Member states lose battle over pharmaceuticals

Date: 14/12/1995

THE European Commission has told seven member states that they may no longer block cheap pharmaceutical exports from Spain.

Belgium, the UK, France, Denmark, Austria, Germany and Ireland had asked the Commission to grant them permission to continue to bar the products under a “safeguard clause” in Spain's 1986 accession treaty. But their request was turned down on legal and economic grounds, according to Single Market Commissioner Mario Monti.

Investment in research leading to the development of new drugs is rewarded in most EU countries by patent systems. They force companies which want to manufacture copies of original drugs to pay inventors a royalty fee.

Spain, however, did not have such a system in place when it joined the Community in 1986.

“This meant effectively that a Spanish company could copy a pharmaceutical developed in the UK without paying any fees to the inventors,” explained Richard Ley of the Association of British Pharmaceutical Industry.

To avoid a situation in which cheap copies made in Spain would flood into other EU countries where royalty fees had to be paid, the Community added a special provision to Spain's accession treaty.

This allowed the new member to join without a patent system, but gave other member states the right to bar its pharmaceutical exports for a certain length of time. With a patent system now in place in Spain, that transitional period is drawing to a close.

But pharmaceutical companies from the seven countries called for the transition period to be extended, arguing that patents would only be granted to new products and not to existing ones in Spain.

“Spain now has a patenting law, but we feel that the full benefits of that law will not be felt for several years,” said Ley. “It takes about 12 years and 200 million pounds to develop a single new medicine, so investors have to be very sure of the long-term security of their investment.”

But Monti told collegues that any prolongation of the transition period would mean unjustifiable distortions in the single market.