authored by Xiaohan Xie
China’s current Patent Law was implemented in 1985 and has been amended three times in 1992, 2000 and 2008. On October 17, 2020, the Decision on the Amendments to the Patent Law of the People's Republic of China was adopted by the Standing Committee of the 13th National People’s Congress (NPC), China’s top legislature, at its 22th session. The new Patent Law will come into effect on June 1, 2021. This article is focused on the amendments concerning patent term extension and patent linkage for pharmaceutical patents.
I. Patent term extension for pharmaceutical patents
The new Patent Law in Article 42.3 prescribes that:
In order to compensate for the time taken for the evaluation and approval of new drugs, the patent administration department under the State Council may, at the request of the patentee, extend the duration of patent right for the invention of the new drugs that have been approved for marketing in China. The compensation period shall not exceed 5 years, and the total effective duration of patent right shall not exceed 14 years from the marketing of the new drugs.
This drug patent term extension system, providing compensation period for valuable innovative drug patents, is introduced to encourage the research and development of innovative drugs.
Before the drug enters the market, it has to go through drug registration, a complicated and lengthy process. According to the type of the drug seeking market approval, the applicant for drug registration needs to conduct corresponding experiments to obtain adequate data to prove the safety, effectiveness and controllable quality of the drug. These experiments cost not only a lot of money but also a lot of time. In addition, the drug approval department needs to examine the data submitted by the applicant, which also takes a certain amount of time. Nonetheless, a patent right has a term period. A pharmaceutical patent is usually an invention patent, which has a patent term of 20 years measured from the date of filing the patent application. Therefore, both the experiments conducted for the purpose of obtaining registration approval and the examination performed by the drug approval department may take up the duration of patent right actually enjoyed by the drug.
In order to compensate for the time taken for the evaluation and approval of patent drugs, the United States, the European Union, Japan, South Korea and some other countries have established a system for extending the term of drug patents so as to avoid shortening of the “effective patent term” of patent drugs caused by drug registration. Although the drug patent term extension systems in different countries differ in terms of specific contents, all the systems are aimed at compensating for patent term lost by the proprietors of drug patents in obtaining administrative approval, so as to ensure that the innovative drug companies can obtain profits that are comparable to their investments in the research and development of the new drugs, and ensure a reasonable return on their R&D investments, thereby encouraging pharmaceutical companies to continue research and development of innovative drugs. A comparison among the drug patent term extension systems in different countries is shown in the Table below.
* The calculation for the extension period shown in “Suggestions for Amending Implementing Regulations of Patent Law (available as Draft for public consultation)” released by the China National Intellectual Property Administration (CNIPA) On November 27,2020
(a portion of the contents in the above Table is cited from https://zhuanlan.zhihu.com/p/181147443 and MA Qiujuan, YANG Qian et al., Comparative study of patent term extensions in different countries, Chinese Journal of New Drugs, 2018, 27(24).)
The length of patent extension period directly affects the length of legal occupation of relevant markets by the patentee of innovative drugs, especially of mature drugs which have good efficacy and are well accepted in the market. On the other hand, for generic drug manufacturers, the longer the patent extension period, the later the time for their generic drugs to go to the market. Therefore, the length of patent extension period is also directly related to the economic interests of generic drug manufacturers.
On November 27, 2020, the China National Intellectual Property Administration (CNIPA) released “Suggestions for Amending Implementing Regulations of Patent Law (available as Draft for public consultation)” (hereinafter referred to as the Draft Implementation Regulations). The Draft Implementing Regulations, under the framework of the Patent Law, provides in detail the method for calculating the patent extension period, the scope of protection, the timing of filing the extension request, the conditions need to be met, the procedure for invalidation of patent term extension and the like. According to the Draft Implementing Regulations, China’s drug patent term extension system has the following main rules:
Rule 85-4 (The numbering of the rules in the Draft Implementing Regulations is used here and hereinafter):
The compensation for the term of a drug patent may be given to those patents related to chemical drugs, biological products and Chinese herbal medicine which are approved for marketing in China, covering new drugs products, preparation methods or medical uses, where the conditions for compensation for drug patent term compensation are met.
The new drug-related patents mentioned to in the previous paragraph refer to patents related to active ingredients of new drugs approved for marketing for the first time by the drug regulatory department under the State Council. The new Chinese herbal medicine patents include patents related to innovative Chinese herbal medicine and patents related to improved Chinese herbal medicine with added functions/indications.
The calculation method for the compensation time of the drug patent term is the date on which the new drug applied for registration is approved for marketing in China minus the patent application date, minus 5 years.
