On Efficiency of China’s Drug-Related Patent Term Compensation System based on “Effective protection period” | Linda Liu & Partners
[author: Yan Wang]
China’s state council issued State Council Degree No. 769 on December 21, 2023 to enact the Implementing Regulations of the Patent Law (Amended in 2023) (hereinafter referred to as “the Implementing Regulations (Amended in 2023)”) as of January 20, 2024. Fourteen years have passed since the last amendment of the Implementing Regulations released on January 9, 2010. The Implementing Regulations of the Patent Law (Amended in 2023) includes comprehensive amendments made to adapt to the fourth amendment of the Patent Law of People’s Republic of China (2020) adopted as of October 17, 2020, and is of great significance. ① Tang Jiawei et. al., New Era of China’s Pharmaceuticals: Influence of Latest Amendments to the Implementing Regulations of the Patent Law on China’s Drug-Related Patent Term Compensation System PTE from a Comparative Perspective of China, US, Europe, and Japan, IPLead, 2024-01-21
The amendments made to the Implementing Regulations this time involve various aspects and articles. For China’s pharmaceutical practitioners, the most significant reform and concern would be the substantial and formation of the overall framework and concept of China’s drug-related patent term compensation system.
Origin of drug-related patent term compensation system
The establishment of the patent system aims to encourage innovators to publish the new technology they grasped, so as to avoid repetitive research and development and facilitate scientific and technological progress and wide application of new technology in social production, meanwhile compensate for the risks and costs borne by the innovators during the innovation process by endowing innovators with market exclusivity over a period of time.
This is particularly important in the field of pharmaceuticals. Pharmaceutical R&D is a length process covering wide-range research and development in laboratory (pre-clinical) and practical (clinical) environments in order to test the effect and safety of drugs. It is due to this lengthy period that pharmaceutical companies intend to apply for a patent before a drug becomes approved or even in the early research and development phase of a drug when the drug exhibits considerable clinical potential. In addition to the long R&D period, before a drug going to the market, mandatory approval and license are also required to ensure the health of the consumers. In view of the foregoing, the market exclusivity period obtained for a medicinal product based on a patent after the drug goes on market will be shorter than the market exclusivity period of other products.
Various drug-related patent term compensation systems have been established in different countries in order to compensate the risks and costs of drug research and development. Under Article 42 paragraph 3 of the Chinese Patent Law (2020), “In order to compensate for the time taken for the review and approval process before the marketing of a new pharmaceutical product, the patent administration department under the State Council shall, at the request of the patentee, extend the term of the new pharmaceutical-related invention which has been approved for marketing in China. The compensation term may not be more than five years, and the total effective term of the patent right may not be more than fourteen years from the date of marketing approval.” The Implementing Regulations of the Patent Law (Amended in 2023) further specifies the calculation of the compensation term as below: “Article 82 The duration of the patent term extension granted in accordance with Article 42 Paragraph 3 of the Patent Law shall be determined by subtracting five years from the number of days between the patent application date and the date on which the new pharmaceutical obtains marketing authorization in China, based on compliance with the stipulations of Article 42 Paragraph 3 of the Patent Law.”
Accordingly, the compensation term for drug-related patents should be calculated by the following formula:
Total duration of patent term T=20 years + X (compensation term), where X (compensation term)=(date on which the new pharmaceutical obtains marketing authorization in China- patent application date)-5 years, and X≤5; date on which the patent expires (including the compensation term)- date of marketing approval in China≤14 years.
Concept of “effective protection period”
In addition to the market exclusivity for medicinal products provided by patent, various protection term systems have been established by national drug regulatory administrations of different countries to compensate for the exclusivity period taken up by the approval process before marketing of a new pharmaceutical product. For example, the European Union and the United States both launched the data protection system for pharmaceuticals. In order to assess the effect of the drug-related patent term compensation systems from a comprehensive perspective, the concept of “effective protection period” is introduced herein to indicate the period from the date on which the new pharmaceutical obtains marketing authorization to the last expiry date of the market protection obtained based on various policies.
