Maria Balestriero
Portolano Cavallo, Milan
mbalestriero@portolano.it

Elisa Stefanini
Portolano Cavallo, Milan
estefanini@portolano.it

Francesca Ellena
Portolano Cavallo, Milan
fellena@portolano.it

Introduction: Bolar exemption in the European Union framework

When the Bolar exemption was introduced at the EU level in 2004 (though some Member State case law applied it prior to that date), it struck a balance between the need for patent owners to preserve their proprietary rights as long as possible and the desire of businesses to enter the market without undue delay the day after patent expiration (known as 'Day 1'). The compromise reached allows generic drug manufacturers to start developing their products for the purpose of obtaining marketing authorisation (MA) without being held liable for patent infringement. This saves time otherwise spent on the regulatory steps involved in bringing a medicine to market, time that serves as a de facto extension of patent protection beyond its natural duration. In 2004, Article 10(6) of Directive 2001/83/EC on the Community Code for medicinal products for human use was amended by Directive 2004/27/EC to read as follows: 'conducting the necessary studies and trials with a view to the application of paragraphs 1, 2, 3 and 4 [filing an application for generic marketing authorization for a previously authorized reference product] and the consequential practical requirements shall not be regarded as contrary to patent rights or to supplementary protection certificates for medicinal products'. Based on this, the EU provision officially allows generic drug manufacturers to perform trials and regulatory procedures prior to MA issuance under patent rights coverage. This was the aim of the 2004 directive, as stated in a call-for-action document issued by the European Commission: 'introduction of a "Bolar-type" provision allowing generic testing, as well as the consequential practical requirements, before the end of the patent protection period in order not to delay the introduction of generics on the market after the expiry of the patent'.^[1]

It is worth noting that the EU provision is general and does not go into detail about exempt activities (eg, preparation of the active substance covered by the patent and necessary to obtaining an MA, and prices and reimbursement); the area where MA must be pursued to benefit from the exemption (eg, EU MA or national MA); or the beneficiaries of such an exemption (eg, third-party active pharmaceutical ingredients (API) suppliers). Hence, these aspects have been open to Member State interpretation, which has resulted in a lack of harmonisation. Clearly, the provision does not cover commercial activities with no regulatory purpose (eg, manufacturing, offering patented products and placing them on the market).

Bolar exemption in the Unified Patent Court Agreement (UPCA)

The Bolar exemption is also enshrined in Article 27(d) of the UPCA. However, the UPCA did not add any further wording to Article 10(6) of the 2001 directive; indeed, the UPCA simply cites Article 10(6). Nonetheless, since the UPCA entered into force, some EU countries have amended their national laws to implement UPCA provisions, and some have even narrowed the interpretation of the Bolar clause.^[2] This is not the case for Italy, which did not make any changes to the Italian Bolar provision due to UPCA implementation.

The Bolar exemption has not been disputed in any Unified Patent Court (UPC) case yet. It will be interesting to see which interpretation will be upheld by the UPC courts. The breadth or narrowness of that interpretation will undoubtedly influence the choice of litigation venues, meaning that lawsuits may be funnelled to UPC or ordinary courts (and venue choice is now possible under the August 2023 modification of the Italian Industrial Property Code (the 'IP Code'), which established that, under certain conditions, Italian patents shall retain their effects and coexist with European and unitary patents).

Italian interpretation of the Bolar exemption

Most EU Member State laws provide a Bolar exemption that is at least somewhat broader than the minimum standard in Article 10 (6)^[3]. This is the case in Italy.

The current Italian Bolar exemption is set forth under Article 68(1)(b) of the IP Code, which states that 'no matter the subject matter of the invention, the exclusive rights conferred by the patent rights do not extend […] b) to studies and experiments designed to obtain marketing authorization for a medicinal product—including in foreign countries—and the consequential practical requirements, including preparation and use of pharmacologically active raw materials that are strictly necessary thereto'.^[4] The article stems from the implementation of Directive 2004/24/EC.

While there is an emphasis on the causal link between the activities in question and the MA (indicated by the wording 'strictly necessary'), the article does not make any reference to generics. Therefore, scholars believe that the provision should also apply to innovative medicinal products, resulting in a significantly broader application than that provided in Article 10(6). Additionally, the provision expressly refers to MA obtained in foreign countries. That said, the meaning of using an active substance in a 'strictly necessary' way is unclear. Specifically, it remains unclear whether activities gravitating around experimentation for MA issuance (ie, pre-clinical and clinical trials, comparative studies and packaging tests) are included under the provision; no case law is available in this regard.

