New law helps clarify reductions for pharmaceutical SPCs

Background
Impact

The Italian Parliament has enacted Decree-Law 248 of 31st December 2007, dubbed the ‘thousand extensions’ decree as it provides extensions for various legislative provisions.

The decree, which is now Law 31 of 28th February 2008, includes, among other things, provisions relating to the pharmaceutical market. These include a specific provision designed to define more precisely the duration of supplementary protection certificates (SPCs) and, in particular, how the original extension period for these can be can be reduced by Law 112 of 15th June 2002.

Background
SPCs were pioneered in the European Union by France and Italy by means of national laws that were enacted shortly before the issue of EC Regulation 1768/92.

Law 349/1991 included provisions for the grant and extension of SPCs, which were extremely favourable to patent owners. Under the Italian law the extension period was equal to the period between the filing date of the basic patent and the first marketing authorisation in Italy, without any statutory five-year reduction and with a maximum extension period of up to 18 years.

On 2nd January 1993, Regulation 1768/92 superseded Law 349/1991. Nevertheless, and in spite of its short life, the law had a significant impact on patent protection for pharmaceuticals in Italy (as well as on the financing of National Health Insurance (NHI)) because of the large number of pharmaceutical products that were able to benefit from these favourable provisions.

In 2002 the government enacted Law 112/2002, which included provisions to reduce the SPC extension period. The law addressed disparities within the internal market created by the existence of substantially different SPC extension periods for the same products. It was also designed to promote the marketing of generic pharmaceutical products in Italy, thereby reducing expenses borne by NHI.

Article 3(8) of Law 112/2002, which was introduced as Article 61 of the Industrial Property Code, provides for:

“a reduction of six months of the SPC extension period, starting from 1st January 2004 and applying to each subsequent calendar year until there is complete alignment with the European Regulation.”

However, the imprecise wording of this provision led to a number of uncertainties as to how this reduction should be applied.

In 2003 the Italian Patent and Trademark Office (IPTO) issued an official communication to SPC owners that included re-calculated terms for all SPCs subject to the envisaged reduction.

However, in a decision rendered on 16th March 2006, the IPTO’s Board of Appeal stated that the IPTO was neither entitled nor competent to re-calculate SPC terms. Although the Italian Constitutional Court later ruled that an administrative body (ie, the Board of Appeal) was not competent to rule upon IPTO decisions relating to SPC duration, the board’s decision added to the uncertainty surrounding the reduction period.

The main issues relating to the criteria for re-calculation were: (i) whether the six-month reduction would also apply in the last year of the SPC, where there was less than six months remaining as of 1st January of that year; and (ii) whether the reduction would apply on 1st January 2004 (as contemplated by Law 112/2002) to SPCs that were not yet in force because the corresponding patents had not yet expired.

Before issuing its above-mentioned decision, the IPTO Board of Appeal had also referred to the Constitutional Court the issue of whether Law 112/2002 complied with the provisions of the Italian Constitution. However, in a decision rendered on 21st June 2005, the Constitutional Court declared this referral to be inadmissible.

Impact
Law 31/2008 helps to clarify the reduction that applies to the last year of an SPC’s term. According to Article 9(2)(bis) of the law, if on 1st January of the last year of the SPC’s life less than six months remains on the SPC, then this residual duration is annulled. This means that the SPC shall be deemed to have expired on 31st December of the preceding year. If, however, the SPC lasts for more than six months as of 1st January, the remaining duration is reduced by six months. Article 9(2)(bis) actually corresponds to the criterion for re-calculation originally adopted by the IPTO and does not constitute a new way of thinking on this subject. However, Law 31/2008 fails to clarify whether the envisaged reduction applied on 1st January 2004 to SPCs that were not yet in force.

Article 9(2)(bis) sets out further provisions authorising the Ministry of Economic Development to publish a list of the pharmaceutical products currently on the market, together with the relevant date on which the patent or SPC protection shall expire. However, it is not yet clear how the ministry will carry out this task - in particular, how it will identify the relevant patents and whether the identified patents will be limited to those relating to active agents or will also include secondary patents (eg, those relating to formulations and uses that are relied upon by patent owners in order to extend further patent protection on the marketed pharmaceutical products).