7/30/2019 Bolar Clause
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On 11 March 2004, having been granted approvalby the European
Parliament, the EU Council ofMinisters adopted a new
pharmaceutical
regulatory package (EU Package).
The EU Package comprises one regulation (No. 726/2004,
laying down Community procedures for the authorisation
and supervision of medicinal products for human and
veterinary use and establishing a European Medicines
Agency, which replaces Regulation 2309/93) and three
Directives, including 2004/27/EC, which amends Directive
2001/83/EC on the Community code relating to medicinal
products for human use, and contains the experimental-use
exemption, or "Bolar clause".
One of the objectives of the EU Package was to put theEuropean
pharmaceutical industry (and, in particular, the
generics sector) onto a more equal footing with the US
which has a strong market in generic pharmaceuticals.
The generics market in the US
In the US, the door was opened to the generics market
some 20 years ago by the landmark litigation between
Roche Products Inc. and Bolar Pharmaceuticals Corp. Inc.
(Roche -v- Bolar), which prompted a change in US law. Prior
to 1984, experimenting with a drug before the expiry of the
patent with the purpose of obtaining marketing
authorisation from the US Food and Drug Administration
(FDA) for a generic version of the patented product was an
infringement of the patent. So before Roche -v- Bolar, there
was a significant delay to market entry for generic
pharmaceuticals in the US.
Roche -v- Bolar came to trial in 1984. Roche was the owner
of the patent for flurazepam-HCI, a benzodiazepine
derivative and the main active ingredient of the sleeping
pill "Dalmane". Bolar intended to submit an Abbreviated
New Drug Application (ANDA) to the FDA for a similar drug
containing the same active ingredient upon the expiry of
Roche's patent. An ANDA requires a generic producer simplyto
show that they have a bioequivalent product and
enables speedy approval by the FDA. A short time before
the expiry of the patent, Bolar obtained some of the active
ingredient from a foreign manufacturer and began the
bioequivalency studies necessary for compiling the ANDA.
Roche responded by filing a suit for patent infringement.
The District Court of the Eastern District of New York found
that no infringement had taken place owing to the
"experimental" nature of Bolar's works. The Court of Appeal
for the Federal Circuit, however, disagreed with Bolar's
argument that its work was covered by the common law
experimental-use exemption and ruled that the exemption
was to be narrowly construed and should not apply to
experiments which have a commercial objective.
Accordingly, experiments conducted for use in an ANDA
could not take place prior to the expiry of a patent.
In 1984, in response to the Roche -v- Bolarjudgment, and in
an attempt to promote competition by simplifying
authorisation for generics while maintaining appropriate
protection for the interests of research-based
pharmaceutical manufacturers, the US Congress passed the
Drug Price Competition and Patent Term Act (known as the
Hatch-Waxman Act). This created a statutory experimental-
use exemption (originally enacted and codified in 35 U.S.C.
271.(e)(1)).The experimental-use exemption states:
"It shall not be an act of infringement to make, use,
offer to sell, or sell a patented invention solely for
uses reasonably related to the development and
submission of information under a Federal law which
regulates the manufacture, use, or sale of drugs ".
An equivalent exemption for Europe?
In 1996, the European Parliament proposed to introduce an
equivalent exemption into European law.This proposal was
unsuccessful because, collectively, the member states
considered it unlikely that such an exemption would
comply with Article 30 of the World Trade Organisation's
Agreement on Trade-Related Aspects of IntellectualProperty
Rights (TRIPs Agreement) which states that:
April 2005
Product Liability Update
The Bolar clause:Bringing the European generic pharmaceuticals
industry into line with the US?
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7/30/2019 Bolar Clause
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"Members may provide limited exceptions to the
exclusive rights conferred by a patent, provided that
such exceptions do not unreasonably conflict with a
normal exploitation of the patent and do not
unreasonably prejudice the legitimate interests of the
patent owner, taking account of the legitimate interests
of third parties".
Accordingly, until recently, the extent to which
experimental use of patented products was permitted in
Europe was governed by national patent laws. The
experimental-use exemption in Europe has its roots in
Article 31(b) of the Community Patent Convention of 1975,which
was transposed into Article 27(b) of the Community
Patent Convention as adopted by the Agreement Relating
to Community Patent of 1989.
In the UK, section 60(5)(b) of the Patent Act 1977 follows
the
wording from the Community Patent Convention and
provides an exemption for "experimental purposes relating
to the subject matter of the invention".
In 1985, the judgment in Monsanto -v- Stauffer indicated
that this experimental-use exemption would not protect
trials which had the sole objective of obtaining
marketauthorisation against claims of patent infringement.
However, in Clinical Trials I (1995), Clinical Trials II (1997)
and
Wellcome -v- Parexel International and Flamel Technology
(2001), the German and French courts and tribunals
subsequently handed down judgments that appear to
conflict with the decision in Monsanto -v- Stauffer. Despite
the common approach generally taken by all member
states, this led to considerable legal uncertainty as to the
European position with regard to the experimental-use
exemption.
Owing to this uncertainty, prior to the accession of the 10
new member states on 1 May 2004, the development and
production of generic pharmaceuticals before the expiry of
a patent tended to take place outside the EU, often in the
countries that became the accession states.The Czech
Republic, Hungary, Poland and Slovenia were, for example,
some of the principal generics-producing countries and it
had been estimated that up to 14,000 jobs would have
been lost in these countries if the uncertainty with regard
to the experimental-use exemption resulted in their
transferring pre-patent expiry development work and first-
wave manufacturing to countries outside the expanded EU,
post-accession.
Review of Europe's pharmaceutical regime
During its review of the pharmaceutical regime, the
European Commission therefore focused on balancing the
interests of the research-based pharmaceutical industry
with those of the generics manufacturers. In his opening
speech at the European Parliament Plenary Session on 16
December 2003, Mr Erkki Liikanen, the Member of the
European Commission responsible for Enterprise and
Information Society, stated that an objective of the review
was to:
"increase the availability of innovative medicinal
products while at the same time encouraging
competition with generic products".
At the end of the review process, the Commissionconcluded that
generics manufacturers should be
permitted to conduct trials required for marketing
authorisation during the patent term of the original
product.
The Bolar clause
This conclusion was transposed in the Bolar clause (set out
in revised Article 10(6) of Directive 2004/27/EC in the EU
Package), which provides that:
"conducting the necessary studies and trials and
theconsequential practical requirements shall not be
regarded as contrary to patent rights or to
supplementary protection certificates for medicinal
products".
The member states had 18 months from 30 April 2004 to
implement the Directives into their national law.The rest of
the EU Package came into force on 20 May 2004.
It was hoped that the Bolar clause would put the EU
generics industry on a par with the US and that it would
stop the migration of the generics industry to non member
states. However, it is already clear that there is disparity
between the European Bolar clause and the US model,
insofar as the European clause is expressly limited to the
conduct of "studies and trials" and "consequential practical
requirements".
It is not specified, and so remains unclear, whether other
actions, such as the supply or export of materials, are
covered by the Bolar clause. "Consequential practical
requirements" is a particularly nebulous term and will
inevitably lead to disputes as to its meaning. Having
adopted such ambiguous wording, it seems that the
Commission is leaving it to the national courts to interpretthe
scope of the exemption. If it is to be construed
narrowly, all acts that fall outside its ambit will continue
to
be assessed under national patent laws, where there is
potential for inconsistency between individual member
