Abstract
Abstract
The patent linkage system is a system designed to protect pharmaceutical patents. By analyzing the protection of pharmaceutical patents in China, this thesis mainly explores problems related to the implementation of the patent linkage system in the country, including such legislative, administrative, and judicial defects as inherent defects of current laws and regulations, inaction of functional departments, and no-infringement warranties becoming mere formalities, etc., so as to come out with feasible suggestion(s) that conform(s) to the reality of China in order to help improve generic drug approval procedures, enhance the coordination between functional departments, and thereby facilitate the establishment of a sound patent linkage system.
1. Introduction
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China is now the second-largest pharmaceutical market in the world, and Chinese pharmaceutical enterprises have made remarkable breakthroughs in various fields, including targeted medicine, recombinant protein, monoclonal antibody, and cell therapy. 2 However, looking from the perspective of market structure, since the production of generic drugs still dominates the market, China remains a huge market of generic drugs.
In order to form a virtuous circle of “innovation-reward-reinnovation” and to encourage pharmaceutical manufacturers to produce more new drugs, in October 2017, China drafted the “Opinion on Deepening the Reform of Review and Approval System to Encourage Innovation in Pharmaceuticals and Medical Equipment” (hereinafter “the Opinion”), pointing out that a pharmaceutical patent linkage system is to be established. In April 2018, China released the “Opinion on Reforming and Improving Pharmaceutical Supply Safeguard and Usage Policies,” which stated that efforts should be made to encourage the development of generic drugs and improve the quality of generic drugs.
This thesis, by analyzing the evolution of pharmaceutical patent protection system in China and referring to the patent linkage system in the United States, probes into the problems related to patents in currently applicable pharmaceutical registration procedures in China, clarifies the relations between the pharmaceutical patent system and the registration and approval system, and explores legal issues related to the implementation of the patent linkage system in China, trying to propose a solution to help overcome current difficulties and build a sound patent linkage system.
2. Patent Protection in Drug Registration in China
2.1. Evolution of pharmaceutical patent protection in China
China's first Patent Law was passed in 1984 and featured the characteristics of that time. The decision to not grant patent rights to “pharmaceuticals and substances obtained in chemical ways” shows that legislators at that time grasped the true reality of China—many things needed to be rebuilt in China at the early stage of reform and opening up. Considering the development of science and technology in China, legislators chose to meet people's health needs over protecting pharmaceutical patents. Obviously, such regulation was not in the favor of the long-term development of the pharmaceutical industry in China, and also suffered from the criticism of other countries. The regulation was cancelled when the government modified the Patent Law for the first time in 1992, which is not a reflection of the rapid development of Chinese science and technology as well as the pharmaceutical industry, but rather a manifestation of the legislators' wish to push the industry to advance and to encourage the Chinese pharmaceutical and chemical industry to go on an independent development road. The decision to cancel the regulation, taken to fulfill the commitments made in the Memorandum on Intellectual Property Protection, is a superstructure design focusing on industrial guidance.
The case of Sankyo Pharmaceuticals Co. Ltd. accusing Beijing Winsunny Harmony Science & Technology Co., Ltd. of infringing its patent rights in 2006 shows another defect of the relevant laws and regulations in China. The laws and regulations applicable at that time did not define whether using relevant patents in materials provided for administrative approval would be deemed as an infringement act, while the Bolar exemption had already been used in the international community to avoid such disputes. The Bolar exemption stipulates that materials to be provided for administrative approval, including those related to manufacturing, using, or importing patent medicine or patent medical equipment, shall not be deemed as an infringement act. The aforesaid case ended with the conclusion that “acts not belonging to using patents for operating and manufacturing purpose as defined in the Patent Law of China shall not constitute [an] infringement act.” 3 ] This led to a hot debate in the academic circle. Two years later, China modified the Patent Law for the third time, specifying the application of the Bolar exemption clearly and making “the first Bolar exemption case in China” in 2006 a milestone in the history of pharmaceutical patent protection in China. The amendment allowed the public to obtain cheaper generic drugs with the same treatment effect after the patent protection term of a pharmaceutical product expires, which is of great significance to relieving the pressure of public health and medical problems in China.
