In an Economic and Trade Agreement entered into between the governments of the U.S. and China on January 15, 2020, China committed to "establish a nationwide system for pharmaceutical products"1 to mirror U.S. law adopted in the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act.2 A revised patent law incorporating the new framework for pharmaceutical products, largely tracking the provisions of the Hatch-Waxman Act, was officially adopted and will take effect on June 1, 2021.3,4 Similar to the dual purposes of U.S. law, China's new revised patent law facilitates an abbreviated generic drug approval process permitting resolution of patent issues before generic drug entry and patent term extension to make up for the time spent by a brand obtaining approval of a new drug.5,6 While deliberately similar to U.S. law, there are some notable differences, which we have analyzed below along with potential implications to pharmaceutical patent litigation in both China and the U.S.
No Notice Letter Requirement - In contrast to U.S. law, China will not require a generic drug applicant to provide a notice letter to the brand-name drug company and patent holder when challenging a patent as invalid or not infringed by the generic drug. Instead, the generic drug application and declarations with respect to each patent identified as covering the drug in China's analog of the Orange Book will be "will be made public on the information platform of the national drug evaluation institution."7 Relative to U.S. law, this provision reduces a burden on generic drug companies, but has the potential to reveal competitively sensitive confidential information provided in the generic drug application that may otherwise remain confidential in the U.S. It also makes it incumbent on brand-name drug companies marketing drugs in China to regularly monitor the publication of this generic drug information in order to initiate patent litigation within 45 days to stay generic drug approval.8
Nine-Month Stay of Generic Drug Approval - Upon the initiation of patent litigation, generic drug approval will only be stayed for a nine-month period,9 which is more than three times less than the 30-month stay provided in the U.S. The period of the stay is designed to approximate a reasonable time period to resolve patent issues before a generic drug will be granted approval and enter the market. While uncertainty remains, patent litigation in China's "double track" system-proceeding in either China's judicial system or before an Administrative Authority for Patent Affairs-is expected to move substantially faster than it does in the U.S. The shorter stay period can only be viewed as a boon to generic drug companies relative to U.S. law. A shorter stay and quicker litigation are bound to result in earlier generic entry and a reduced litigation cost burden in China. Parallel patent litigation also has the potential to occur quicker and earlier in China than in the U.S., and is likely to require close coordination of litigation positions between U.S. and Chinese litigators.
12-Month Exclusivity - As compared to the 180-day exclusivity period in the U.S., the incentive provided to the first generic drug company to successfully challenge brand patents and obtain regulatory approval in China is a 12-month exclusivity period from competition of other generics.10 The 180-day exclusivity period has proven to be a valuable carrot for generic drug companies, and the longer exclusivity period in China is likely to provide even greater incentive for generic drug companies to be the first to successfully challenge brand-name patents and bring generic pharmaceuticals to the market.
It will be exciting to see how China's adoption of Hatch-Waxman analog provisions will affect the pharmaceutical industry and market in China. The Hatch-Waxman Act is widely credited with creating the generic drug industry in the U.S. and the robust availability of generic drugs available today. It also spawned an industry of pharmaceutical patent litigation that has made up a large percentage of U.S. patent litigation for the last 30 years. Drug companies and litigators alike will closely watch to see if the same explosion of generic drugs and related patent litigation occurs in China. Regardless, patent litigators in both jurisdictions will need to be ready to work together to coordinate their patent positions to help their clients achieve the best results in the two largest economies in the world.
1 Economic and Trade Agreement Between The Government Of The United States of America And The Governemnt Of The People's Republic Of China (January 15, 2020) at Article 1.11 ¶ 2, https://ustr.gov/sites/default/files/files/agreements/phase%20one%20agreement/Economic_And_Trade_Agreement_Between_The_United_States_And_China_Text.pdf.
2 The Drug Price Competition and Patent Term Restoration Act of 1984, Pub.L. No. 98-417, 98 Stat. 1585 ("Hatch-Waxman Act"), https://www.congress.gov/bill/98th-congress/senate-bill/01538.
3 Decision of the Standing Committee of the National People's Congress on Amending the "Patent Law of the People's Republic of China" (October, 19, 2020), http://www.gov.cn/xinwen/2020-10/18/content_5552102.htm
4 Unofficial Translation of Text of China's Amended Patent Law, National Law Review (October 19, 2020), https://www.natlawreview.com/article/text-china-s-amended-patent-law
5 "Implementing Measures for Drug Patent Dispute Early Resolution Mechanism (Trial for Implementation) (Draft for Public Opinions)," National Medical Products Administration ("NMPA") and the China National Intellectual Property Administration ("CNIPA") (September 11, 2020), ("Draft Regulation") https://www.nmpa.gov.cn/xxgk/ggtg/qtggtg/20200911175627186.html
6 Unofficial Translation of Draft Regulation, https://chinaipr2.files.wordpress.com/2020/09/drug-patent-early-dispute-resolutions-english-translation.doc
7 Id. at Article 6.
8 Id. at Article 7.
9 Id. at Article 8.
10 Id. at Article 11.
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