During the period of compensation for a drug patent, the scope of protection of the patent is limited to the new drug approved for marketing by the drug regulatory department under the State Council, and is limited to the approved indications of the new drug. The patent right during the compensation period of the drug patent has the same rights and obligations as before the compensation of the drug patent period.
Where the patentee requests compensation for the duration of a drug patent, it shall submit a request for compensation for the duration of the drug patent to the patent administration department under the State Council within 3 months from the date when the drug marketing authorization application is approved, and the relevant certification documents shall be attached. The drug and the patent should meet the following conditions at the time of submitting the request:
(1) Where there are multiple patents for a drug, the patentee can only request compensation for the duration of the drug patent for one of the patents;
(2) Where a patent involves multiple drugs, only one drug can be requested for compensation for the term of the drug patent;
(3) The patent has not yet received compensation for the term of the drug patent;
(4) The remaining period of protection of the patent for which compensation for the period of drug patent is requested is not less than 6 months.
After reviewing the request for drug patent term extension, if the patent administration department under the State Council finds that the conditions for patent term extension are not met, the request shall be rejected. If no reason for rejection of a patent term extension request is found through examination, a decision to grant the patent term extension shall be made and shall be registered and announced.
Starting from the date when the patent administration department under the State Council announces the grant of a patent term extension, any unit or individual who deems that the decision to grant the patent term extension does not meet the compensation conditions may request the patent administration department under the State Council to declare the decision invalid. If not satisfied with the decision of maintaining the grant of the patent term extension valid or the decision of declaring the grant of the patent term extension invalid, the petitioner or patentee may file a complaint with the people’s court within three months from the date of receiving the decision. The people’s court should notify the opposing party in the invalidation request procedure to participate in the litigation as a third party.
The calculation method for the compensation time of the drug patent term in the Draft Implementing Regulations is basically the same as the current calculation method used by the European Union. It seems that the purpose of adopting such a relatively simple calculation method is to facilitate the implementation of the patent term extension system. On the other hand, the upper limit of the total effective duration of patent right after the marketing of the drugs as prescribed in the Chinese Patent Law is identical to that in the United States and is one year less than that in the European Union. The author believes that the method for calculating the compensation time of the patent term concerns the interests of both innovative drug manufacturers and generic drug manufacturers, and should be determined by balancing the interests of both parties based on China’s basic national conditions.
II.Pharmaceutical patent linkage system
The pharmaceutical patent linkage system refers to “linking” the approval for marketing of generic drugs with the expiry of innovative drug patents. To apply for registration of generic drugs, one should consider the patent status of previously marketed drugs to avoid possible patent infringement disputes. The pharmaceutical patent linkage system has the following meanings: (1) linking the procedures of the approval for the marketing of generic drugs to the examination of the validity of relevant drug patents; and (2) linking the function of the national drug regulatory department to that of the intellectual property office.
The pharmaceutical patent linkage system was first established in the United States through Hatch-Waxman Act of 1984. Within the framework of this Act, the United States has built a pharmaceutical patent linkage system with the patent term compensation, data protection, Orange Book, Bolar exemption, abbreviated new drug application (ANDA), 30-month stay, 180-day period of market exclusivity for the first generic drug and the like as its core. The implementation of the pharmaceutical patent linkage system, on the one hand, can encourage generic drug companies to resolve patent disputes before the generic drugs are approved for marketing, and reduce the risk of litigation after the marketing of the drugs; on the other hand, it also enables an open and transparent process for approving drugs for marketing, and facilitates proper assessment of the drug infringement risk to avoid unnecessary disputes.
Data source: LIU Yimeng, Practice of the pharmaceutical patent linkage system in foreign countries and China’s exploration in this regard, Pioneering with Science & Technology Monthly, 2019 (5).
China introduced “Bolar exemption” in the third amendment to the Patent Law in 2008. “Bolar exemption” exempts from infringement producing, using, or importing patented drugs or patented medical apparatus and instruments, for the purpose of providing the information required for administrative examination and approval.
In the United States, the drug patent term extension system was established to balance the impact of “Bolar exemption”, and is designed to balance the interests of patentees and the public interests. The “Bolar exemption” introduced to the Chinese Patent Law of 2008 has evidently facilitated the development of generic drugs in China. Nevertheless, with the rapid development of China’s economy and the improvement in its scientific and technological innovation, there is an objective need to give China’s pharmaceutical companies more room for innovation and development, and more institutional support for research and innovation. Thus, in the fourth amendment to the Chinese Patent Law, a drug patent term extension system was introduced to balance innovative drugs companies and generic drug companies under the new situation.
Meanwhile, a pharmaceutical patent linkage system was introduced during the fourth amendments to the Patent Law (the newly added Article76).