On October 8, 2017, the Opinion offered a series of measures to help protecting pharmaceutical patents, trying to build a science-based and comprehensive protection mechanism by combining pharmaceutical patent linkage, patent term compensation, and data protection, for the purpose of taking proactive steps to protect the legitimate interests and rights of patent owners and to trigger innovation in the pharmaceutical manufacturing industry.
2.2. Current situation of pharmaceutical patent protection in China
China started to regulate patent issues in the pharmaceutical registration approval process in 2002. From the “Provisions for Drug Registration (Trial) to the Provisions for Drug Registration” (hereinafter “the Provision”) in 2005 and 2007, China kept modifying relevant regulations and is finally equipped with some of the elements needed to build a patent linkage system. Article 8, “Information Announcement”; Article 20, “Data Exclusivity”; and Article 66 “New Drug Monitoring Term” in the Provision and the Bolar exemption in the Patent Law are deemed to be the basis of the patent linkage system in China. 4
2.2.1. Information announcement system
As specified in Articles 8 and 18 of the Provision, drug supervision authorities shall fulfill the obligation to inform and announce information, while the applicant is not only obliged to disclose the ownership of relevant patents and submit a no-infringement statement, but also has the right to check the progress and result of registration approval. Such regulation has helped improve the transparency, equality, and fairness of drug registration approval and enhance the protection of the rights and interests of drug patent owners to a certain extent.
In this regard, the United States has the Orange Book in its patent linkage system. The full name of the Orange Book is Approved Drug Products with Therapeutic Equivalence Evaluations, with the information to be announced including drugs approved by FDA, therapeutic equivalence evaluation of multisource prescription drugs, and information about the product patent and process patent related to the drugs listed in the Book. FDA discloses information about newly approved drugs in the Orange Book, including a drug list, drug patent introduction, data protection term, etc. Applicants for generic drugs could get information about the patent of the new drugs to be imitated to avoid infringement. In fact, the Orange Book is a simplified system built to specify the patent(s) of the new drug manufacturer, settle patent disputes between new drug manufacturers and generic drug manufacturers, and thereby help the judicial body settle patent cases.
Unlike the Orange Book, the information announcement system in China didn't specify what should be announced, and there are also no clear standards to regulate the approval process, making the information announcement process somewhat uncertain. Some pharmaceutical manufacturers might abuse their rights and submit a large amount of irrelevant patents to stop other pharmaceutical manufacturers from producing relevant generic drugs. In addition, the Orange Book is required to be updated regularly to ensure its authoritativeness and accuracy of information, while the information announcement system in China stipulates nothing about updating information.
2.2.2. Data exclusivity system
Data exclusivity in the patent linkage system indicates that drug supervision authorities are obliged to protect secret data submitted in the registration process. Pharmaceutical manufacturers, in order to apply for administrative approval and prove drug effect, have to submit a large amout of laboratory data, a majority of which constitutes commercial secrets. In this case, supervising authorities should protect the undisclosed data within a certain period and forbid other manufacturers from using it directly or indirectly, so as to safeguard the interests of new drug manufacturers.
Article 20 in the Provision defines a unified protection term for undisclosed data obtained and submitted by the applicant. That is, within the six years after the drug is approved, without the consent of the applicant, others shall not apply to use the undisclosed data (unless such data has been obtained independently). The monitoring term defined in Article 66 also protects the data exclusiveness of new drugs objectively. The monitoring term, shorter than five years, makes other manufacturers unable to produce or import the new drug, or change the form of the drug.
FDA grants a protection term in accordance with the categories of drugs: seven years for orphan drugs (ODE), five years for new chemical entities (NCE), and another six months on the basis of the original patent term for pediatric medications (PED). FDA also stipulates that unless the applicant has obtained the authorization or submitted effective data obtained by it independently, the same application shall no longer be accepted within the protection term.
2.2.3. Abbreviated New Drug Application.
According to the “Work Programme for the Reform of the Registration and Classification of Chemicals,” there are five main categories for the new registration and classification of chemicals, of which category 3 and category 4 should be declared in accordance with the procedures for generic drugs in the Measures. Also, according to the “New Registration and Classification of Chemical Drugs (Trial),” category 3 drugs (generic drugs listed abroad but not listed in China) are required to submit clinical trial information, which clearly requires the submission of electronic documents in the clinical trial database, including the original database, derived analytical database, and variable description documents, while category 4 drugs (generic drugs listed in China) are more focused on bioequivalence testing and do not require the submission of complete clinical trial data.
