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Partner, Doubinsky & Osharova
Attorney-at-Law, Doubinsky & Osharova
Bolar Exemption in Ukraine
On 2 June 2020, the Verkhovna Rada of Ukraine approved in the second reading and adopted in full Draft Law of Ukraine No. 2429 On Introducing Amendments to Certain Laws of Ukraine Regarding Elimination of Artificial Bureaucratic Barriers and Corruptogenic Factors in the Public Health Sector, which had been discussed in the professional community for a long time.
In particular, one of the most resonant issues of the mentioned draft law is whether it provides a so-called “Bolar exemption” or “Bolar provision”, which will permit companies to file an application for obtaining marketing authorization for a generic medicinal product before expiration of a patent for an original medicinal product. It is stipulated that after expiry of the patent the company may immediately begin introduction of the generic medicinal product into circulation, reducing the time it takes for the generic to get onto the market.
Introduction of the Bolar exemption into Ukrainian legislation has already been stipulated by the State Strategy for Realization of State Policy on Providing the Population with Medicinal Products for the Period up to 2025, as approved by Resolution No.1022 of the Cabinet of Ministers of Ukraine 5 December 2018. According to this Resolution, the Bolar exemption should resolve the problem of ensuring the availability of medicinal products. Therefore, the approval of the said bill is the next step in the implementation of exactly this strategy.
Ukrainian legislation had not contained the relevant provision till then. Moreover, the current procedure for examination of materials for obtaining marketing authorizations for medicinal products expressly stipulates that a medicinal product may not be recommended for granting a marketing authorization in the event there is a court decision stating that the rights protected by patent will be infringed by the mentioned marketing authorization. This opinion is also supported by the courts, which have repeatedly recognized the filing of applications for obtaining marketing authorizations for generic medicinal products as infringement of the patent holders’ rights to inventions and prohibited such authorizations.
Draft Law No.2429 proposes to set out part 5 of Article 31 of Law of Ukraine On Protection of Rights to Inventions and Utility Models (hereinafter referred to as the Law) with the following wording: “Importation on the customs territory of Ukraine, in accordance with the procedure established by law, of the goods manufactured with the use of the invention (utility model) for research and/or the use of the invention (utility model) in research conducted for the purpose of development and submission of information for obtaining marketing authorization for a medicinal product shall not be considered an infringement of rights deriving from the patent”.
The Bolar concept arose from a judicial precedent after a dispute between Roche Products, Inc. and Bolar Pharmaceutical Co. in the USA in 1984. Bolar, a generic medicinal products manufacturer, began to conduct experimental studies for confirming the bioequivalence of a created generic medicinal product and launching it on the market prior to the expiry of Roche’s patent for an active ingredient in Valium, an original medicinal product of the latter.
The U.S. Court of Appeals for the Federal Circuit found Bolar’s actions to be an infringement of exclusive rights. However, that same year the United States Congress passed amendments to the Hatch-Waxman Act, aka the Drug Price Competition and Patent Term Restoration Act, which allowed the use of a patented formula for the development and subsequent launch of the medicinal product on the market.
The Bolar exemption in European Law is governed by Directive 2004/27/EC. Article 10(6) provides that: “conducting the necessary studies and trials with a view to the application of paragraphs 1 to 4 [i.e. bioequvalents and biosimilars] and the consequential practical requirements shall not be regarded as contrary to patent rights or to supplementary protection certificates for medicinal products.”
Notwithstanding the EU Directive, the exact language, scope and interpretation of the Bolar exemptions vary across Europe. Generally speaking, the EU countries are divided into those, where the Bolar exemption is limited to activities relating to obtaining of marketing authorizations for generic medicines, bioequivalents and biosimilars (the UK, Belgium, Cyprus, Ireland, Netherlands and Sweden), and those, where the exemption is interpreted more broadly. In particular, a number of countries will not consider as an infringement of the patent rights any act required for marketing approval, as well as acts relating to innovative medicines. At the same time, Austria, Germany, Denmark and Italy also exempt acts aimed at marketing authorizations outside the EU or European Economic Area (EEA).
However, neither in Ukraine nor in the world is the Bolar exemption limited to provisions previously mentioned.