In the case where, in the regulatory process for drug evaluation and approval, any dispute arises between the applicant for drug marketing authorization and concerned patentee or an interested party over a patent right related to the drug for which regulatory registration is applied for, an involved party may institute legal proceedings in the people's court for requesting a verdict on whether the technical solution related to the drug, for which regulatory registration is applied for, falls with the protection scope of a pharmaceutical patent right owned by a third party. The drug regulatory department under the State Council may, within prescribed time limit, make a decision on whether to suspend the approval of marketing of the concerned drug in accordance with an effective judgment of the people's court.
The applicant for drug marketing authorization and concerned patentee or an interested party may also request the patent administration department under the State Council for an administrative decision on the dispute over a patent right related to the drug for which regulatory registration is applied.
The drug regulatory administration under the State Council, in conjunction with the patent administration department under the State Council, shall formulate specific measures for linking the approval of drug marketing license and the resolution of patent right disputes at the stage of application for drug marketing license, which shall be implemented after the approval of the State Council.
The provisions specifically provides the method for resolving patent disputes between innovative drug companies and generic drug companies during the stage of evaluation and approval for drug marketing; that is, the disputes can be resolved by filing a lawsuit with the people's court (judicial procedure) or requesting the patent administration department for an administrative decision (administrative procedure).
Regarding the patent disputes after receiving relevant drug registration applications, different countries have different handling methods.
In the United States, the patentee may file a patent infringement lawsuit with the court. During the maximum 30-month litigation period (stay period), the drug approval department shall not finalize the approval of the application for registration of the generic drug.
In the European Union, the drug approval department is not involved in the handling of the patent disputes, and the patent disputes are resolved by the interested parties through judicial procedure.
In China, patent disputes are resolved by the patent administration department or by the people's court. For the interested parties, these two dispute resolution procedures have their own respective advantages. Therefore, the establishment of the two dispute resolution mechanisms, namely, judicial procedure and administrative procedure, provides convenience for the interested parties. In summary, drug approval departments are not involved in the settlement of the patent disputes in the aforementioned countries, and judicial procedure is a common choice of China, the United States, and Europe Union.
Regarding whether the filing of judicial or administrative complaints and whether their results affect the process and results of drug registration, China, the United States, and the Europe Union have different rules. The Europe Union adopts the simplest rule of not considering the patent disputes. In the United States, the patent disputes will affect the results of drug registration. In China, the new Patent Law prescribes that the drug regulatory department under the State Council may, within prescribed time limit, make a decision on whether to suspend the approval of marketing of the concerned drug in accordance with an effective judgment of the people's court.
In order to form a more complete framework of the patent linkage system, China has also introduced some supporting measures. The "Implementing Measures for Early Resolution Mechanism for Drug Patent Disputes (Trial for Implementation) (available as Draft for public consultation) (hereinafter referred to as the "Draft Implementing Measures”) jointly issued by the National Medical Products Administration (NMPA) and the China National Intellectual Property Administration (CNIPA) on September 11, 2020, and “Provisions of the Supreme People’s Court on Several Issues Concerning Application of Law to the Trial of Patent Civil Cases Involving the Evaluation and Approval for Drug Marketing” (available as Draft for public consultation) issued on October 30, 2020 have refined and extended the early resolution mechanism for drug patent disputes mainly in the following aspects:
1. Establishment of a patent information record platform for marketed drugs
The NMPA will create a Chinese Marketed Drug Patent Information Record Platform (hereinafter referred to as “Platform”) (analogous to the “Orange Book” in the United States), for marketing authorization holders (MAH) to record key patent information for their drugs marketed in China, which will be available to the public as a basis for generic drug applicants to make statements as to the patent status of related drugs. The measures will not apply to patents which are not recorded on the Platform.
The following types of drug patents can be recorded on the Platform: in terms of chemical drugs, active pharmaceutical ingredient (API) compound patents, API-containing pharmaceutical composition patents and pharmaceutical use patents; in terms of biologic products, sequence structure patents; and in terms of Chinese herbal medicine, composition patents, extract patents and pharmaceutical use patents.
When filing for marketing authorization, a generic drug applicant is obligated to make a statement with reference to each of the related drug patents whose information has already been recorded on the Platform and provide supporting evidence for the statement. Such statements are classified into four categories:
Category 1: No patent information of the innovative drug on the Platform;
Category 2: The patent of the innovative drug on the Platform has expired or been invalidated;
Category 3 – There is patent information of the innovative drug on the Platform, but the generic drug applicant promises that the generic drug seeking marketing authorization will not be marketed before expiration of the patent;
Category 4 – The related patent of the innovative drug on the Platform should be invalidated or the generic drug does not fall within the protection scope of the related patent.
