“While the Draft Measures are good news overall for innovative drug applicants, patentees and the generic drug industry in China, Innovators and pharmaceutical companies that are interested in the China drug market should evaluate their business objectives and take this opportunity to submit comments.”
The National Medical Products Administration (NMPA), in conjunction with the China National Intellectual Property Administration (CNIPA), recently solicited public comments on the draft of “Measures For the Implementation of Early Resolution Mechanisms for Drug Patent Disputes (Trial)” (“Draft Measures”). The purpose of the Draft Measures is to establish an early resolution mechanism for drug patent disputes. The deadline for submission of comments is October 25, 2020.
Article 1 of the Draft Measures states that the implementation of an early resolution mechanism for drug patent disputes is to protect the legitimate rights and interests of drug patent holders, encourage new drug research and promote the development of high-quality generic drugs. The Draft Measures draw from the U.S. Hatch-Waxman Act for resolving patent disputes in many aspects but differ in fundamental implementation, especially regarding the burden among patentees, innovative drug applicants and generic drug applicants.
Overall, the Draft Measures are good news for innovative drug applicants, patentees and the generic drug industry in China. While there is an additional burden for innovative drug applicants and patentees who now must actively defend their patents and/or approved innovative drugs, it is better than the existing system for generics, in which the NMPA will not even consider any relevant patents that cover innovative drugs. On the other hand, if innovative drug applicants and patentees are not vigilant in monitoring the registration platform, they may lose their right of full exclusivity. Innovators and pharmaceutical companies that are interested in the China drug market should evaluate their business objectives and take this opportunity to submit comments to the Draft Measures (see below for details).
Lack of Notification Process to the Patentee or Innovative Drug Applicant
According to the Draft Measures, the NMPA will establish and publish a Chinese listed drug patent information registration platform for patentees and drug manufacturers to register drug-related patent information in China. The Draft Measures are not applicable to patent information that has not been registered to the platform. The platform links Chinese drug applications to related patents (“patent linkage system”) which is similar to the Orange Book in the United States.
When a generic drug applicant submits an application for a drug marketing license, it will make a certification regarding each relevant patent based on patent information from the registration platform. Similar to the U.S. Hatch-Waxman Act, the generic drug applicant will make one of four types of certifications regarding each patent listed on the registration platform. The four types of certifications are:
- Type I – no relevant patent information is listed on the platform;
- Type II – the relevant patents have been terminated or declared invalid;
- Type III – the relevant patents are listed on the platform and the generic drug applicant will not market the generic drug prior to the expiration of the relevant patents; and
- Type IV – the relevant patents shall be declared invalid or non-infringed.
However, in contrast to the U.S. Hatch-Waxman Act, the generic drug applicant does not need to provide notification to the patentee or innovative drug applicant.
Article 6 of the Draft Measures leaves it to the patentee or innovative drug applicant to monitor the list of generic drug applications on the platform to defend its own drug patents. Since generic drug applicants benefited from innovators’ inventions and the patentee or innovative drug developers’ information is readily available from the platform, it would not be an extra burden on the generic drug applicants to provide notice.
Short Stay of Approval for Nine Months for Generic Drugs
If the patentee or innovative drug applicant has objections to the certification by the generic applicant, then either the patentee or the applicant may file an infringement claim with the People’s Court or apply for an administrative ruling with the CNIPA within 45 days of the publication of the generic drug application on the registered platform. Within 10 days of acceptance by the People’s Court or CNIPA, the patentee or innovative drug applicant must notify China’s Center for Drug Evaluation (CDE) of the NMPA. Failure to do so will lead to the NMPA’s own decision on whether to approve the listing based on the technical review and the statement submitted by the generic drug applicant.
Under Article 8 of the Draft Measure, the waiting period starts from the day when the People’s Court or the CNIPA accepts the case. Then the NMPA will set a nine-month waiting period for the registration of chemical generic drugs. If the Court or the CNIPA fails to make a judgment or decision within nine months, then the NMPA can approve the generic drug applicant. Currently, proceedings in front of the People’s Court could take longer than 24 months. NMPA may continue the technical review during the nine months. In contrast, under the Hatch-Waxman Act, the Food and Drug Administration may not grant approval of the generic drug application for 30 months from the notification date of the certification by the generic applicant. Although proceedings in China are generally shorter than in the U.S., the nine-month waiting period is too short and would place a heavy burden on the patentee or innovative drug applicant, as the timing of the outcome depends on the Court or the CNIPA. The nine-month period is also a short window for a company to monitor, strategize, and institute a lawsuit, especially if certification notice has not been given.
If the NMPA decides to grant marketing authorization to the generic applicant, even if the Court subsequently issues a decision in favor of the patentee, according to Article 14 of the Draft Measures, the approval of the NMPA is irrevocable and its effectiveness is not affected by the Court’s judgment or CNIPA’s decision.
If the Draft Measures are modified to lengthen the waiting period or to indicate that the NMPA will not approve the generic drug before the People’s Court or CNIPA issue a decision, it would give the patentee and innovative drug applicant some relief. This would also streamline the process without causing further dispute between the two parties, and avoid providing contradictory rulings between the government entities.
Administrative Examination for Approval of Generic Application
Article 10, Sections (1) and (5) state that if the generic drug application passes the technical review, and the judgment of the People’s court or the administrative ruling of the CNIPA confirms that the application falls into a protection scope of the relevant patent right, then the generic drug application shall be transferred for final approval 20 working days before the expiration of the patent right. This means that even under the best-case scenario for the patentee, its patent right could be usurped prior to the expiration of the patent depending on the timing of any final approval.
Biologics and Patent Linkage
Regarding biologics and traditional Chinese medicines, there are few patent linkage provisions as compared to chemical generic drugs. Unlike chemical generic drugs, biologics can only register patents on the registration platform that claim sequence structure. There is no registration of patents for composition or medical use of the biologics. For traditional Chinese medicines, patents for composition, extracts, and medical uses can be registered. Also, unlike chemical generic drugs, there is no nine-month waiting period for the NMPA to conduct a technical review after receiving the biosimilar application for the registration of biosimilar drugs and traditional Chinese medicines with the same name and same formulation. If a patentee or innovative biologics applicant wants to delay the approval of biosimilars, it would have to file a lawsuit for infringement or for an administrative ruling with the People’s Court or the CNIPA within 45 days after the publication of the biosimilar application. If a favorable decision is obtained from the Court or CNIPA before the approval by the NMPA, then the biosimilar may be marketed after the expiration of the relevant patent. In contrast, if the biosimilar application is approved by the NMPA prior to a decision from the Court or CNIPA, then the biosimilar product can immediately go to market.
The Draft Measures are ambiguous as to whether a biosimilar product may be marketed pending approval by the NMPA or if the patentee must first obtain a Court decision or administrative ruling. Regardless, involved parties appear to be in a race to reach an imaginary finish line.
An effective and balanced approach to early resolution of drug patent disputes would be equitable to patentees and generic drug applicants alike. But within the current framework of the Draft Measures, the innovative pharmaceutical industry in China could face daunting challenges ahead.
To submit comments, email: email@example.com using the following subject heading: ???????????????????? (Feedback on the implementation measures of the early settlement mechanism for drug patent disputes”).