According to rules and regulations for U.S. drug registration management, a New Drug Application (NDA) should be submitted for new drugs, while an Abbreviated New Drug Application (ANDA) should be submitted for generic drugs. When filing the ANDA, generic drug manufacturers no longer need to prove the safety, effectiveness, and controllable quality of the drug through toxicological research and clinical trial. All they need to do is to prove that the drug has bioequivalence with approved new drugs and provide one of the following four statements according to the patent information listed in the Orange Book:
I. The new drug has no patent in the Orange Book; II. The new drug has patents recorded in the Book, but the patents have expired; III. No approval required until new drug patent expires; IV. The new drug patent related to the generic drug is invalid, or the generic drug does not constitute an act of infringement.
Once the generic manufacturer chooses to submit statement IV, it should notice the owner of the challenged patent within 20 days and provide relevant evidence and a legal basis. Generally speaking, ANDA has simplified the application process and manufacturing cost for generic drugs greatly, providing a sound platform for both the new drug manufacturer and generic drug manufacturer.
3. Problems Existing in The Implementation of the Patent Linkage System in China
After the U.S. patent linkage system was implemented, problems like reverse settlement agreements between pharmaceutical manufacturers and the abuse of the Orange Book and containment term appeared gradually, making many people realize that the system was not perfect. For instance, in the GSK v. Apotex patent infringement case, GSK filed five different patent infringement claims against generic drug applicant Apotex, asking for a 30-month containment term in each claim, and finally delayed the launch of the generic drug produced by Apotex by 65 months. 5 By comparing the national realities, system structures, and drug patent protection in China and the United States, the authors believe that the problems existing in the implementation of the patent linkage system in China might be as follows:
3.1. Unclear drug patent ownership statement making no-infringement statement a mere formality
Without the protection of a national system, all the new drug manufacturers could do is spend their own limited time and money to pay close attention to the huge and complicated market. Even if they found other manufacturers infringing their drug patent rights, since they could not intervene in the drug registration process, they could only file litigation after the drug was officially put into the market. In this case, the no-infringement statement of the patent linkage system could solve the problem. New drug manufacturers could grasp the trend of the pharmaceutical market through the statements of the generic drug manufacturer and make the measures they take to protect their own rights more specific and targeted. However, currently, the no-infringement statement system in China still has many defects.
As specified in Article 18 of the Provision, the applicant should provide statements about the patent and ownership of the patent related to the drug under registration or the prescription used, process and usage, etc., leaving discretionary space for the applicant with the word “etc.” Since current regulations offer no direct specification and drug supervision authorities did not offer further specification about this with other normative documents, it is hard to tell what the “etc.” included or excluded from literal interpretation. Morevoer, because different patent searching institutions differ in searching capacity, it is hard to ensure the reliability of the statement submitted by the applicant.
Secondly, before Center for Drug Evaluation under the China Food and Drug Administration (CFDA) released the Catalog of Listed Drugs of China on December 29, 2017, the open database of patent information of CFDA also offered information about unauthorized patent applications and invalid patents (i.e., all the invention patents that are related to the drug under application directly and indirectly). As the applicant only makes a statement against valid patents, a no-infringement statement against a registered but unauthorized patent should not be deemed as a false statement. However, if the patent application is granted with patent rights after the statement is made, the drug applicant would be deemed as having committed an infringement act, and the aforesaid statement would become a false statement indeed. Therefore, the database with limited legal force, due to the complexness of information, makes it hard to ensure the validity of the no-infringement statement of the drug applicant.
In addition, in China, applications of both new drugs and generic drugs should provide no-infringement statements against all the patents involved, but it is unnecessary to offer corresponding explanations in each application. 6 Unlike the ANDA of the United States, a no-infringement statement in China must be one of the four kinds of statements listed in the relevant regulations, and is merely a rough and less-binding statement depending on the moral quality of the applicant. Besides, CFDA only performs formal examination on this issue. All these together gave birth to a large number of false statements from pharmaceutical manufacturers.
