Comparative Overview of Drug Patent Linkage Systems in China and the United States

On October 17, 2020, the Standing Committee of the National People's Congress of China passed an amended Patent Law, which takes effect on June 1, 2021. The amended Patent Law introduces a patent linkage system in Article 76, which outlines a general framework allowing early patent dispute resolution before generic drug approval.

Draft measures to implement Article 76 are proposed by three government agencies:

1. "Draft Measures on the Early Resolution Mechanism for Drug-Related Patent Disputes" jointly by the National Medical Products Administration (NMPA) and the China National Intellectual Property Administration (CNIPA),
   
   

2. "Draft Legal Provisions on Several Issues Concerning the Application of Laws in the Trial of Disputes over Drug Patent Linkage" by the Supreme People's Court, and
   
   

3. "Draft Measures on Administrative Adjudication in the Early Resolution Mechanism for Drug-Related Patent Disputes" by the CNIPA.

Like the Hatch-Waxman framework in the U.S., China's patent linkage system aims to balance the interests of innovative drug developers and generic drug manufacturers, encouraging therapeutic innovations and, in the meantime, not unduly impeding the public's access to inexpensive, generic drugs.

In the past, generic drugs could be approved in China and enter the market even though they may be infringing certain patents. The patent owner had no cause of action to bring a patent infringement suit until a generic drug had actually entered the market, because filing a generic application per se, even when it entirely relies on an approved drug's efficacy and safety data, was not an infringing act in China.

But at the same time, a generic company in China enjoys a safe harbor for manufacturing, using, or importing a patented drug for the purpose of providing information needed for regulatory approval. These practices in China resulted in a system that tilted in favor of the generic drug industry.

China's amended Patent Law now provides several bargains to the innovative drug industry. It provides a public platform where the patent owner/NDA holder can monitor whether a generic version of its patented, approved drug product or medical use is seeking market approval.

The amended law also provides the patent owner/NDA holder a cause of action regarding whether the generic product falls within the scope of the registered patent.

Thus, the patent owner/NDA holder can initiate civil judicial proceedings or administrative adjudications ("an Article 76 action") prior to marketing approval of an allegedly infringing generic product. Once an Article 76 action is initiated, the NMPA will not approve the generic drug during the 9 months after the docketing date of the Article 76 action.

The amended patent law also provides patent term extensions for innovative drug patents to remedy delays incurred during the regulatory approval process, subject to two restrictions: (1) the total extension cannot exceed 5 years, and (2) the total patent term after drug approval cannot exceed 14 years.

On balance, China's patent linkage system also encourages generic applicants to challenge innovators' drug patents, providing the first successful generic challenger a 12-month market exclusivity.

In this article, we will focus on the draft measures relating to Article 76 of China's amended patent law, and its comparison with the Hatch-Waxman framework in the U.S. The draft measures may change when the amended Patent Law takes effect on June 1, 2021.

Read the full article here.