Abstract
A
Different countries hold different attitudes toward, and have different policies and laws in regard to, the legality of experimenting with patented pharmaceuticals prior to patent expiration (henceforth “drug patent experiments”). For dealing with this situation, the United States originated the “Bolar” exception principle, which has been imitated by many countries, such as Canada, Japan, Australia, and India. The World Trade Organization regards this exception as not constituting a violation of the TRIPS Agreement.
As a populous nation with obvious (and expensive) public-health problems, China has an interest in having generic medicines become available for sale at the earliest possible opportunity. The third time the Chinese Patent Law (hereinafter CPL) was amended, the Chinese legislature added the Fifth Term to Article 69: “behaviors not deemed as violations of patent rights” now includes “manufacturing, using and importing patent drugs and patent medical devices and specially manufacturing and importing patent drugs or patent medical devices in order to provide information needed for administrative examination and approval.” This stipulation, clarifying the legality of the exception for drug patent experiments and defining generic medicine manufacturers' rights and responsibilities in conducting experiments using patented drugs prior to patent expiration (and making such use an infringement defense), is called the Chinese-style Bolar exception principle; it is also called the medical administrative license plea.1
I. Development and Establishment of the Exception Principle for Drug Patent Experiments in China
Chinese courts were faced with uncertainty when it came to legal disputes about the propriety of drug patent experiments before the third amendment of CPL in 2008. In one case, Sankyo accused Wansheng Company (hereinafter “Sankyo case”).2 Sankyo, the plaintiff, received a patent for “preparation method of pharmaceutical compositions for the cure or precaution of hypertension” on September 24, 2003. In 2005, Sankyo found that Wansheng Company, the defendant, had applied to China's State Food and Drug Administration for the registration of a new medicine named “Olmesartan Medoxomil Tablets.” The pending number was CXHS0501489, which showed that the drug registration application had reached the stage of applying for new drug production.3
Sankyo believed that Wansheng Company's manufacture of drugs violated Sankyo's patent. Although there was an “exception principle for scientific research”4 in CPL, a very narrow understanding of “specially used by scientific research and experiments” was adopted in Chinese judicial practice, which provided that “patent[ed] [products] could [only] be used for the purpose of researching, verifying or improving others' patents and it shall result in new technological achievements on the basis of the existing patented technology; otherwise, it shall be deemed as infringement.”5 Wansheng Company made use of Sankyo's patent to get its drug registration administratively examined and approved by the National Drug Regulatory Authority. Of course, with the purpose of passing through examination and obtaining drug production approval, Wansheng Company's behavior was obviously commercial.
Through an analysis of Article 11, “production and operation purpose”6 in the Patent Law, the Chinese court determined that Wansheng Company's behavior was not a violation of Sankyo's patent because Wansheng Company manufactured drugs using Sankyo's patented process in order to obtain clinical study drugs; it then used those drugs for the purpose of clinical trials and registration instead of in direct production and operation. However, a broad, overly discretionary interpretation of this exemption could damage the conformity and predictability of patent law.7 Although the defendant's behavior was aimed at meeting the requirements of administrative examination and approval, rather than explicitly at direct production and operation, its final purpose was clearly to market and sell drugs, which should at least be regarded as an indirect production and operation purpose. However, excluding such behavior from CPL was too farfetched, and there was no legal standing to do so.
Under the circumstances, at the third revision of CPL (which was amended in 2008), Chinese legislators added the fifth item while retaining Article 69 Item 4 (that is, the “exception of scientific research”) in response to the development of the Chinese medicine/pharmaceutical industry, in order to make the exception principle for drug patent experiments more explicit. Meanwhile, according to Article 19 of China's Measures for the Administration of Drug Registration, “as to others' patent drugs, applicants could apply for registration two years before term of patent expires.” Therefore, generic medicine manufacturers could conduct experiments two years before expiration of a patent's term and provide the data to the State Food and Drug Administration (SFDA) in advance for administrative examination and approval. Consequently, generic medicine could be released into the medical market rapidly after the expiration of a medicine's patent, which release would effectively decrease the price of the drug by introducing generic competition.