3.2. Generic drug application and data exclusivity systems are not implemented effectively in practice
It is broadly specified in Article 13 of the Provision that an application for drug registration approval should be submitted together with comprehensive and reliable research data, without distinguishing new drugs and generic drugs. In Article 31 and Article 74, it is stipulated that when applying for generic drug registration, the applicant must prove the candidate drug has the same bioequivalence and active ingredient, etc., with the reference drug. The request for “New Registration and Classification of Chemical Drugs (Trial)” stipulates that category 3 drugs also need to submit detailed clinical trial data with the new drug registration application. Although category 4 drugs have reduced declaration requirements, the overall institutional framework is still unable to reflect that there are substantial differences between new drugs and generic drugs in the examination and approval. As mentioned above, we can conclude that China lacks a real, complete generics simplified application system.
Generic drug manufacturers need to prove the safety and effectiveness of the drug through a large number of pre-clinical studies and clinical trials. Even if the legal protection term of the laboratory data of the reference drug has already expired, it is also necessary for them to prove and conduct experiments, which makes it more difficult for generic drugs to go into the market.
The Provision proposes a “one for all” regulation for the data protection term and new drug monitoring term, which does not conform to the practical demands. After comparing China's data protection term with American data exclusivity term, it could be easily found that the former generates less motivation for the R&D of orphan drugs and pediatric medications, and suppresses the enthusiasm of manufacturers in developing such drugs to a certain extent due to the excessively long protection term of new chemical entities.
Looking at the current drug patent protection system in China, the data exclusivity system is of little value to a certain extent. Since the materials and data to be submitted for applications of new drugs and generic drugs are almost the same, the applicant could not have the generic drugs passing the registration approval process by simply proving equivalence. For manufacturers of generic drugs, to produce a generic drug, experiments should be conducted and relevant data should be obtained once again no matter whether the laboratory data protection term has expired. In this light, the protection term of laboratory data is meaningless since it could not be used directly or indirectly. A waste of time and money hinders the development of generic drugs in China.
However, there is a trend to improve the current situation. On April 26, 2018, the Office of the State Drug Administration publicly sought advice on the “Measures for the Implementation of Data Protection for Drug Testing (Interim).” In the draft, a distinction has been made among the data protection periods of drugs. In addition, the need-to-apply mode for data protection has been adopted: pharmaceutical manufacturers submit the application for registration of drug listing permits together with the application for stating the duration and the reasons for protection of the protection of drug rights. In addition, under the prevention of abuse of rights clause, should the obligee on the date of obtaining data protection fail to disclose their protected data and the drug is not sold in the market, protection should be revoked.
3.3. Bolar exemption is not clear enough and is inappropriate in terms of many issues
According to relevant laws and regulations, as well as China's practical experience, new drugs, generic drugs, and medical equipment should all pass administrative approval. The Bolar exemption, being widely applicable, could help promote the development of the pharmaceutical industry in China and is therefore of great importance.
However, the Patent Law does not specify the particular time when applicable regulations of the Bolar exemption should be applied, which would definitely lead to chaos in application of the regulation in practice. For example, could the patent of the reference drug be used at any time within the patent term for the purpose of providing information needed for administrative approval?
As specified in Article 19 of the Provision, a “registration application can be filed two years before the patent term expires.” After it is confirmed by CFDA that relevant requirements have been met, the relevant document number and registration certificate would be issued after the patent term expires. The time limit of “two years” has been questioned by many scholars and researchers who doubt that whether the complicated clinical trial of the generic drug could finish within two years. After the generic drug comes into the market, the drug patent protection term might have expired for a long term, which undoubtedly delays the patent protection term. 7 Meanwhile, the meaning of “patent term expires” in the regulation should be carefully studied. Most drugs in modern times usually involve more than one patent. Does “patent term expires” here mean “intermediate patent expires,” “manufacturing method patent expires,” or “all the patents expire”? The ambiguous definition of this concept makes the calculation of the starting date of the two-year time limit a difficult thing, which goes against the Bolar exemption's aim of ensuring that generic drugs can be produced and put into market in time after the new drug patent term expires.
In addition, although Article 69 of the Patent Law specifies the range of application of the Bolar exemption in the legal area, given the special characteristic of domestic law, it could not be applied before the applicant passes relevant administrative approval in China. Using patent rights for the purpose of obtaining the information needed for the administrative approval of other countries would commit an infringement act. Knowing what the potential legal consequences would be, Chinese generic manufacturers have become increasingly less active in expanding overseas markets.
