Sponsored | China’s Establishing Patent Linkage System More Favorable to Generic Drug Companies or Innovator Drug Companies?

The fourth Amendment of the China Patent Law has been deliberated and was passed on October 17, 2020. It will come into force on June 1, 2021. For the medical industry, China's proposed patent linkage system can be more favorable to generic drug companies than the U.S. system.

During the marketing approval procedure, both the marketing approval applicant and the holder of the drug-related patent have an opportunity to initiate judicial or administrative proceedings for the timely resolution of patent disputes. China’s National Medical Products Administration (NMPA) in turn will decide whether or not to approve the drug within a specified time limit, according to an effective judgment rendered by the court.

Although China’s Patent Linkage System is considered closer to the U.S. Linkage System (vs. EU Linkage System), it is NOT a simple mirror of it. The main differences are (but not limited to):

1. The act of application for marketing approval will NOT be deemed as infringement of the patent right. A “real” artificial act of infringement is not included. Remedies like injunction or monetary compensation cannot be pursued at this stage.

2. The generics have no obligation to notify the patentee of the ANDA. The patentee needs to proactively monitor the publication of the generics’ ANDA on the website of NMPA.

3. To postpone the approval of ANDA, an effective judgment is generally needed (after two instances of trial) within the 9-month stay of NMPA Approval, compared to a 30-month stay in the U.S., which is not advantageous to the patentees.

4. While the U.S. has a 180-day Exclusivity Period, China’s is double that length. A significantly extended 12-month Exclusivity Period will highly incentivize the generics to challenge the patentee.

To better adapt to the approaching change and make better business decisions in China, the innovators may bear the following questions and takeaways in mind:

i.      China’s Patent Linkage System will start implementation in mid 2021. Innovators, within as short as 45 days of publication of a generic certification, can initiate legal proceeding(s) with no extension available. Required legalized empowering documents takes up to three months to complete. You need to take action now.

ii.     We expect more invalidation to be filed coming along with this change. A recent statistics shows that ~70 percent of drug-related patents were invalidated entirely or partially in the past three years. As a patent owner, are you prepared?

iii.    Would you identify and incorporate your patent(s) into the Chinese Orange Book?

The specifics will be formulated in the Measures for Implementation of the Patent Linkage System (Measures). Recently, an exposure draft, thereof, has been open for public comment, including the stipulations of the Chinese Orange Book, Paragraph I-IV Patent Certifications, ANDA nine-month Stay of NMPA Approval, 12-month Exclusivity Period, etc. The Measures are estimated to come into force along with the newly amended Patent Law after further modification.

Submitting Comments to: 

Lynn Wang

lynnwang@chinantd.com