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What is the patent linkage in pharmaceuticals?

1. What are some of the actions taken by the Chinese authorities to encourage investment into pharmaceutical development and research in China?

Chinese authorities have made significant strides in creating an intellectual property environment which will encourage investment into pharmaceutical development and research in China, some of the more important steps being:
· amended the patent law to include pharmaceutical substance
patent (previously, only process patent protected) (1993);
· prolonged the term of protection for patent for invention from 15
to 20 years (1993);
· joined the Patent Cooperation Treaty (to allow
multi-jurisdictional filing) (1993);
· adopted data exclusivity for a 6-year term (2002);
· added provisions on Patent Linkage (2002).

2. When will marketing or manufacturing approval not be granted?

Marketing (or manufacturing) approval will not be granted to a generic application by drug administrative authorities if a patent exists, until the patent has expired or is judged to be invalid or not infringed by a competent court. In other words, the patent holder’s rights are presumed valid until proven otherwise by a third party. For business planning purposes, for both the pioneer and generic company, it is very important to have any patent dispute
resolved early, therefore Chinese authorities need to address this issue in crafting an appropriate remedy.

3. Why are patents and intellectual property rights important in the pharmaceutical industry?

The pharmaceutical industry is uniquely dependent on patents and other forms of intellectual property rights to ensure some form of marketing exclusivity in order to recoup its substantial cost of research and development in proving the safety and efficacy of a drug. Without exclusivity, most products would be immediately copied as the technical
barriers to entry by competitors could be easily overcome.

4. What is the U.S 1984 Hatch-Waxman Act?

Perhaps the most concrete example of Patent Linkage is contained in the 1984 Hatch-Waxman Act of the U.S., formally called the "Drug Price Competition and Patent Term Restoration Act of 1984". This Act through its transparency, presumption and automatic stay mechanisms provides business planning clarity and incentives for the pioneer industry, and through an expeditious route for approval of generic drugs, benefits the consumer.

5. When is FDA required to refrain from granting marketing approval to a generic applicant?

According to the Hatch-Waxman Act, FDA is automatically required to refrain from granting marketing approval to a generic applicant if a patent holder initiates an infringement lawsuit against the applicant based on a listed patent, until the patent has expired or is judged to be invalid or not fringed by a competent court. This is so-called Patent Linkage, i.e. generic marketing approval is "linked" to the expiration of the pioneer drug patent.

6. Is public availability of the list of approved drugs necessary?

The 1984 Act requires that FDA, among other things, make publicly available a monthly-updated list of approved drug products that is updated monthly. The Approved Drug Products with Therapeutic Equivalence Evaluations publication, also called "Orange Book", satisfies this requirement.

7. When should the patent information be filed?

The Act requires that patent information must be filed with FDA within 30 days of NDA approval. The patent numbers and the expiration dates of appropriate patents claiming drug products that are the subject of approved applications will be published in the Addendum to the Orange Book. This Addendum identifies drugs that qualify under the 1984 Amendments for periods of exclusivity and provides patent information concerning the listed drugs which also may delay the approval of ANDAs or Section 505(b)(2) applications. Through the use of the Orange Book, a process is provided by which a drug’s patents can be determined and assessed prior to generic drug approval (granting of marketing authorization). Generic drug companies can inform FDA that particular listed patents do not cover specific FDA-approved drug products; FDA can request the innovator company to investigate.

8. What kinds of certificates are needed?

A generic applicant seeking ANDA must make one of the following types of certification:
i) that the drug has not been patented;
ii) that the patent has already expired;
iii) the date on which the patent will expire, and that the generic drug
will not go on the market until that date passes; or
iv) that the patent is not infringed or is invalid.

In the case of a 'paragraph iv' certification, the ANDA applicant must notify the pioneer company / patent holder of its filing, and give reasons why the patent will not be infringed, is invalid, or unenforceable. The pioneer company / patent holder has 45 days after receipt of notice to file a patent infringement action. If a lawsuit is filed, the FDA approval
process is automatically stayed up to 30 months, until the parties reach agreement or, the generic company proves the patent right is not affected or not valid.

