1. Future European Patent Policy Lidia Mallo Legal and Government Affairs Manager EUPACO Brussels, 24 January 2007

2. Index 1. Introduction to the Generic Medicines Industry 2. Our patent concerns: how to improve the European patent system 3. Our views on the European Patent Litigation Agreement (EPLA)

3. EGA - Who Are We ? EGA Established 1992. Secretariat in Brussels Membership is Pan- European. (represent 28 European countries) Has over 80 direct members. Represents some 900 companies. Employs over 100,000 persons. Brings savings of 18 Billion Euro per year

4. Contributions of Generic Medicines from a Public Health perspective Increase access through affordable medicines Stimulate innovation through competition Provide budget headroom for financing genuine new innovations Develop for patients new formulations, methods of delivery etc.

5. Role of Generic Medicines –“Pricing studies have shown unequivocally that generic competition is the most effective way to ensure lasting price reductions” WHO 55th Assembly May 2002 –“The promotion of generics can have important impact in reducing costs and creates headroom to help pay for new innovative products” EU Council of Ministers June 2000

6. The Generic Reality – 50% In the new EU 27 the generic pharmaceutical industry is becoming the principal supplier of medicines for EU citizens –60-75% CEE / DK –40-60% UK/DE/NL –10-15% and expanding rapidly in PT/F/Belgium

7. Growing Complexity Of Pharma Patents – 1980s (5 properties) Primary uses Processes and intermediates Bulk forms Simple formulations Composition of matter 1990s (18 properties) Primary uses Processes and intermediates Bulk forms Simple formulations Composition of matter Expansive numbers of uses Methods of treatment Mechanism of action Packaging Delivery profiles Dosing regimen Dosing range Dosing route Combinations Screening Methods Chemistry Methods Biological Target Field of use Source: “Evolution of IPR & Pharmaceutical discovery and Development”, Eric Larson, Sr Director, Groton Site Head, Pfizer Global Research & Development. Viewed on 9/11/2005 at: http://www7.nationalacademies.org/step/Larson_ppt.ppt

8. Pharmaceutical Innovation IP protection in EU has increased dramatically since 1990 but the rate of innovation has declined. Only 22% of “New” medicines are truly innovative (Public Citizen July 2001)

9. Getting the Right Environment For Generic Competition Four Foundation Stones: –Efficient Regulatory System –Single Market –Intellectual Property Balance –National Measures Promoting Generic Medicines

10. How to improve the patent system to favour generic competition

11. 1. Need to improve patent quality: crucial role of EPO Higher standards in examination and prior art search Revise level of inventive step: should be higher No more weak patent granted by EPO Quality control system (external audit patent quality check?) Separation of powers to increase independence of examiners

12. 2. Patent system should not encourage strategies against generic competition  Patent linkage  Frivolous & abusive litigation  Increased litigation based on dubious secondary patents  Injunctions granted on low level of proof because of inexperience of judges

13. These strategies:  prevent generic competition  restrict access and affordability  discourage real innovation

14. 3. Need of harmonization of enforcement and litigation procedures either through EPLA, COMPAT or both. WHY?  Litigation in parallel before several national courts is unaffordable  Legal uncertainty because of diverging decision by multiple national courts

15.  Disharmony of judicial system encourages Forum Shopping  Different interpretation of patent law  Different granting of damages Unpredictability: Difficult to invest, plan and market.

16. The European Patent Litigation Agreement (EPLA)

17. 3 different systems to deal with patents CURRENT SYSTEM: National courts deal with National & European patents PROPOSAL 1 : A new European Patent Court (set up by the EPLA) would deal with European patents PROPOSAL 2 : A new Community Patent Court would deal with a new EC Community Patent

18. EPLA advantages Sets up a European Patent Court to deal with infringements/revocations of European Patents Central revocation of identical patents: less revocation costs and less professional advice costs Centralization: no more diverging decisions more legal certainty for generic producers

19. The Court will create a single ruling, so if patent is declared invalid, the generic company can market the product simultaneously in all countries where the patent has been revoked. Increase our EU market access EPLA advantages

20. The real situation TODAY: EPLA is not at good as it seems…. Why?

21. EGA is against current draft of EPLA (I) Enormous increase of litigations costs for SMEs Cost base is unsuitable:  Need to generate revenue instead of sound decision making  Risk of more litigation, instead of quality decisions  Careful with EPO experience! Not again….

22. EGA is against current draft of EPLA (II) Predominant role of the European Patent Office (EPO): independence of European Patent Judiciary not guaranteed Level of competence of judges is unclear Forum shopping will not disappear:  Some Regional EPLA courts will have more patent experience than others  Patentee might choose to launch product in country where he ‘likes’ the Regional EPLA Court.

23. EGA is against current draft of EPLA (III) Danger of bottle necks, specially in 2d instance Detailed court procedures are inexistent Loss of flexibility If company brings badly prepared case and looses or poor decision is given: EU 27 market simultaneously closed

24. Recommendations to improve EPLA (I) EPLA should minimize court fees Need of detailed, transparent, easy to operate and fair Procedural Rules Need of experienced, independent and well trained patent judges to assure quality decisions Full case management from the EPLA with compulsory preliminary hearings to set a timetable with target dates for hearing and decision

25. Recommendations (II) Transparency: all EPLA cases should have simple Register of Proceedings open to public. All decisions should be published. National courts should not be phased out after 7 years transitional period A review of EPO’s role in granting patents is crucial

26. Conclusion Draft EPLA shows clearly influence of EPO but has little details on how it will work for practitioners and users As currently drafted, EGA cannot support We believe in harmonization of patent procedural law of the different Member States, to facilitate harmonization of patent litigation.

27. Thank you! Our position paper on EPLA at www.egagenerics.com