The impact of regulatory systems in life sciences

Frantzeska Papadopoulou (Stockholm University), “The impact of regulatory systems in life sciences. Emerging exclusive rights growing outside the scope of the traditional Intellectual Property system?”

The interest in the various regulatory systems and the role these play in the evolution of the life sciences industry has been growing steadily during the past few years. The objective of regulatory systems is in fact to provide stringent control mechanisms guaranteeing the quality and effectiveness of products and methods related directly or indirectly to the health of humans and animals. Although this is their primary function, they tend to evolve in a way entailing the grant of exclusive rights and the protection of innovation, an objective previously fulfilled by means of the patent system. Regulatory systems such as data protection or the protection for orphan drugs, give innovators a period of exclusivity delaying thus the entry of generic competition. Exclusivity, even when this is counted in days or months, is of considerable value for this specific industry, turning thus these systems into factors of focal importance.

Regulatory systems seem to be gradually growing in importance both for private actors as well as for purposes of public policy. The important role regulatory systems play in the market is expressed in the increasing case-law both on an EU as well as on a national level, relating to their interpretation and application. On the other hand, regulatory systems are employed as means of achieving public policy objectives, sometimes even relating to the enhancement of specific fields of innovation, such as in the case of the Orphan Drugs Regulation.

Taking into consideration the fact that life sciences is an innovation- and thus also IP- intensive industry, it is only natural that these regulatory law will have to interact directly or indirectly with the IP system. The interface between the regulatory systems and IP is in some cases subtle, where both systems exist the one parallel to the other, while in other cases, the clash is such that it leads to the creation of hybrid remedies. An illustrative example of that is the marketing authorization procedure, impeding upon the term of the patent protection and consequently giving rise to Supplementary Protection Certificates (SPCs) which in its turn forms the basis for yet another regulatory regime, that of the Paediatric Extension.

This paper will in particular look into the following regulatory systems:
The Data and Marketing Protection for pharmaceuticals in accordance with Directive 2001/83/EC (as amended by Directive 2004/27/EC) and Regulation (EC) No 726/2004. While this is not market exclusivity right per se, it hinders indirectly the entry of generic versions of pharmaceuticals either because new clinical trials become too expensive, or because of the fact that ethics committees might be reluctant to grant clinical trials entailing unnecessary testing on humans.

The Orphan Drugs Regulation (Regulation (EC) no 141/2000 awards pharmaceuticals which are recognized as a treatment for rare diseases (diseases affective less than 5/10.000 patients) a ten years’ market exclusivity. This regulatory system gives an incentive to the research and development of pharmaceuticals that are not expected to enjoy a commercial success.

The Paediatric Extension, introduced by means of Regulation 1901/2006 in order to facilitate access to medicinal products with paediatric applications provides for the grant of a six months extension to SPCs. The specific system is introduced as a remedy to the very limited testing of pharmaceuticals on children.

The Advanced Therapy Medical Product (ATMP) Regulation ((EC) No. 1394/2007) has as its objective to ensure that ATMPs are both safe and effective by means of a centralized market authorization procedure, while at the same time granting market exclusivity. The Regulation was introduced as a means of enhancing this particular segment of the life science industry in Europe.

Although created to satisfy different needs and most usually to regulate different categories of products or methods, these regulatory systems share a number of common characteristics. They are based upon EU Regulations and Directives, employing complicated terminology and rather blurry formulations that lead to interesting case-law several years after their entry into force. The paper explores the different factors behind these similarities as well as their de facto application and role in the life sciences market.

Apart from exploring the particular characteristics of these major regulatory systems, the paper focuses on the role these play as substitutes or compliments to the well-established IP system. In fact, the paper reflects upon the objectives they were introduced to achieve and at the same time whether these systems in fact include the exceptions and flexibilities necessary for their smooth application in the market.

The evolution of these regulatory systems as a means of creating exclusive rights becomes even more interesting in an era where the substantive harmonization of patent law seems to be a rather unrealistic objective. Furthermore, the paper discusses whether the need for exclusivity and reward of innovation can be obtained outside the traditional IP system, as well as whether regulatory rights operate in fact as sui generis exclusive rights. The development of a harmonized informal and disguised IP system, tailored for a specific industry, raises a number of interesting issues and concerns. The paper addresses advantages and disadvantages when choosing to reward innovation under the framework of a regulatory law, instead of that of the traditional IP system. Finally, another important aspect discussed in the paper is that of the interface between the above mentioned regulatory systems and the patent system, as well as the frictions this has and may be expected to entail in the future.