those activities are carried out for the purpose of obtaining marketing authorisation for the same or a different indication and preparing for launch.
The Bolar exemption is a supplement to the experimental use exemption. The experimental use exemption allows experimental actions in relation to patented inventions under certain conditions, in particular for research purposes or for the acquisition of new knowledge. The Bolar exemption, on the other hand, privileges studies, trials and other preparatory acts insofar as they serve directly and exclusively to meet the requirements of pharmaceutical law, namely the preparation and implementation of an authorisation procedure. It therefore differs from the experimental use exemption in that it privileges not only studies and trials for the purpose of gaining further knowledge about the invention, but precisely for the purpose of preparing for the commercial exploitation of the invention.
Without this exemption, it would not be possible for lower-cost generics and biosimilars to enter the market in a timely manner after the expiry of the patent term, in view of the necessary time-consuming preclinical and clinical studies and the approval process. The patent protection of the patent holder would de facto be extended for a considerable period of time.
Fragmented legal landscape despite the current attempt at harmonisation
Despite the common framework, the Bolar exemption has been implemented to varying degrees in the EU member states and is applied to varying degrees by the courts. Since Article 10 (6) of Directive 2001/83/EC was designed as a directive and not as a directly applicable regulation, its regulation first had to be transposed into national law by the EU Member States. In doing so, the EU member states were given a margin of manoeuvre due to the general wording, which they used differently. This led to considerable national divergences with regard to the scope of the Bolar exemption.
The vast majority of Member States have introduced Bolar schemes that go beyond the privilege provided for in Article 10(6) of Directive 2001/83/EC. For example, in some countries – contrary to the wording of the regulation in Directive 2001/83/EC – the privilege has not been limited to generics and biosimilars, but has been extended to innovative medicinal products. On the other hand, there are states, such as the Netherlands and Belgium, which are closely aligned with the wording of Article 10 (6) of Directive 2001/83/EC and have implemented the Directive restrictively in national patent law.
The EU Pharma Package: Article 85 of the Proposed Directive
The reform aims at a comprehensive harmonisation of the Bolar exemption. As set out in Recital 63 of the Proposed Directive, the reform aims “to facilitate the market entry of generic, biosimilar, hybrid and bio-hybrid medicinal products to clarify its scope in order to ensure a harmonised application in all Member States, both in terms of beneficiaries and in terms of activities covered”. Thus, although the Proposed Directive will still need to be transposed into national law, it is expected to promote greater consistency in its interpretation and application across the EU.
According to Article 85 of the Proposed Directive, the exemption applies to the conduct of all studies, trials and other activities necessary to generate data for an application to obtain a marketing authorisation for medicinal products. This applies not only to generics and biosimilars, but also to hybrid or biohybrid medicinal products. In addition, the exemption applies not only to the initial authorisation, but also to subsequent changes to an existing authorisation (subsequent variations).
Further, the Bolar exemption is not limited to the marketing authorisation itself; it also applies to:
- health technology assessment activities;
- pricing and reimbursement;
- complying with subsequent practical requirements related to these procedures.
Insofar as they serve exclusively the aforementioned purposes, the manufacture, offer, sale, supply, storage, import, use and purchase of patented medicinal products or processes are permitted. This now explicitly applies to third-party suppliers and service providers as well. It is also permitted to submit tenders in the context of public tenders, as long as this does not lead to an actual sale or placing on the market of the medicinal product during the protection period.
However, it remains unclear to what extent the exemption covers supplies to third parties as well as actions that take place in the context of an application for marketing authorisation outside the EU.
Recommendations for action: Adapt strategy to extended Bolar exemption
Companies may wish to use the remaining time before entry into force to adapt their strategies.
For originators, harmonisation means a strengthening of legal clarity, even if the extended scope may lead to earlier competitive pressure. They should use the transition phase to align their strategies with the new framework conditions with regard to a sufficiently long market exclusivity mediated by patent protection, supplementary protection certificates and regulatory documentation and market protection, the planned changes for regulatory data and market protection and market exclusivity for orphan drugs in the EU Pharma Package and the planned further renewal options for supplementary protection certificates, e.g. for biologics in the EU Biotech Act.
For generics and biosimilar companies, it is advisable to check at an early stage which preparatory activities now fall under the extended Bolar exemption. Reviewing existing contracts with suppliers and service providers is also a good way to make full use of the new legal certainties.
The amendment will also have an impact on the Unified Patent Court (the "UPC"). The Bolar exemption, as embodied in Article 10(6) of Directive 2001/83/EC, is incorporated by reference in Article 27 of the UPC Agreement (the "UPCA"). While the UPC has not yet interpreted Article 27 UPCA, it has held that infringement is imminent where the alleged infringer has completed all preparations necessary for infringement to occur, such that only the alleged infringer’s "self-restraint" would prevent it from infringing. Under the current Court of Appeal case law, activities such as pricing and reimbursement applications can trigger infringement actions and potential preliminary injunctions.
Once the Proposed Directive is implemented, however, these activities will be expressly permitted under the broadened Bolar exemption making it harder for patentees to rely on such conduct as a basis for preliminary injunctions.
Finally, although these changes will not apply directly in the UK, they are likely to have implications for the UK market, since data generated in the EU may be relied on in the UK. They may also affect the conduct of trials for generic products in the UK if equivalent trials can be started earlier in the EU.
