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Are You Ready for China’s Patent Linkage System? – Lexology

On September 11, 2020, the National Medical Products Administration (NMPA) and the China National Intellectual Property Administration (CNIPA) issued the “Implementing Measures for Drug Patent Dispute Early Resolution Mechanism (Trial for Implementation)” (Draft Measures). The Draft Measures establish a framework for a patent linkage system in China. The NMPA and CNIPA have invited public comment on the Draft Measures until October 25, 2020. Once finalized, this new patent linkage system will present challenges and opportunities for both innovator and generic drug companies doing business in China.

Establishment of a Chinese “Orange Book”

Similar to the Orange Book in the U.S., the Draft Measures propose to establish an information disclosure platform for marketing authorization holders (MAH) to list drug-related patent information. This platform will be known as the Approval Drug Patent Registration Platform (Platform). Patents eligible for listing on the Platform include active pharmaceutical ingredients (APIs), compositions containing APIs, methods of use, biologics (patents containing specific sequence information can be listed (e.g., SEQ ID NOS. covering the variable heavy and/or light chain and/or complementary determining regions (CDRs)) and Traditional Chinese Medicine (patents related to compositions, extracts and methods of use of Traditional Chinese Medicine).

The Draft Measures provide time limits and procedures for submitting and updating patent listing information in the Platform. These time limits are: (1) if a patent has already been granted, patent listing information may be submitted with a new drug application (NDA); (b) if the patent is newly granted and a NDA is pending, the patent listing information may be submitted within 30 days of receiving notice of patent grant; (c) if a NDA has already been approved, the Draft Measures do not specify a deadline for submitting patent information; and (d) for any patents already listed, any updates should be submitted within 30 days of any changes to the patent listing information. Patents are not eligible for listing if an NDA has not been filed or if a drug has not yet received marketing authorization (in China). If a patent is not listed on the Platform, it will not be eligible for patent linkage protection.

Information that will be included in a patent listing includes: the drug name, patent number, patent type, patent status, patentee, MAH, patent expiry date, and contact information.

According to the Draft Measures, if an NDA has already been approved, the MAH can list and update the patent information directly on the Platform without NMPA review. Nonetheless, an NDA applicant or the MAH is responsible for the truthfulness, accuracy, and completeness of the patent listing information. Penalties will be imposed for intentionally listing unrelated patents, including prohibiting the applicant from filing application for the same drug again for one year.

Generic Patent Certifications

A generic drug applicant filing for marketing authorization will be required to provide one or more certifications with respect to any patent listed on the Platform and provide supporting evidence for its such certification(s). Similar to the U.S. Hatch-Waxman framework, the certifications fall into four categories. These categories are:

A generic drug applicant and its requisite patent certification will be publicly disclosed on the information platform of the Center for Drug Evaluation (CDE). However, unlike the U.S. Hatch-Waxman system, a generic drug applicant has no obligation to notify an innovator drug MAH of its application filing and patent certification(s). Since the Draft Measures do not provide or require any notice be provided to the innovator, innovator drug MAHs should closely monitor the CDE information disclosure in order to avoid missing the deadline for filing an opposition (discussed in more detail below).

Generic drug applications containing a category I and/or II certifications can be approved immediately. Generic drug applications containing a category III certification, can also be approved immediately, provided that the generic drug applicant includes a notation that the product will launch only after patent expiry.

Generic drug applications containing a category IV certification are subject to an opposition period. Specifically, an innovator drug MAH/patentee can oppose an application containing a category IV certification within 45 days from the date of the CDE public disclosure. Such an opposition can be filed with a People’s Court or with the CNIPA. If the generic drug application is for a small molecule, the NMPA will set a 9-month waiting period before approving the generic drug application, beginning from the date the case is accepted by the People’s Court or the CNIPA. Although the NMPA will wait to approve the generic drug application, the CDE will not stop its technical review during this waiting period. If the innovator drug MAH/patentee cannot obtain a favorable court judgment or decision from the CNIPA within this 9-month period, the NMPA can grant marketing authorization to the generic application upon expiration of the 9-month period. Once this occurs, the marketing authorization will be irrevocable. Nonetheless, a patentee may still sue a generic manufacturer for patent infringement; however, as mentioned, the marketing authorization will not be withdrawn.

Biosimilar applications will not be subject to the patent linkage system. The NMPA can proceed with the technical review and marketing authorization upon receiving biosimilar applications. In order to delay the entry of a biosimilar, the innovator drug MAH/patentee will need to file an infringement action with the court of CNIPA within 45 days after the CDE’s publication of the biosimilar application, and obtain a favorable decision before the NMPA’s issuance of the marketing authorization. The NMPA will then convert the marketing authorization into a conditional approval effective only after the relevant patents expire.

Marketing Exclusivity for First Generic Applicants

The first generic applicant filing a category IV certification and receiving the marketing authorization will be granted a marketing exclusivity period for 12 months from the date of marketing authorization. Additionally, this exclusivity will not exceed the originator’s patent term. During this exclusivity period, the NMPA will not approve any other generic applications for the same drug; however, the agency can accept and review generic applications.

Patent Term Extension

On July 3, 2020, amendments were proposed to China’s patent law to add patent term extension to compensate for the time that the NMPA and CDE spend in reviewing and approving a marketing authorization for a new drug. Under the proposal, the maximum extension will not exceed five years, and the total patent term, after adding the extension, will not exceed 14 years at the time marketing authorization is received.

Data and Marketing Exclusivity

Practically speaking, data or market exclusivity is not available for an innovator or improved drug that is manufactured (outside of China) and imported into China. In other words, a generic drug application can be filed and approved in China as soon as a foreign innovative or improved drug is approved in or outside of China and the generic drug can be commercially manufactured and launched provided there are no patents protecting the drug in China.

However, market exclusivity is available in China for innovator or improved drugs that are manufactured in China. When such a drug is approved in China, it will be placed under a “New Drug Monitoring Period” which provides a period of up to 5 years during which the NMPA will not grant approval of a generic version of the drug prior to the expiration of the New Drug monitoring Period.

However, in 2019, the “Implementation Regulations of the Drug Administration Law (2019)” (the 2019 Regulations) were released which provide that a drug with novel API will be granted a 6-year data exclusivity period. However, such data exclusivity has not yet become available for drugs with novel APIs because no legislation was enacted to implement the 2019 Regulations. Moreover, the newly revised “Administrative Measures for Drug Registration (2020)” do not contain any provisions relating to the data exclusivity period, and the 2019 Regulations are now pending further amendment. In view of this, the future of the data exclusivity system remains unclear and needs to be clarified by future legislation.

Timing and Next Steps

In terms of timing, it is likely that the Draft Measures will come into full force and effect next year, although the exact timing is unclear. The fourth amendment to Chinese Patent Law (Patent Law), which will provide the patent term extension and patent linkage system, is currently under final review and is likely to be promulgated by the end of the month and formally take effect in early 2021. Also, the “Implementing Rules of the Patent Law” (Patent Implementation Rules) are pending and are expected to come into force later. Because the Patent Law typically only sets out a high-level framework, a detailed implementing guidance will be provided under the corresponding Patent Implementation Rules. Therefore, the patent term extension system will only be implemented after the Patent Implementation Rules becomes effective. It is uncertain how long this might take.

Finally, the Supreme People’s Court plans to issue a judicial interpretation on patent linkage system by the end of 2020. As such, we do not expect significant changes to the Draft Measures before its formal release, though some details are still under discussions, such as the period of marketing exclusivity.