It should be emphasized that the extended period of patent protection for drugs was not established when CPL initially enacted the liability exemption principle for drug patent experiments, which principal is harmful to the original drug manufacturers. The reasons for this may lie in the Chinese pharmaceutical enterprises's generally lower capability for independent innovation: most Chinese pharmaceutical enterprises are not capable of developing new medicines, and accordingly, generic medicine accounts for 98%8 of Chinese pharmaceuticals. If extensions of the terms of patents are given to drugs, the winners will overwhelmingly be transnational pharmaceutical companies, not Chinese enterprises. However, in the long run, the lack of extensions (both de facto and de jure) for patents is not conducive to Chinese pharmaceutical enterprises' research into innovative new drugs, as shorter effective periods of exclusivity undercut the economic incentives for expensive investments in research and development.
Ironically, drugs created in China are also facing the challenge of the Bolar exception. This became evident in the context of Chinese research and development into fluoroquinolone antibacterial drugs. A patent was sought for antofloxacin hydrochloride; it was applied for in 1997 and obtained 2000. However, it was not authorized to appear on the market until it obtained a new drug certificate in 2009. Optimistically, its market share will be ten billion RMB. Unfortunately, its patent protection duration now is less than 10 years.9 Other pharmaceutical manufacturers are certainly keeping a close watch on developments in regard to this drug's patent, market exclusivity, and sales. It is highly likely that a relatively short period of patent protection will make leading pharmaceutical manufacturers in China deeply uneasy, which will be bad for Chinese pharmaceutical manufacturers' innovative pharmaceutical research.
II. Specific Questions Regarding the Application of the Exception Principle to Drug Patent Experiments in China
Although the CPL establishes the exception principle for drug patent experiments, the regulation exists in a rather simple written form, without extensive guidance, which lends itself to ambiguity. Therefore, there are still many problems in relation to the application of this provision. Some issues include:
Could a “green light” be given to the extension from product patent to process patent?
The drug patent experiment exception in CPL has limited, not universal, application. It applies to drugs and medical devices, but does not apply to pesticides, animal medicines, or biotechnology equipment for veterinarians. Within its scope, however, the exemption is broadly available; Chinese pharmaceutical enterprises and medical device manufacturers can make use of this exemption reasonably easily. However, it cannot be ignored that the Sankyo case (and the Amgen case in the United States) have affirmed the exercise of process patent rights. Therefore, one can draw the conclusion that if the purpose of using drugs made by a patented process is only to provide necessary information for administrative examination, the exception would also be applicable to process patents—meaning that “medicine and medical devices” stipulated in CPL should be understood as including “medicine and medical devices manufactured by patented process.”
Should experimental information be provided to relevant departments?
There is a dispute about whether the drug experiment exception is still applicable if experimental information is not provided to an administrative department. Lianhong He (2009)10 believes that if the experiment exception is still applicable even when information extracted from the experiments is not provided to the drug supervision and administration department, it would be unfair to the original drug patent holders and will dampen their enthusiasm for product creation. It seems that the “drug experiment exception principle” in CPL emphasizes that the infringement exemption exists only when the information obtained is submitted for administrative examination and approval department. However, applying this rubric too mechanically would be too harsh to generic medicine manufacturers, as well as ill-adapted to the current development of the Chinese medicine industry. As long as doers subjectively aim at collecting the data required by the examination and approval department, and the experiment is indeed conducted for the purpose of collecting data for administrative examination and approval, the drug experiment exception principle should be applicable.
What can't experiments achieve?
The CPL's definition of acceptable action in the context of this exemption is the conduct of manufacturing, importing, and using patented products to conduct experiments to obtain information that can be supplied for administrative examination and approval. There is no specific restrictive regulation that the allowed behavior should not range beyond (such as in quantity or scope) the minimum necessary for this goal. However, we believe that manufacturing and using the patented substances prior to patent term expiration constitutes patent infringement to the extent that such manufacture or use exceeds that necessary for the examination/application process. The conduct allowed under the exception for medical patent experiments should be limited to that necessary for the relevant experimental research and cannot extend to carrying out mass production and operating activities in the name of research. Moreover, generic makers' other acts, such as transporting products to potential cooperators and selling products to international distributors, should
What is the time frame for drug patent experiment(s)?
