As part of the Phase One US/China trade agreement (Agreement) signed on Jan 15, 2020, China has agreed to establish pharmaceutical patent linkage and restoration, which, once implemented, would give innovative drug companies the ability to: (1) prevent infringing products from obtaining market approvals from China’s drug regulator the National Medical Products Administration (NMPA) through patent litigation and (2) obtain extended patent terms to make up for the time spent waiting for NMPA approval. [1]/ As global drug companies continue to develop their own positioning strategies in the world’s second largest market for pharmaceuticals, how to leverage these significant changes would be the key for future growth in China.

Regarding patent linkage, specifically, under Article 1.11 of the Agreement, China will “give a cause of action to allow the patent holder, licensee, or holder of marketing approval to seek, prior to the marketing approval of an allegedly infringing product, civil judicial proceedings and expeditious remedies for the resolution of disputes concerning the validity or infringement of an applicable patent.” The langue in the Agreement does not contain any details for the promised patent linkage system. However, an NMPA policy document titled “Policies Regarding the Promotion and Protection of Innovators’ Rights in Drugs and Medical Devices (draft for public comments)” issued in 2017 would shed some light on what the system may look like once implemented. [2]/  According to this 2017 policy document by NMPA, the drug applicant is required to disclose whether the product infringes others’ patents. In the event the applicant decides to challenge the patent, a notification is required to be sent to the patent holders within 20 days of the application submission. If the patent holder views the applicant’s product as an infringing product, a complaint should be filed with the courts within 20 days of receiving the notice from the drug applicant. Patent holders can also inform NMPA of any infringing drug application. NMPA, in turn, can decide whether it should set up a 24-month wait period, during which the drug application cannot be approved pending the resolution of the dispute. However, if no settlement or decision is made after 24 months, NMPA can approve the product.

For patent term restoration, under Article 1.12 of the Agreement, China “shall make available an adjustment of the patent term or the term of the patent rights of a patent covering a new product … to compensate the patent owner for unreasonable curtailment of the effective patent term as a result of the marketing approval process related to the first commercial use of that product in China… China may limit such adjustments to no more than five years and may limit the resulting effective patent term to no more than 14 years from the date of marketing approval in China.” Notably, the language is almost identical to the draft amendments to the Chinese Patent Law released in early 2019. [3]/ As proposed in the amended Chinese Patent law, companies would be able to add up to five years to the patent term to make up for the time spent waiting for approval, when the drug product couldn’t be commercialized.  The extended patent term could not go beyond 14 years after the drug’s approval.

While both the NMPA policy document and the amended Chinese Patent Law need to be finalized before the system can be implemented, the proposed changes could be significant, and a close read of these two documents is highly recommended to assess the likely impact. Please let us know if we can be of any assistance by contacting any of the authors of this blog or the Hogan Lovells attorney with whom you regularly work.

[1]/         See “Economic and Trade Agreement Between the Government of the United States of America and the Govern of the People’s Republic of China”, available at: https://ustr.gov/sites/default/files/files/agreements/phase%20one%20agreement/Economic_And_Trade_Agreement_Between_The_United_States_And_China_Text.pdf.

[2]/         总局关于征求《关于鼓励药品医疗器械创新保护创新者权益的相关政策（征求意见稿）》（2017年第55号）.

[3]/         中华人民共和国专利法修正案（草案）, available at: https://npcobserver.files.wordpress.com/2019/01/patent-law-draft-amendment.pdf.

My recent article published by FDLI’s Update Magazine:

https://www.fdli.org/2019/05/global-regulatory-focus-china-survival-of-the-fittest-or-cheapest/

On March 28^th, China’s National Medical Products Administration (NMPA) published a list of 30 new drugs that are “urgently needed” in China.  To encourage the international pharmaceutical companies to submit their new drug applications to NMPA, the agency will  waive any clinical trials requirement, to the extent the drug sponsors can submit data demonstrating there are no racial or ethnic differences that would affect the efficacy.  This marks the second time the China drug regulator directly calling on the industry to provide better patience access to new treatments that are currently available in U.S., EU, or Japan, but unavailable in China.  NMPA uses the following three criteria in selecting these “urgently needed” new drugs: 1) orphan drugs; 2) for life-threatening diseases and currently no effective treatment; 3) for life-threatening diseases and have substantial clinical advantage.  Significantly, under the NMPA review guideline published in October 2018 for the “urgently needed” new drugs, the target review time for these new drugs is only six months (three months if they are also orphan drugs).  It is reported that since August 2018, when NMPA published the first list of 48 “urgently needed” new drugs, 11 listed drugs have been approved.    

 The public can submit comments to the NMPA within 5 working days (by April 4^th), if they disagree with NMPA listing any of the 30 new drugs as “urgently needed” in China.  Query on what basis could the public object to the listing of a new drug as “urgently needed.”  We will continue to monitor the status of any regulatory changes and reforms by NMPA.

Appendix:

On January 4, China’s National People’s Congress (NPC) released its draft amendments to the Chinese Patent Law, opening a docket for public comments to be submitted by February 3. Significantly, for the first time, the Patent Law would provide up to five years of patent term restoration  for patent term loss due to National Medical Products Administration’s (NMPA, formerly China Food and Drug Administration) regulatory review, but only when a new drug application is concurrently filed both in China and abroad. Under the draft amendments, the total duration for patent rights in China would be 20 years for invention patents and the total effective patent term shall not exceed 14 years after the new drug is launched.

Also under the draft revision, the statutory compensation for patent infringement would be increased from a maximum of 1 million to 5 million RMB Yuan (around 700,000 USD), and 1-5 times punitive damages for willful infringement would be added.

This move comes as China continues developing its “Hatch-Waxman” system to encourage new drug development.  NMPA already published a draft guidance that provided details on how the data exclusivity applies to pre-clinical and clinical data submitted to the agency. The government is expected to finalize rules on data exclusivity protection for new drugs later this year.

If you have any questions about the amendments or wish to submit comments, please contact us.