The value and cost of a Supplementary Protection Certificate extension in Europe
The value and cost of a Supplementary Protection Certificate extension in Europe
BACKGROUND
On 16 December 2025, the European Commission adopted a proposal for a European Biotech Act. Its aim is to create a coherent framework that strengthens the European Union’s biotechnology and biomanufacturing sectors, including the pharmaceutical industry.The Biotech Act proposal includes a 12-month extension of a Supplementary Protection Certificate (SPC). An SPC is an intellectual property (IP) right that provides an extension of patent-based market exclusivity for authorised medicinal products, with the objective of offsetting regulatory delays and preserving effective protection periods for innovative medicines.
The SPC extension reinforces the effectiveness of patent protection and, in turn, the EU’s attractiveness for pharmaceutical investment. It allows firms to recoup their past R&D investments and sustain future R&D. Furthermore, the duration and strength of patent and SPC protection, alongside other factors such as market size, regulatory efficiency, or availability of skills, influence decisions on where to locate R&D and manufacturing activities.
In this context, stronger and more predictable IP frameworks can improve the EU’s relative attractiveness for investment.
UNDER THE COMMISSION’S PROPOSAL, THE IMPACT OF THE 12-MONTH SPC EXTENSION WOULD BE LIMITED
To qualify for a 12-month SPC extension, the medicinal product needs to meet specific criteria. It needs to be developed through specified biotechnological processes (or ATMPs), with a valid SPC, subject to a list of strict, cumulatively applied eligibility criteria. According to Article 27 of the Biotech Act, only products that are new active substances (NAS) with a mechanism of action distinct from existing treatments can benefit from the extension, with the additional provisos that developers need to conduct clinical trials in more than two EU Member States and carry out at least one stage of manufacturing within the EU.
Due to the narrow scope of these criteria, the proposal in its current form is likely to reward only a small number of R&D projects, rather than create broad incentives for innovation to take place in Europe.
OUR TASK AND APPROACH
We assess the value that an SPC extension can bring to the EU, including the following:
its impact on EU pharmaceutical sector competitiveness and economic contribution – covering R&D expenditure, employment, gross value added (GVA), the number of clinical trials, innovation pipelines and global competitiveness;
its impact on the availability of and access to innovative medicines and the resulting value for patients, healthcare systems, and society.
We weigh these benefits against the associated costs, specifically the impact on healthcare expenditure arising from delayed entry of generic and biosimilar products. Our assessment goes beyond the European Commission’s proposal by assessing alternative policy options.
Specifically, we explore eight scenarios by varying:
Eligibility, by applying the Article 27 criteria either cumulatively or by fulfilling at least one criterion.
Duration, by considering 12- and 24-month extensions
Scope, by covering products developed through biotechnological processes (biologics) only or all compounds
MAIN FINDINGS OF OUR STUDY
Our analysis suggests that Europe could benefit from broadening the SPC extension beyond the current proposal. A broader SPC extension can strengthen the competitiveness and economic footprint of the EU pharmaceutical sector by increasing R&D investment while also improving patient access to innovative medicines.
Specifically, assessing impacts over a 15-year period, we find that:
Under a 12-month extension, R&D investment increases from EUR 4 billion under the Commission proposal to up to EUR 45 billion under broader scope and eligibility scenarios. Under a 24-month extension, the impact increases from EUR 8 billion to up to EUR 91 billion.
In both cases, higher R&D investment translates into additional employment, gross value added, and clinical trial activity.
More R&D investment supports the development of additional treatments, while more clinical trials give patients earlier access to innovative therapies.
Relative costs to public payers are limited, with the annual impact on pharmaceutical expenditure not exceeding 0.5 per cent in six of the eight scenarios assessed.
The net economic impact is likely to be positive, with the estimated economic value generated exceeding the associated increase in pharmaceutical expenditure in six of the eight scenarios.
In essence, our assessment suggests that an SPC extension can meaningfully contribute to the objectives of the Biotech Act by strengthening incentives for pharmaceutical R&D, clinical trial activity, and innovation in Europe, while also improving patient access to innovative treatments.
This study was commissioned by European Federation of Pharmaceutical Industries and Associations.
contact us
Click below to read more about our Healthcare & Life Sciences service.
Related work
European Federation of Pharmaceutical Industries and Associations (EFPIA)
Cost and value of regulatory data protection
Interfarma and PhRMA
Regulatory data protection for pharmaceuticals
Novo Nordisk
The economic impact of the pharmaceutical industry in Europe