3.4. Fragmentation of functional departments and malpractice of remedy procedure
Before the State Council launched institutional reforms in March 2018, drug registration approval was under the management of CFDA, while the granting of patent rights was under the management of State Intellectual Property Office (SIPO). Under the previous administration management system, there was no channel for CFDA and SIPO to coordinate with each other effectively, and CFDA was not responsible for and did not have the professional capability to conduct patent examinations and determine whether an infringement act was committed.
Clause 2 of Article 18 of the Provision roughly specifies that patent disputes occuring during the drug registration process shall be settled in accordance with relevant patent laws and regulations. However, how to coordinate the work of different functional departments? What are the limits of the functions and power of the different departments? How to apply this principal in litigation? All these problems are not mentioned in the Article. The lack of a procedural linkage mechanism led to different ways of handling drug patent infringement cases in different places, making it hard to specify or define normative approaches. Once a patent dispute happens, the relationship between CFDA and SIPO, as well as CFDA and the court, would make the situation complicated: CFDA's technical examination would not be suspended because of the examination on announcement of patent invalidation of SIPO or patent litigation in the courts. If the patent dispute were settled before CFDA came out with its examination result, the settlement of the dispute would influence the result of the examination. However, if CFDA came out with its decision before the dispute is settled, CFDA would not cancel its decision even if the patent were deemed valid or cancelled. Article 12 of the Provision (2005), currently invalid, specified that the patent owner could file an application with CFDA, according to the final decision of patent management departments or the judgment of People's Court that an infringement act has been committed, to ask CFDA to cancel the drug approval number of the infringer, which the CFDA could do. Without an appropriate and legal lockout period, the process of generic drug review and patent dispute handling could not be coordinated and connected effectively.
In addition, the U.S. patent linkage system not only encourages generic drug manufacturers to challenge patents, but also offers opportunities for new drug manufacturers to file appeals or otherwise seek relief, which is perfectly manifested in the regulations about the 45-day litigation term and 30-month containment term. When filing an ANDA, if statement IV is concerned, a generic drug manufacturer should send a notice to the new drug manufacturer, which grants the new drug manufacturer the right to file patent infringement litigation within 45 days. Once the litigation is filed, the 30-month containment term would be activated: that is to say, within 30 months after the litigation begins, FDA shall suspend the examination and review work against a generic drug application. If the court comes out with the judgment that the patent is invalid or the generic drug does not infringement other's patent rights within 30 months, the containment term shall end.
But in the Provision of China, it is only specified that relevant information should be “made public.” There are no mandatory requirements about noticing the rights owner, making the patent linkage system no longer able to coordinate patent right protection work, and leaving the new drug manufacturer extremely disadvantaged. This is because generic drug manufacturers know exactly what patents they are going to challenge, but new drug manufacturers don't who the challenger will be. Asking a new drug manufacturer to pay close attention to the information publicized by administrative authorities is impractical. Looking from the technical and procedural level, publicizing information and noticing the right(s) owner are both easy to implement. Therefore, there is no reason to have this information gap, which harms the new drug manufacturer's right to file patent infringement litigation.
In addition, an absence of regulations on “artificial infringement” puts new drug manufacturers in an impossible position even after they know what generic drug manufacturers plan to do through the information publicized. Artificial infringement means that one would be deemed to be infringing others' patent rights by filing a registration approval application with the drug supervision authorities during the patent term of a new drug. The infringement act defined by the Patent Law refers to manufacturing, selling, and promising to sell, etc., but does not include filing an application. However, after the birth of the Bolar exemption, many manufacturing and importing acts are also exempted from infringement, which protects the rights and interest of generic drug manufacturers, but disadvantages new drug manufacturers. Introducing the concept of artificial infringement into China added the act of application into the regulation range of the Patent Law, and was a measure taken to reach a balance between the interests of new drug manufacturers and those of generic drug manufacturers. This does not conflict with the Bolar exemption. Artificial infringement regulates the act of filing applications for registration approval of drugs related to others' patents, while the Bolar exemption aims to protect all kinds of acts taken at the experimental stage when producing generic drugs. Artificial infringement was not introduced into China together with the Bolar exemption, which makes new drug manufacturers unable to obtain legal evidence supporting the filing of patent infringement litigation before generic drugs come into the market, thereby forcing them to fall into a passive position when facing patent challenges.