It is interesting that earlier, on 4 February 2020, the Verkhovna Rada of Ukraine approved in the first reading Draft Law of Ukraine No.2259 On Introducing Amendments to Certain Legislative Acts of Ukraine (regarding Reform of Patent Legislation), which also contains the Bolar exemption and some more exemptions from the legal protection of inventions, which follow the foreign example.
In particular, part 6 of Article 271 establishes that the manufacture of a product or a medicinal preparation containing the product with the use of the patented invention for the purposes of export to third countries, as well as other actions, if they are necessary for the manufacture of the product or a medicinal preparation containing the product, for the purposes of export to third countries, will not be considered as infringement of rights to the invention.
Furthermore, the manufacture of a product or a medicinal preparation containing the product with the use of the patented invention not earlier than 6 months prior to the expiry of the supplementary protection term for the purpose of storage thereof for introduction into circulation after the expiry of the supplementary protection term shall not be considered as infringement of rights to the patent. Persons who intend to manufacture a product or a medicinal preparation containing the product with the use of the patented invention during the supplementary protection term should be obliged to notify in writing both the Office and the holder of the supplementary protection certificate not later than 3 months prior to the commencement of use of the invention.
It is apparent that the mentioned provision follows Regulation (EU) 2019/933 of the European Parliament and of the European Council of 20 May 2019 amending Regulation (EC) No 469/2009 regarding the supplementary protection certificate for medicinal products, from which it has been adopted by Ukrainian lawmakers.
However, in the European Union, in contrast to Ukraine, the purpose of such measures is not the fight against the so-called “evergreen” patents and Big Pharma, as supporters of generics try to represent it to be. The aforementioned legislative amendments try to establish a balance of interests between both manufacturers of innovative medicinal products and patients/consumers who will be able to obtain an alternative almost as soon as the patent protection for some invention or other expires.
In light of the adoption of Draft Law No. 2429, it is unclear whether the legislator will consider those amendments further.
Even more, Draft Law No. 2429 makes change to Article 9 of the Law of Ukraine On Medicinal Products, and says that the reference of the generic applicant to the registration information of the original medicinal product and its use in the registration materials of the generic is not considered as disclosure and unfair commercial use of such information.
As we see, such an amendment influences the mechanism of protection of the data exclusivity. At the same time, the current edition of the said Article 9 in the part in restriction to apply for registration of a medicinal product that violates the rights of a third party protected by a patent and, accordingly, the authority of the Ministry of Health of Ukraine, to refuse to register such a drug if intellectual property rights protected by a patent are not changed.
In Ukrainian realities, this will most likely result in infringements of intellectual property rights. Experience shows that generic companies formerly not only used to applying to receive marketing authorizations for medicinal products wherein patented active ingredients were used, but also, having obtained the respective marketing authorizations, used to introduce the mentioned products to the market, in particular, offered them for public procurement. So, can we hope for their integrity at this particular time?
Moreover, in our opinion, the change to the protection mechanism of data exclusivity is a step backwards, since, at a minimum, provisions of Draft Law No. 2429 do not comply with Article 222 of the EU-Ukraine Association Agreement and certainly do not approximate Ukrainian legislation on data protection on medicinal products to the relevant European standards.
Therefore, instead of stopping a potential infringement of their rights to inventions from the very outset, inventor companies will have to make efforts to monitor the activities of competitors for observance of patent rights by them during the period of the so-called research.
This may result in a situation where Ukraine will once again appear in a negative light in terms of the investment climate and lead to certain innovative companies exiting the market, as it has happened in the past.
In order to prevent this situation, the Bolar exemption should not be too “broad”. Ukrainian legislation should have certain restrictive mechanisms that would allow generic companies, on the one hand, to “conduct research” and, on the other hand, would guarantee observance of the patent rights of the innovative company – patent holder throughout the patent protection term.
For example, Mexican law similarly provides for a Bolar-like exemption, although such protection is available only when a patent is within eight years of expiry for a biologic product, or within three years for a small molecule.
Alternatively, it could provide the possibility to generic companies to conduct research and development during the patent protection term without any restrictions, but the marketing authorization to be obtained by the generic company for its product will have effect with a suspensive condition, namely the next day following expiry of the patent or supplementary protection certificate.
Otherwise Ukraine will, time and again resorting to improvement, merely take a backwards step.