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Phase 1 of China & USA Trade Agreement: Pharmaceutical related IP issues

Published on 19 Dec 2019 | 3 minute read

Phase 1 of an Agreement to end the trade war between China and the USA has recently been announced.

The Intellectual Property Chapter of this Agreement includes reference to addressing longstanding concerns about pharmaceutical related intellectual property (IP), amongst other issues.

There are several China pharmaceutical related IP issues that this could refer to, but perhaps the most obvious are pharmaceutical patent extension of term, patent linkage, and the regulatory data protection term for innovative therapeutic biologics. It would not be a surprise to see all these issues addressed in Phase 1 of the Agreement.

Pharmaceutical Patent Extension of Term and a Patent Linkage System

China currently has what is commonly referred to as a “naked” Bolar approach to pharmaceutical IP protection. China’s patent law contains a Bolar type regulatory approval exception to patent infringement which applies when patented drugs, medical apparatus or medical instruments are used for the purpose of seeking regulatory approval. This infringement exception shortens the monopoly protection available to a patentee, as product registration and marketing approval can be obtained by a competitor within the term of a patent, allowing faster product release following patent expiry. China’s Bolar exception is “naked” as China does not have counter-balancing provisions to address that loss, usually involving patent term extension and/or a patent linkage system.

Pharmaceutical patent term extensions and patent linkage systems have both been proposed in China previously.

In the draft of the Fourth Amendment to China’s patent law, a patent term extension for innovative pharmaceutical patents was included for delays resulting from regulatory approval processes. Patent term extension would apply to innovative drugs having a simultaneous listing in China and abroad. The extension would not exceed 5 years and the total term of the patent after listing in China would not be able to exceed 14 years. The Fourth Amendment to China’s patent law remains a draft.

Patent linkage was proposed by the China Food and Drug Administration (CFDA) as part of a reform of regulatory approval processes prior to release of the draft of the Fourth Amendment to China’s patent law. It was a notable absentee from the draft law. The patent linkage system proposed was similar to the US system and included (i) a catalogue listing relevant drug patents (similar to the Orange Book) (ii) a requirement that generic companies notify a patentee of an application for regulatory approval (iii) suspension of the approval process if the patentee launches an infringement action, and (iv) a period of marketing exclusivity for the first generic company to successfully challenge the validity of a relevant listed patent.

Introduction of a pharmaceutical patent term extension period based on regulatory delays would not be a problem for China as this is already part of the draft Fourth Amendment to China’s patent law. Patent linkage would be more difficult due to the complexity of the system and its potential impact on pharmaceutical costs and availability.  However, it could probably be introduced relatively easily, as a system has already been proposed and considered.

Regulatory Data Protection Term for Innovative Therapeutic Biologics

Biologics are pharmaceutical products produced by living systems such as cells or tissues. Regulatory data protection for innovative therapeutic biologics is important as these products are difficult to effectively protect with patents. In the regulatory process, for example, standard generic drugs must contain the identical molecular active ingredient in order to obtain regulatory approval based on bioequivalence with the innovative drug. In the case of biosimilars (the generic biologic product), an identical active ingredient to the biologic is not needed. Therefore, patent protection has limitations and regulatory data protection becomes more important.

In 2018 the China Drug Administration (formerly the CFDA) published a proposed draft on Implementing Measures for Pharmaceutical Trial Data Protection. The draft proposed a data protection term for innovative therapeutic biologics of up to 12 years (equivalent to the term in the USA) where there is a simultaneous listing in China and abroad. Again, this has yet to be implemented. Recent news reports on the China/US trade negotiations say that China has offered an 8 year protection period and is resisting further extensions.

It seems almost certain that regulatory data protection for innovative therapeutic biologics will form part of Phase 1 of the Agreement. The question is simply the term of that protection.

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Rouse Editor
+44 20 7536 4100
Rouse Editor
+44 20 7536 4100