Where the patentee or an interested party opposes the patent statement and/or the reasons supporting the statement, it may, within 45 days upon the publication of the application for marketing of the generic drug, file a complaint with the people’s court or request the patent administration department under the State Council for an administrative decision regarding whether the technical solution related to the generic drug seeking marketing authorization falls within the protection scope of relevant patents.
3. Establishment of a waiting period for evaluation and approval of chemical drugs
The NMPA will adopt different treatment methods for evaluation and approval of the drugs based on the categories of the patent statements submitted by chemical generic drug applicants.
For Category I and Category II statements, the NMPA will determine whether or not to grant the market authorization depending on the conclusion of the technical review. For Category III statement, the NMPA will make a decision of granting the market authorization if the generic chemical drug passes the technical review, but the NMPA will also indicate that the drug may only be sold after the expiration of the patent.
For Category IV statement, where the patentee or an interested party, within 45 days upon the publication of the application for marketing of the generic drug, files a complaint with the people’s court or request the patent administration department under the State Council for an administrative decision regarding whether the technical solutions related to the generic drug which seeks marketing authorization fall within the protection scope of relevant patents, the NMPA will set a 9-month waiting period (analogous to the “stay period” in the United States) for the approval of the chemical generic drug application, starting from the date on which the case is accepted by the people's court or the patent administration department under the State Council. The Center for Drug Evaluation (CDE) under NMPA will not suspend its technical review during the waiting period. Where the drug passes the technical review, the NMPA will still need to make its decision based on the judgment of the people's court, or based on the administrative decision of the patent administration department under the State Council.
4. Market exclusivity for first generic drugs
To encourage patent challenge, the applicant for the first chemical generic drug that successfully challenges an innovator drug patent and obtains marketing approval is granted market exclusivity. Within 12 months, the NMPA will no longer approve the marketing of the same type of the generic drug. Nevertheless, the period of market exclusivity will not exceed the patent term of the drug being challenged.
It should be noted that different countries have set different stay periods. In the United States, the stay period is as long as 30 months; in Canada, it is 24 months; in South Korea, it is 9 months; and in China, the waiting period is 9 months as provided in the Draft Implementing Measures. The author believes that the length of the waiting period should be matched with the average period of patent infringement litigation in China. If the waiting period is overly short, the NMPA still cannot make a decision in accordance with an effective judgment of the people's court, or an administrative decision of the patent administration department under the State Council, and the aim of setting a waiting period for approval cannot be reached. If the waiting period is overly long, it may unnecessarily hinder the marketing of the generic drugs.
Different countries also have set different periods of market exclusivity for first generic drugs. The United States provides a period of market exclusivity of 180 days; there is no such market exclusivity in Canada; in South Korea, the period of market exclusivity is 9 months; and in China, it is 12 months as provided in the Draft Implementing Measures. This relatively long period of market exclusivity will encourage generic drug manufacturers to challenge innovative drug patents.
As mentioned above, the Draft Implementing Measures includes many suggestions for the implementation of pharmaceutical patent linkage in China but its content will be inevitably further discussed in the academic and professional circles before it is finalized.
The successive promulgation of the aforementioned series of laws and regulations fully reflects that Chinese legislators wish to comprehensively promote the pharmaceutical patent linkage system so as to achieve a proper balance between the interests of patentee and the public interest, and draw on foreign experience to build its pharmaceutical patent linkage system. It is believed that with the deepening of the understanding of the pharmaceutical patent linkage system in all walks of life, this system will be refined and improved gradually by practice, and a more complete framework of China’s pharmaceutical patent linkage system will be formed.
MA Qiujuan, YANG Qian et al., Comparative study of drug patent term extensions in different countries, Chinese Journal of New Drugs, 2018, 27(24).
ZHANG Li, A brief overview of the patent linkage system, https://www.sohu.com/a/218088184_100011502
YU Fenglei, The interest balance in intellectual property protection and construction of its system: taking china’s pharmaceutical patent linkage system as an example, Seeker, 2019 (6).
LIU Yimeng, Practice of the pharmaceutical patent linkage system in foreign countries and China’s exploration in this regard, Pioneering with Science & Technology Monthly, 2019 (5).
DU Chengjie, The implementation and improvement of pharmaceutical patent linkage system in China, Southwest Intellectual Property Review, 2020 (2)
LIAN Rongmao, The drug patent term extension and the interest balance between the drug patent term extension and the Bolar exemption, Master's thesis, Southwest University of Political Science & Law, March 1, 2014.