Artificial infringement limits the application range of the Bolar exemption. If the application filed by pharmaceutical manufacturers were not related to patents owned by others, the manufacturer would not be deemed to be committing artificial infringement acts. If the generic drug under application does infringe the drug patents of others, the artificial infringement actually gives new drug manufacturers the right to file litigation, which is the basis of the appropriateness of the containment term.
4. Suggestions for Implementation of a Patent Linkage System in China
Some scholars think that implementing the patent linkage system in China might violate the Patent Law. 8 In the authors' view, such opinion is at least somewhat incorrect. To establish a new system, it is necessary to coordinate the work of various parties and modify relevant laws and regulations. Viewed in this light, the fundamental flaw in believing that implementing a patent linkage system will violate existing Patent Law is that the law and regulations will necessarily be changed or revised to implment the system in the first place.
China is exploring the establishment of a patent linkage system for the purpose of promoting innovation in and development of its pharmaceutical industry, as well as to meet its people's health needs by increasing the accessibility of various drugs. The innovation China seeks to encourage not only refers to original innovation (research and development of new drugs), but also includes re-innovation drawing upon others' achievements (research and development of generic drugs). 9 It should be made clear what the defects of the current drug patent protection system of China are, and that relevant laws and regulations, like the Patent Law and Provisions for Drug Registration Management, will have to be modified in a comprehensive way to form a new system. For this, the authors provide the following suggestions:
4.1. Building drug information platforms to link functional administrative organs
A patent linkage system is a relatively comprehensive system, concerning the research and development, manufacturing, and selling of drugs. To implement the system in China, we should, first of all, build a unified and well-protected drug information platform to protect laboratory drug data and publicized drug information.
When applying for registration approval, for both new drugs and generic drugs, pharmaceutical manufacturers should always submit information about the effective ingredients, dosage form, and specification of the drug for public inquiry. Relevant undisclosed data should also be submitted to prove the safety, effectiveness, and controllable quality of the drug under application. The former information shall be made public and updated on a timely basis according to law, while the latter would enjoy effective protection from drug supervision authorities, so as to maintain the enthusiasm of new drug manufacturers for research and development. 10
Under the original administrative management system, CFDA and SIPO belong to different departments, and so it is difficult for them to coordinate closely with each other. But according to the plan for institutional reform which the State Council proposed at the 13th National People's Congress, given the special characteristics of drugs and drug supervision work, China will set up a State Drug Administration to replace CFDA and seek to restructure SIPO, placing CFDA and SIPO under the management of the State Administration for Market Regulation. The reform will facilitate the implementation of patent linkage system in China. Although drug registration and patent licensing will remain the responsibilities of the two departments respectively, the two departments will have the same immediate superior, facilitating intersystem cooperation.
Defining the reference preparation and standard preparation to set standards for generic drugs plays a fundamental and essential role in producing generic drugs. 11 On December 29, 2017, the Center for Drug Evaluation under CFDA released the Catalog of Listed Drugs of China (hereinafter refer to the “Catalog”). Newly listed, registered, and classified drugs, as well as drugs passing generic drug quality and therapeutic effect consistency evaluation, would be listed in the Catalog and their corresponding information kept updated. In this way, the government set up objective standards for generic drug development in China, making it more convenient for pharmaceutical manufacturers and the public to check various attributes of drugs. It can also help generic drug manufacturers find the accurate information they need, improve the examination efficiency and effectiveness of drug supervision authorities, and thereby promote the development of generic drugs. As for the compilation of the Catalog, the principle “taking actions before making improvements,” conforms to the reality of China. As mentioned before, while the pharmaceutical industry in China has made great strides, there is still a long way to go for China in many areas. One cannot realistically hope to achieve big things over night, but rather should take cautious steps. The Catalog records all the hard work CFDA did from 2015 to now. It's the result of various studies and bold attempts. Compared with the Orange Book of the United States, it does have many defects, but it marks a great breakthrough of “from zero to one” made by China, and to make further improvements and adjustments, we need to settle various problems existing in practice.
It is not enough to keep improving the Catalog. We need to be open to fresh ideas and concepts, so as to develop a demand-driven way of thinking. For example, it is necessary to make and publicize a list of drugs with expired and invalid patent rights and for which no application has been filed, so as to help pharmaceutical manufacturers produce generic drugs. We can also make a list of drugs for which the production of generic drugs would be welcomed, 12 so as to encourage the production of clinical generic drugs with specific curative effects or meeting specific needs—such as orphan drugs and pediatric medications—and thereby make the production and approval of generic drugs more transparent.