Rather, the most recent case law of the Court of Milan addresses the issue of beneficiaries of the exemption. The court dealt with the question of whether the exemption also applies to third-party API suppliers (meaning parties other than the entity applying for MA). The court stated that the Bolar exemption is connected to the regulatory purpose of the exempt activity and therefore covers only preparatory activities closely linked to obtaining MA. The judges ruled that, in principle, third-party suppliers could benefit from the exemption because arguing otherwise would diminish the importance of the provision by forcing MA applicants to buy the API from the patent owner (which would be detrimental to fair competition). However, to preserve the link to the regulatory purpose, the supplier must be able to prove that: (1) it acted on the request of a generic manufacturer; and (2) the MA applicant has agreed to use the API solely for the MA process (with a possible penalty paid to the supplier^[5]). This interpretation was first upheld by the court in a decision in 2018, that is, prior to the introduction of the supplementary protection certificate (SPC) manufacturing waiver. While there is no room in this article to discuss the interplay between the SPC manufacturing waiver and the Bolar exemption, we note that the latter appears to be the more attractive option for a manufacturer that wants not only to make the product but also to supply it to Italian MA applicants under SPC protection as this activity is not covered by the SPC waiver because it relies on a different basis (although there is no Italian case law on the matter).

Finally, price and reimbursement procedures ('P&R') for equivalent/biosimilar medicines do not constitute patent infringement, as explicitly confirmed by the recent Article 17 of Law 118/2022 that replaced Article 11 of Law Decree 158/2012 (the 'Balduzzi Decree'), although Article 17, paragraph 3, states that equivalent medicines can only be reimbursed at the expense of the Servizio Sanitario Nazionale (SSN or Italian National Health Service) as from the date of expiry of the patent or SPC on the active ingredient published by the relevant Ministry. Some case law (though it is disputed and to be evaluated for use on a case-by-case basis) found completion of P&R to be an indication of a generic's imminent entry into the market and therefore to substantiate the urgency requirement in preliminary injunction (PI) precautionary proceedings ('periculum in mora'). The European Commission already determined that P&R procedures were lawful in 2009 when it specified that applications for P&R status do not constitute patent violations, following the same logic used for MAs.^[6]

The Italian position on the Bolar exemption can be summarised as follows:

• both generic and innovator medicines are covered;
• MA may be sought everywhere;
• third-party API suppliers may benefit from the exemption under certain conditions; and
• P&R procedures for equivalent/biosimilar medicines are exempted.

EU Pharma Package and Bolar exemption

The European legislature is planning to amend Directive 2001/83/EC. A proposal for a new directive to repeal the current directive and establish a new code for medicinal products for human use will be discussed by the European Parliament as part of the 'EU Pharma Package'. As of this writing, the most recent text is the 26 April 2023 version, although some amendments have been proposed.

The stated aim of the directive is to broaden the Bolar exemption to facilitate entry into the market of generic and biosimilar medicinal products. However, due to the broad interpretation of that provision by Member States, the first commenters on the directive proposal suggested that the proposed provision could effectively narrow the Bolar exemption.

Article 85 of the proposed directive provides that the following acts would not be considered infringing: 'studies, trials and other activities conducted to generate data for an application, for: (i) a marketing authorization of generic, biosimilar, hybrid or bio-hybrid medicinal products and for subsequent variations; (ii) health technology assessment as defined in Regulation (EU) 2021/2282; (iii) pricing and reimbursement'.

The most striking detail here is that the proposal, unlike the Italian approach, connects the Bolar exemption solely to generics and biosimilar medicinal products. This means that either differences will continue to exist between EU countries or the exemption will be narrowed everywhere, leaving the research exemption to regulate trials of new drugs.

Second, the draft directive does not clarify whether the exemption would cover acts carried out as part of an application for MA outside the EU. In Italy, as noted above, the law expressly allows MA to be sought everywhere.

P&R are expressly included in Article 85 and appear to be in line with the European Commission and Italian approaches.

Additionally, the proposal touches on the beneficiaries covered by the Bolar exemption by including 'third-party suppliers and service providers'. Article 85(b) reads as follows: 'the activities conducted exclusively for the purposes set out in point (a) may cover the submission of the application for a marketing authorization and the offer, manufacture, sale, supply, storage, import, use and purchase of patented medicinal products or processes, including by third party suppliers and service providers'. Again, the provision seems to be in line with the Italian method of including suppliers under the exemption, provided there is a causal link with MA procedures. The proposal does not specify how that causal link should be ascertained, and that will probably be yet another factor open to Member State interpretation.

Finally, amendments have been proposed by the European Parliament Committee on the Environment, Public Health, and Food Safety ('ENVI') and the European Parliament Committee on Industry, Research, and Energy ('ITRE'). These are designed to reduce the scope of the Bolar exemption, for example, by striking out P&R procedures. Should such amendments make it into the final text, they will undoubtedly impair 'Day 1' availability by postponing price negotiation until after patent expiration.

Notes