The extension of the Bolar Exemption in the EU Pharma Package

A key objective of the EU Pharma Package is to ensure supply security, in particular through availability of affordable medicinal products immediately after expiry of intellectual property rights of the originator medicinal product. Therefore, the extension and harmonisation of the Bolar Exemption, as enabler for day-one market entry of generics and biosimilars, is intended to be a central component in achieving this objective.

The Bolar Exemption dates back to 1984

The term ‘Bolar Exemption’ derives from the 1984 decision in Roche Products v. Bolar Pharmaceutical Co. by the US Court of Appeals for the Federal Circuit which formed the starting point for the international discussion on a corresponding privilege to be implemented in patent law. At European Union level, this concept was later incorporated into Article 10(6) of Directive 2001/83/EC ["Medicinal Products Directive"] and was implemented in Germany with effect from 2005 by Section 11 no. 2b of the German Patent Act (PatG).

What does the Bolar Exemption regulate?

The Bolar Exemption (also known as Roche-Bolar-rule) refers to an exception to the prohibition on the use of a patented invention, which enables pharmaceutical manufacturers to carry out certain activities involving a patent-protected medicinal product prior to the expiry of the relevant patent or the supplementary protection certificate, with a view to obtaining marketing authorisation for the same or a different indication. 

The Bolar Exemption supplements the experimental use exception. The experimental use exception, which is regulated in Germany under Section 11 No. 2 of the German Patent Act (PatG), permits experimental activities in relation to patented inventions under certain conditions, in particular for research purposes or to gain new insights/ findings concerning the patented invention. The Bolar Exemption, on the other hand, grants a privilege to studies, trials and other preparatory acts, as far as these serve directly and exclusively to meet the requirements of pharmaceutical legislation, namely the preparation and conduct of a marketing authorisation procedure. It, therefore, differs from the experimental use exception in that it grants a privilege not only to studies and trials for the purpose of gaining further insights concerning the patented invention, but specifically for activities necessary to be conducted for the purpose of preparing for the commercial exploitation of the patented invention.

Without this privilege, it would not be possiblefor more cost-effective generics and biosimilars to enter the market promptly once the patent or supplementary protection certificate term has expired, since such generic manufacturers from legal perspective would be able to begin with the required time-consuming pre-clinical and clinical trials as well as the market authorisation application process at that point in time. De facto, the patent protection of the patent holder would be extended for a considerable time.

A fragmented legal landscape despite the current harmonisation attempt

Despite the common framework, the Bolar Exemption has been transposed to varying degrees across Member States and is applied differently by the courts. As Article 10(6) of the Medicinal Products Directive was enacted as a directive rather than a regulation with provisions directly applicable in all Member States, it first had to be transposed into national law by the Member States. The general wording of the directive left the Member States discretion with respect to the scope of transposition, which they exercised to varying degrees. In some cases, this led to significant national divergences regarding the scope of application of the Bolar Exemption.

The vast majority of the Member States have introduced Bolar Exemption provisions that go beyond the privilege provided for in Article 10(6) of the Medicinal Products Directive. In some countries, for example – in deviation from the wording of the provision in the Medicinal Products Directive – the privilege has not been limited to generic and biosimilar medicines but has been extended to include innovative medicinal products. In contrast, however, there are countries, such as the Netherlands and Belgium, which have closely followed the wording of Article 10(6) of the Medicinal Products Directive and have transposed the Bolar Exemption restrictively in their national patent law.

Bolar Exemption: What is the legal situation in Germany?

In Germany, the Bolar Exemption is not limited to generics and biosimilars. It also covers studies and experiments for innovative medicinal products, for example for the use of the patent-protected active pharmaceutical ingredient in a new indication. It also covers studies conducted with a view to submitting applications for marketing authorisations for medicinal products outside the European Union.