4.2. Regulate registration statements of new drugs and generic drugs
The experience of foreign countries tells us that the drug patents that need to be registered and publicized are only those directly relating to drug examination and approval. But some new drug manufacturers tend to abuse the patent publicizing system and try every means to increase their number of registered patents with invalid patents and junk patents, so as to make it more difficult and complicated for generic drug manufacturers to challenge their patents. This trend has been proved in U.S. practice. Since FDA does not conduct substantive review over the patents of new drug manufacturers listed in the Orange Book, many manufacturers would apply to list patents that have little to do with the new drug in the Book, for the purpose of delaying or hindering the entrance of generic drugs into the market.
Although there are many difficulties, we cannot give up halfway. We should learn from the Orange Book system of the United States in terms of managing the publication of drug information and also in regard to improving the accuracy of generic drug patent applications and no-infringement statements. Meanwhile, we should judge whether the statement made when applying for generic drug registration and approval challenges others' patents according to the specific situation, and simplify the application procedure for generic drugs to reduce clinical trials and replace certain clinical trials with an evaluation of the consistency of chemical substances, product function, and bioequivalence.
4.3. Conducting substantive examination against the no-infringement statement made by a generic drug applicant
When filing their applications, generic drug manufacturers should detail the patents and ownership of the patents related to the generic drug and submit a no-infringement statement. CFDA should conduct a substantive examination of the statement, which will be facilitated by the unified drug catalog and laboratory database, as well as by the coordination between different administrative departments.
During the application process, the supervising authority should not depend only on the no-infringement statement made by the manufacturer, since excessive trust in an interested party will invariably lead to patent disputes and even litigation in later stages. Also, there are many ways to settle conflicts and disputes, and recourse to the court should be the last choice, not the first. Eliminating conflicts and disputes before they escalate, and settling patent disputes before they emerge, leads to a more efficient use of resources and time.
4.4. Improving the Bolar exemption
As stated above, Article 19 of the Provision, matching the Bolar exemption in the Patent Law, is difficult to implement in practice. The authors suggest the two-year limit be canceled. Although it could extend the patent protection term of drugs to make up for the time spent on administrative approval, such an extension is somewhat tricky and full of uncertainty.
Geographical limitations of the Bolar exemption, which is the result of unclear expression, should also be canceled. This is a thing that must be done to meet the requirements of economic globalization. For example, when modifying its patent law in 2005, Germany expanded the applicable range of the Bolar exemption to “the European Union, members of the EU and the third country.” 13
4.5. Defining litigation period, containment term, and market exclusivity of the first generic drug
The Chinese government should also consider issues related to the litigation period, containment term, and market exclusivity of the first generic drug. In “Policies on Encouraging Drug and Medical Equipment Innovation and Protecting the Rights and Interests of the Innovator (Draft for Exposure),” CFDA offers the following in relation to the litigation period and containment term: if intending to challenge others' drug patents, the applicant should make the no-infringement statement and provide notice to the relevant patent owner within 20 days; if the patent owner thinks the applicant has infringed his/her rights, he/she shall file litigation within 20 days after receiving the notice; after litigation is accepted formally, the drug examination and approval authority could initiate a containment term shorter than 24 months without suspending the technical evaluation process.
In other words, after making a no-infringement statement when filing an application for producing generic drugs, the applicant shall notify the patent owner immediately, and the patent owner shall file litigation within 20 days after receiving the notice if the owner thinks an act of infringement has been committed. In such a situation, the State Drug Administration should suspend the issue of the drug license for a period of no longer than 24 months after the litigation is filed. According to general laws, the aforesaid would not apply in the following situations: the patent owner fails to file litigation within 20 days after receiving the notice; the patent owner cancels the litigation after filing it, or the litigation is canceled by the court; the patent of the patent owner is invalid; the court makes the judgment that no infringement is committed; the two parties reach consensus after the litigation is filed or the case is settled through meditation; and in other circumstances where the license should be issued according to law.