SPC system, data protection, and market protection in Europe
SPC (Supplementary Protection Certificates) system is proposed by the EU which extends the patent term by up to 5 years. The extended patent term is calculated as below: Duration of SPC=date of first MA in the EEA-date of filling corresponding patent-5 years. It can be seen that China’s drug-related patent term compensation system is substantially based on the same strategy with the EU’s SPC system.
The SPC system provides an additional 6-month extension for pediatric medicinal products, which means that a protection period of up to 25.5 years can be obtained based on the SPC system.
Further to SPC, the EU also established data protection and market protection. Specifically speaking, within 8 years after the date on which an original drug obtains marketing approval, the drug regulatory administration does not accept requests for marketing approval of a generic drug based on data of the original drug provided during its review process for marketing approval. After the 8-year period expires, although marketing application of generic drug is accepted, the generic drug will not be approved for marketing until 10 years have passed since the date on which the original drug obtains the marketing approval. In other words, the original drug enjoys an 8-year data protection and a 10-year market protection from the date on which it obtains the marketing approval. Furthermore, for an original drug approved for a second indication or bringing significant benefits, the market protection may be extended by one year based on the 10-year protection.
In view of the foregoing, the protection provided by the EU for original drugs may be concluded as below:
Fig. 1 Protection term provided by the EU for original dugs
Accordingly, the actual “effective protection period” obtained by a drug is as shown below:
Fig. 2 “Effective protection period”
As seen from the above figures, based on SPC, data protection, and market protection, the EU provides at least 10 years of an effective protection period for medicinal products. In contrast, although China introduces the framework of SPC to establish the drug-related patent term compensation system, the siding data protection and market protection are not provided. Specifically, under the Implementing Regulations of the Drug Administration Law, “The State protects undisclosed data of drug study and others which are independently acquired and submitted by drug manufacturers or sellers to obtain production or marketing approval of the drugs in question which contain new chemical entities. No one may make unfair commercial use of the said data. Within six years from the date a drug manufacturer or seller obtains the approval documents for producing or marketing a drug containing new chemical entities, if any other applicant uses the data mentioned in the preceding paragraph to apply for approval for production or marketing of the drug in question without permission of the original applicant who has obtained the approval, no approval may be given to any other applicant by the drug regulatory department except that the data submitted are acquired independently.” The above could be considered data protection. But China does not provide market protection. In view of the forgoing, currently available effective protection period for medicinal products in China is as shown in the following figure.
Examples of calculation
Ravatio
With Ravatio as an example, the drug is produced by Pfizer for treating pulmonary arterial hypertensionand. The active ingredient thereof is the well-established Sildenafil that has long been on the market. Timeline of this drug in the Europe is as shown in the following figure:
Based on SPC, the patent of the active ingredient Sildenafil of Ravatio obtains a 2-year SPC protection period, which expired in 2013. However, Ravatio still obtained an effective protection period of 10 years based on the 10-year marketing exclusivity provided by orphan medicinal product protection.
In China, in contrast, the effective protection period obtained by the drug is merely 8 years (2013-2005) according to the current drug-related patent term compensation system.
Conclusion
The former Drug Regulatory Administration of China released Measures for Implementation of Pharmaceutical Test Data Protection (Provisional) (Draft for soliciting public opinions) on April 25, 2018. However, due to the huge disputes arising therefrom, the draft has not been adopted by far. Presently in-force provisions on pharmaceutical test data protection in China remain the articles of the Implementing Regulations of the Drug Administration Law and the Regulations on Administration of Pharmaceutical Registration while specific and workable implementing rules.
The fourth amendment to the Patent Law in 2020 aims to enhance protection for drug-related patents and establishes two important systems, i.e., drug-related patent term compensation and mechanism for early resolution of patent disputes. These two systems pertain to patent-related laws while market protection and data protection for pharmaceutical tests pertain to medicinal product-related laws. Although they fall under different jurisdictions, they are all indispensable constituents of medicinal product protection. We as IP practitioners still need to seek for an effective cross-division collaboration method that suits for Chinese local situations with reference to foreign research results and practical experiences, such that China’s drug-related protection systems cohere with one another to form an organic whole that facilitates effective implementation of protection for drug-related research and development and innovation in China.