There is legal uncertainty in Germany regarding provisioning of the medicinal product/ active pharmaceutical ingredient by third parties. In 2013, the Higher Regional Court of Düsseldorf referred a question to the Court of Justice of the European Union (CJEU) regarding the requirements to be imposed on suppliers of patent-protected active pharmaceutical ingredients (see Higher Regional Court of Düsseldorf, court order of 5 December 2013 – I-2 U 68/12). As the national proceedings were discontinued, the Court of Justice of the European Union (CJEU) did not issue a ruling. In the view of the Higher Regional Court of Düsseldorf, the import of an active pharmaceutical ingredient manufactured in a non-patent-protected foreign country and imported into a patent-protected domestic country for the purpose of conducting trials falls under the Bolar Exemption if, at the time of supply, the third party can reasonably assume that the active pharmaceutical ingredient will in fact be used exclusively for privileged trials preparing for marketing authorization application.

The new provisions in the EU Pharma Package: Article 85 of the Revised Medicinal Products Directive

The reform aims at a comprehensive harmonisation of the Bolar Exemption. Article 85 of the Revised Medicinal Products Directive clarifies and extends the scope of the Bolar Exemption. Through the final wording and the objective of a “harmonised application in all Member States” explicitly set out in Recital 63 of the Revised Medicinal Products Directive, the European Union legislator has now opted for full harmonisation of the provisions in order to prevent a recurrence of divergences between national laws of the Member States.

Under Article 85 of the Revised Medicinal Products Directive, all studies, trials and other activities necessary to obtain a marketing authorisation for a medicinal product are permitted. This applies not only to generic and biosimilar medicines, but also to hybrid or biohybrid medicines. Furthermore, the Bolar Exemption applies not only with respect to the initial marketing authorisation but also to subsequent variations intended to be made with respect to an existing marketing authorisation. The Bolar Exemption is not limited to the marketing authorisation itself. It also covers:

• activities relating to the assessment of health technologies,
• for obtaining price and reimbursement approvals, and
• the fulfilment of subsequent practical requirements associated with these procedures.

The manufacture, offering for sale, sale, supply, storage, import, use or acquisition of patented medicinal products (or respectively the patented active pharmaceutical ingredient) or manufacturing processes is permitted, provided that such activities serve exclusively the purposes mentioned above. This now applies explicitly to third-party suppliers and service providers as well. Under the revised Bolar Exemption, it is also permitted to submit bidding offers in the context of public tenders, provided that this does not result in the actual sale or placing on the market of the medicinal product during the term of protection under a patent or supplementary protection certificate. 

It remains unclear, however, to what extent the Bolar Exemption covers supplies to third parties and activities taken in the context of an application for marketing authorisation outside the European Union.

Extension of the Bolar Exemption: Practical implications for companies

The extension of the Bolar Exemption enables generic and biosimilar manufacturers to make preparations earlier and in a uniform manner across the European Union. The broad scope of activities permitted under the revised Bolar Exemption in the context of medicinal product development and preparation for actual market entry clearly demonstrates the objective of enabling generic/ biosimilar companies to launch the generic or biosimilar on the market the day after the originator medicinal product’s patent or supplementary protection certificate expires.

The explicit inclusion of third party suppliers and service providers in the revised Bolar Exemption represents a significant improvement in legal certainty. The previous uncertainty, particularly regarding the supply of patent-protected active pharmaceutical ingredients for privileged clinical trials, is eliminated by the clear wording.

Practical recommendations: Adapt strategy to the revised extended Bolar Exemption

Companies should use the remaining time until the revised extended Bolar Exemption is transposed into national law and comes into force to adapt their strategies to the additional activities and possibilities.

Generic and biosimilar companies are advised to assess at an early stage which preparatory activities now fall under the revised extended Bolar Exemption. It is also advisable to review existing contracts with suppliers and service providers to take full advantage of the new legal certainty.

For originator companies, harmonisation means greater legal certainty, even though the expanded scope of application may lead to earlier generic competition. They should use the transition period to align their strategies with the new legal framework with a view to securing sufficiently long market exclusivity through patent protection, supplementary protection certificates and regulatory data and market protection. In doing so, they can make use of the intended changes to data and market protection and market exclusivity for orphan drugs in the EU Pharma Package, as well as the planned further extension options for supplementary protection certificates, for example for biologics, in the EU Biotech Act.