The 19th item of regulations in regard to the registration and management of drugs stipulates that generic manufacturers have the right to apply for registration to SFDA as early as two years before expiration of the pharmaceutical patent. This stipulation may be taken to limit when experiments can be conducted to the same two-year period, but should not be. First, applying for registration should be based on experimental data, and generic manufacturers need to conduct research into the patented product before applying for registration (i.e., if they can apply two years prior to patent expiration, they would need to research before that). Limitations on registration do not—and should not—necessarily limit the underlying experimentation, because regardless of when the experimentation is conducted, generic manufacturers cannot receive their drug registration before it is allowed by law—and cannot sell prior to patent expiration. Second, against the backdrop of a market economy, generic manufacturers will apply for registration at the most opportune time before patent expiration, subject to not being granted registration more than two years prior to patent expiration. The specific time frames for this process should be managed by the manufacturers, based on their needs, strategy, and capability, subject (as stated) to the overall parameters of when first registration, and then sales, are allowed.
III. Conclusion
The exception principle for medical patent experiment limits the effective duration of the original drug developer's patent monopoly, promotes healthy competition in China's public health system, and safeguards the public interest in access to affordable medication. However, the relevant regulations of SFDA and other state organs (such as SIPO) have not adapted this exception to the current, unmetered pharmaceutical market and China's strengthening pharmaceutical sector. Although supporting the underlying objections of this exception (preventing a de facto extension of the patent monopoly, to the public's detriment, by allowing the experimentation necessary to create and market generic versions of drugs shortly after the expiration of the patent term), there is nonetheless a need to strengthen pharmaceutical patent protection in order to avoid malicious violations of patent rights by enterprises taking advantage of this principle. Changes that should be made include:
(1) The burden of proof for generic developers should be enhanced, which will not only help prevent malicious violations (such as manufacturing, importing, and storing drugs under the guise of creating samples for experimentation) by generic manufacturers, but will also safeguard patentees' rights. For example, China should require generic manufacturers to provide proof that the “quantity” they manufacture under this exception meets—but is not in excess of—the demands of work toward administrative examination and approval. (2) In China, some patent infringers acquire their Pharmaceutical Production License by making use of supervision loopholes, then go on directly to sell their products, ignoring patent rights. These infringers usually adopt guerrilla tactics, which increase the cost for patentees to crack down on their counterfeit goods and inflict heavy losses on pharmaceutical companies, which invested large sums in research and development. Therefore, the patent system should be further improved in terms of the administration of drug registration, so as to eliminate such loopholes and prevent any infringement.
Acknowledgment
This paper is sponsored by Key Projects in the National Science & Technology Pillar Program (No. 2012BAF12B11).
Li Bingqin. Application of Law of Bolar Exception Sinicized. Meditation on Medicine Administrative Examination and Approval Plea in Patent Law. Excellent Papers Collection of Annual Meeting of China Patent Agents Association Fourth Forum on Intellectual Property. Intellectual Property Publishing House, 2013:408–417.
See also the Second Beijing Intermediate People's Court (2006) No. 4134 Written Judgment.
According to the regulation in Measures for the Administration of Drug Registration, application for drug registration is divided into three stages: preclinical study; clinical trials; and new drug production. At the clinical trial stage, the applicant should provide the clinical trial agency with the drugs used in the trial, manufactured by the applicant itself; at the new drug-production stage, SFDA should conduct an on-site inspection into the production status and conditions by extracting three samples of the product with consecutive batch numbers.
See also Item 4 of Article 63 in old CPL and Item 4 of Article 63 in new CPL.
Beijing Higher People's Court: Several Opinions on the Judgment of Patent Infringement (Trial), Article 98, Item 2–3.
Article 11 in CPL stipulates that after inventions and utility model patents are authorized, except as provided by other CPL provisions, no unit or individual shall use a patent without the permission of the patent holder, which means that manufacturing, using, offering for sale, selling, importing, or using a patented process, and using, offering for sale, selling, and importing products directly obtained from the patented process are not allowed.
Zhang Xinfeng. Bolar exception of drug patent right—analyzed from a patent infringement case.
Yuan-Hongmei et al. Comparison of “Bolar exception” clause and its impact on the pharmaceutical Industry between China and USA.
Tang-Ranzhi. Simple analysis of the application of Bolar exception.
H.E. Lianhong et al., Researches on pharmaceutical invention patents of experimental use exception system of our country.