9. How is patent linkage created in the U.S?

In the U.S., Patent Linkage is created through several mechanisms – the Orange Book, the certification process, notice to the pioneer of a generic filing, and automatic stay of drug approval. The pioneer company reports patent information and enforces its patent, the generic company certifies the reason the patent (or patent status) is not applicable, FDA publishes information and automatically stays the approval process once notified that the pioneer company / patent holder has initiated an infringement lawsuit against the generic company. This creates a set of overlapping mechanisms that reinforce one another and prevent an accidental approval. More importantly, it does not rely solely on the pioneer company to enforce its rights, but presumes that the pioneer company's rights are valid until proven otherwise by the generic.

10. Is patent linkage recognized by the WTO?

WTO TRIPS provisions clearly support the concept of patent linkage by requiring procedures in national laws to prevent infringements and by requiring that in process patent cases, the burden of proof shifts to the non-patent holder to prove non-infringement. The clear implication is that national authorities must have preventive measures in place to protect the patent holder, i.e. finding of invalidation or non-infringement, before the non-patent holder would be granted a marketing/manufacturing approval.

11. What does WTO Trips provision require?

TRIPS specifically requires Members to:
(a) …have enforcement procedures…available under national laws so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement, including expeditions remedies to prevent infringements and remedies which
constitute a deterrent to further infringements….(TRIPS, Article 41)

(b) …if the subject matter of a patent is a process for obtaining a product, the judicial authorities shall have the authority to order the defendant to prove that the process to obtain an identical product is different from the patented process. Therefore, Members shall provide…that any identical product when produced without the consent of the patent owner shall, in the absence of proof to the contrary, be deemed to have been obtained by the patented process…if the product obtained by the patented process
is new… (TRIPS, Article 35)


12. What are China’s current provisions on patent linkage?

In the Drug Registration Regulation (Temporary) which was approved by SFDA on October 15, 2002 as SDA Order # 35, and was effective from December 1, 2002, there are three Articles related to the Patent Linkage:
Article 11: Regarding the drug or its formula, processing, etc. the applicant shall submit documents explaining the China patent status and ownership rights. The applicant shall submit a letter of guarantee stating that the drug will not infringe on the patent rights of others and that the applicant assumes liability for any possible infringement.

Article 12: If an infringement dispute occurs after completion of registration, the parties shall try to negotiate a resolution, or resolve the matter according to relevant laws, regulations, or rules through judicial organs or patent administration institutions.

Article 13: For a drug that has obtained patent protection in China, another applicant may apply for registration within two years prior to the patent expiration. SFDA shall review the application according to this Regulation and, after expiration of the patent, approve production or import for an application that meets requirements.


13. Is there a remedy for lack of transparency and expeditious preventive remedy under the current patent linkage provisions?

When the Patent Linkage provisions were first adopted in China, we understood the process to be roughly as follows (no official at SFDA has confirmed the exact procedures which are in place):

· pioneer company lists patent information in drug registration application;
· generic company required to complete a patent search through SIPO or agency with access to SIPO data base;
· patent search report provided to SFDA.

However, this process lacked transparency in two important ways:

· pioneer company has no notice of the name or date of acceptance of second drug registrant’s application by SFDA for the pioneer’s product;
· pioneer company has no access to the patent search report submitted by the generic company.

As a result:

· pioneer company has no access to “legal” evidence of drug registration application having been filed (because of lack of receipt of notice from generic company and lack of public disclosure of second drug registrant’s application) which can cause many complications when making application for judicial remedies and makes it difficult
for the pioneer company to monitor the situation;
· SFDA having notice of possible infringement, and despite supposedly not wanting to decide patent infringement matters, and without providing a copy of the results of the patent search to the pioneer company which would provide the pioneer company a basis to comment to SFDA, we understand that in some cases SFDA still grants manufacturing/marketing approvals to the non-patent holder application.


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