A certain amount of market exclusivity should be granted for the first generic drug. During the duration of market exclusivity, the State Drug Administration should not issue licenses to other similar generic drugs for the purpose of helping the first generic drug expand the market and recover costs. Market exclusivity for the first generic drug has its own special meaning. During the duration of exclusivity, the new drug and the first generic drug would dominate the market. In addition, since the price of generic drugs is relatively lower, the first generic drug would enjoy great market opportunities, ensuring healthy competition in the pharmaceutical market and enabling the public to buy the drug they need with a lower price. The authors suggest the market exclusivity for the first generic drug be set at 12 months. If two manufacturers meet the precondition of applying for the first generic drug, they would enjoy market exclusivity for 12 months together. Meanwhile, efforts should be made to combat speculators, including improving the Anti-Monopoly Law and restraining new drug manufacturers from making generic drug manufacturers give up the market exclusivity of the first generic drug by buying it.
4.6. Establishing drug patent term compensation system
Patents of intermediate chemicals and manufacturing methods, as well as core pharmaceutical patents, are usually applied for at an early time, after which a large amount of time would be spent on pre-clinical studies, clinical studies, administrative approval, and going into the market. Therefore, when new drugs are officially sold in the market, the remaining protection term of their core patents is not long, which reduces the ability of the manufacturer to recoup costs and make profits, thereby reducing the motivatation for developing new drugs.
Currently, China does not have a patent term compensation system in the true sense. The only regulation that is related to this issue is Article 150 of the Provision, stipulating differentiated technical evaluation time. The regulation did help shorten the time taken for approval, benefiting the patent term of drugs. However, a system aiming to lengthen the drug patent term by shortening administrative approval time is unreliable and uncertain. Looking at drug patent protection in China, it could be found that a valid patent term that could ensure drug market exclusivity is much shorter than that defined by law. In this light, we still need a drug patent term compensation system. To do this, we must take cautious steps, otherwise the production activity of the generic drug manufacturer would be detrimentally impacted. Therefore, we should pilot a patent term compsenation system on some selected new drugs by giving them proper patent term compensation. The specific compensated time could differ according to different categories of drugs. At the preliminary stage of the system, it could be set short. As the system develops, it could be made longer according to the specific situation.
5. Conclusion
The patent linkage system is a comprehensive interest-balancing system based on interest competition. In the U.S., the Hatch-Waxman Act aims to encourage innovation in research and development of drugs and help generic drugs entering the market, 14 so as to protect the rights of patent drug manufacturer and to help generic drugs enter the market in a faster and more efficient way.
The Orange Book makes information about drug patents accessible and transparent. The Bolar exemption allows generic drug manufacturers to use patents and product drugs under certain conditions, while artificial infringement grants new drug manufactures the right to file litigation and suspend the registration and approval process of generic drugs that might infringe. The system should also set up the concept of market exclusivity of the first generic drug in order to protect the interests of generic drug manufacturers who are not committing any infringement acts; while the patent compensation system protects the rights and interests of new drug manufacturers.
The advantages a patent linkage system would bring to generic drug manufacturers outweigh the disadvantages it brings. Firstly, the system could help generic drug manufacturers get information about drug patents in a more convenient way, to help them challenge patents; secondly, it can prevent drugs from going into the market and thereby avoid patent disputes and corresponding consequences (including being forced to halt production and stop selling the drug, resources slack, wastes and loss of previous costs, and even massive compensation) when infringement acts have been committed but no one knows.
It is a daunting task to build a patent linkage system in China, but it is also the only course that could be taken to promote further development of the pharmaceutical industry and to increase the pharmaceutical innovation capability of the country. To achieve the task, we need to do the following things: formulate laws to provide guidance to manufactuers and also provide a legal basis for the implementation of the system; adjust the original administrative and judicial system, linking drug supervision authority with the intellectual property department to enhance the coordination between administrative organs and judicial authorities; establish a unified, convenient, authoritative, and precise drug information platform to update information about drugs going into the market and create a list of encouraged generic drugs, so as to help both new drug manufactures and generic drug manufacturers launch high-quality drugs in a more rapid, standard, and professional manner, in order to meet people's health needs and reduce medical costs; and simplify the approval channel of generic drugs by reducing unnecessary approval items, so as to help generic drugs to go to the market faster.
To implement a patent linkage system, we need to make sure that every link is in place. We should, following the principle of “balancing interests”: motivate drug manufacturers to develop and produce new drugs, guarantee public interests and promote public health, guide the pharmaceutical industry in China toward a new development state with preferential tax policies and pricing policies, and finally, kick off a new page for drug patent protection in China.