Are the revisions to the EU’s ‘Bolar’ system compatible with TRIPS?

The EU’s proposal to speed up generic and biosimilar market access by expanding the “Bolar exemption” to pricing and reimbursement procedures raises significant international IP law concerns, as it is probably incompatible with its obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Maarten Meulenbelt, Chris Boyle, Lauren Shapiro, Maryanne Kamau, and Alix Vermulst explain.

In the EU, much has been written about the so-called “Pharma Review” proposals, published by the European Commission (Commission) on April 26, 2023. One of the main goals of the Pharma Review (set out in a proposed Pharmaceutical Directive and a Pharmaceutical Regulation) is to steer investment into areas of unmet medical needs by reducing and “modulating” the main intellectual property (IP) and regulatory rights – such as regulatory data protection (RDP) and orphan market exclusivity – and to speed up generic and biosimilar market access.[1] The Pharma Review is currently going through the legislative process. (See previous Blog post: EU’s Overhaul Of Pharma Legislation Amended With Uneasy IP Compromises).

One of the proposed EU measures to speed up generic and biosimilar market access deserves particular attention from an international IP law perspective: the proposal to expand the so-called “Bolar exemption.” This wide-reaching proposal raises significant concerns under international law, as it is likely incompatible with the EU’s obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Currently, the EU’s Bolar exemption exempts from patent infringement the “necessary studies and trials” conducted by generic/biosimilar applicants and “consequential practical requirements” to obtain a marketing authorization. As part of the Pharma Review, the Commission’s proposal seeks to expand the scope of the Bolar exemption to include, inter alia, situations where a reference medicinal product is used to generate data for an application for pricing and reimbursement (P&R Bolar). If amended as proposed by the European Parliament on April 10, 2024, the P&R Bolar would allow, potentially years before the relevant patent expiry date (Day 1), any activity reasonably related to pricing and reimbursement (P&R) procedures or approvals at Member State level, including negotiations with payors on prices and quantities (and potentially listing) of generic and biosimilar products. There has been no published impact assessment for these proposals. They offer no mechanism to determine the “Day 1” date, no clear safeguards, and no clarity on whether the “signalling” function of P&R steps would be preserved for the enforcement of patents.

The present article is limited to assessing the consistency of the P&R Bolar with TRIPS, as applied to patents (Supplementary Protection Certificates are not discussed). We find strong arguments that the proposal is inconsistent with the EU’s obligations under TRIPS.

There is no doubt that the P&R Bolar encroaches upon the rights set out in Article 28.1 of TRIPS (Rights Conferred). Indeed, the sole purpose of the P&R Bolar is to permit any generic or biosimilar applicant seeking a marketing authorization (MA), a health technology assessment (HTA), or P&R to engage in activities that would otherwise be reserved to the patent holder during the patent term. The EU would bear the burden of proof of justification of this infringement under the three cumulative conditions of Article 30 of TRIPS (Exceptions to Rights Conferred).

The EU is unlikely to be able to meet this burden of proof under Article 30 of TRIPS. Given the wide scope of activities permitted, and the lack of definition of the core concept of “Day 1” market entry, the P&R Bolar can hardly be called “limited.” The P&R Bolar interferes with “normal exploitation,” especially where it would permit offers for sale before the expiration of the patent. The “legitimate interest” of patent holders does not appear sufficiently protected, and there is no consensus view in society that generic and biosimilar companies should be able to engage, for an undefined period of time before the expiration of the patent, in any activities including offers and negotiations of post-expiry supplies to obtain P&R.

The P&R Bolar also appears inconsistent with Article 27.1 of TRIPS (Patentable Subject Matter) because it unjustifiably imposes differentially disadvantageous treatment to inventions in the field of medicinal products relative to inventions in all other fields of technology. The P&R Bolar differs from the measures examined in the Canada – Pharmaceutical Patents case in this respect: the Canadian laws at issue in that case were not, as the P&R Bolar, limited to medicinal products.

By adopting the P&R Bolar, which we find to be inconsistent with the relevant requirements in Articles 27.1, 28.1, and 30 of TRIPS, the EU would not be giving effect to all provisions of TRIPS – and is contravening certain provisions of TRIPS – in violation of Article 1.1 of TRIPS.

This article was originally posted on Worldtradelaw.net on August 25, 2024.

The full article on which the post is based is available here.

[1] The Pharma Review should be assessed together with the Patent Package, published by the Commission on April 27, 2023, which includes proposals on Supplementary Protection Certificates, Compulsory Licensing, and Standard Essential Patents.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.