European Parliament and Council have agreed on special arrangements in the event of a crisis.

After almost a year of negotiations, the Council and the European Parliament reached a provisional agreement on 21st May covering the regulation about granting compulsory licensing for crisis management purposes and amending EU Regulation No 816/2006. The European Commission proposed this in a legislative package for protecting intellectual property on 27th April 2023 in the wake of the COVID-19 pandemic.

What is it about?

At its core, is about the question of when and under what conditions a patent for a medicinal product or vaccine can be used without the authorisation of the rights holder. In cases of health threats, the availability of critical products in the internal market should be ensured by allowing them to be manufactured by companies other than the patent holder.

Regulating compulsory licences throughout the EU

If the public health interest is deemed to be of greater importance than intellectual property rights, then the European Commission will be able to grant special licences in future. This is currently not possible, as the granting of compulsory licenses is regulated at Member State level. National regulations also vary. This is counter-productive in the event of cross-border health crises or emergencies that require a standardised, coordinated response. Especially as supply chains often cross borders.

Triggering an emergency

With their provisional agreement, the European Council and Parliament are creating the conditions for an EU-wide framework that can only be used after a crisis or emergency mode has been activated. One of the legal instruments applicable here is the Internal Market Emergency and Resilience Act (IMERA), which can also be activated in the event of natural disaster. An emergency can also be declared based on the regulation covering serious cross-border threats to health. This provides a package of measures for preventing public health threats that are of biological, chemical or environmental origin. Finally, it is also based on the regulation for establishing a framework to ensure the provision of crisis-relevant medical countermeasures. This will provide an emergency framework in the event of a health emergency with the aim of ensuring access and provision of crisis-relevant medical countermeasures.

Voluntary agreements will have priority

However, voluntary agreements made with licence holders will have priority. The European Commission can only intervene in cases where negotiations threaten to drag on indefinitely or the patent-holding company does not have the necessary capacity to manufacture the required quantities of a critical medicinal product or a voluntary agreement is not feasible for other reasons. A compulsory licence would only be used as a last resort if the public interest outweighs the patent holder's private property right in a crisis or an emergency. However, appropriate remuneration would be granted if this happens. Trade secrets do not have to be disclosed.

What's next?

The provisional agreement reached on the granting of compulsory licences must now be approved and formally adopted by both legislative bodies.