On the Effectiveness of China’s Drug Patent Term Compensation System Based on the “Effective Protection Period”

(author: Yan Wang)

The State Council of China issued State Council Grade No. 769 on December 21, 2023 to adopt the Patent Law Implementation Regulations (Amended in 2023) (hereinafter referred to as the “Implementation Regulations (Amended in 2023)”) on January 20, 2024. Fourteen years have passed since the last amendment to the Implementing Regulations issued on January 9, 2010. The Patent Law Implementing Regulations (amended in 2023) contain comprehensive changes introduced to adapt to the fourth amendment to the Patent Law of the People’s Republic of China (2020) adopted on October 17, 2020. and it is of great importance. ①Tang Jiawei et al. al., New Era of China’s Pharmaceuticals: The impact of the latest amendments to the patent enforcement regulations on China’s patent term compensation system related to PTE drugs from a comparative perspective of China, the US, Europe and Japan, ILead, 2024-01-21

The changes introduced to the Implementing Regulations this time concern various aspects and articles. For Chinese pharmaceutical practitioners, the most significant reform and concern would be the development and establishment of the overall framework and concept of China’s drug patent term compensation system.

The Origin of the Drug Patent Term Compensation System

The creation of a patent system is intended to encourage innovators to publish the new technology they have mastered in order to avoid repetitive research and development work and facilitate scientific and technical progress and the wide application of new technologies in social production, while at the same time compensating the risks and costs incurred by innovators during the innovation process by providing innovators with market exclusivity for a certain period of time.

This is especially important in the pharmaceutical industry. Research and development in the pharmaceutical industry is a long-term process involving extensive research and development in laboratory (preclinical) and practical (clinical) environments, the purpose of which is to verify the performance and safety of drugs. It is because of this long period that pharmaceutical companies intend to apply for a patent before a drug is approved or even in the early phase of drug research and development when the drug shows significant clinical potential. In addition to the long research and development period before a drug reaches the market, mandatory approval and licensing is also required to ensure the health of consumers. Therefore, the period of market exclusivity obtained for a medicinal product based on a patent after the drug is placed on the market will be shorter than the period of market exclusivity for other products.

Different countries have created different drug-related patent term compensation schemes to compensate for the risks and costs of drug research and development. Pursuant to Art. 42 section 3 of China Patent Law (2020): “In order to compensate for the time needed for the review and approval process before introducing a new pharmaceutical product to the market, the Patent Administration Department of the State Council, at the request of the patent owner, extend the validity period of a new pharmaceutical invention that has been approved for marketing in China. The compensation period cannot be longer than five years, and the total validity period of the patent right cannot be longer than fourteen years from the date of admission to trading. The Patent Law Implementing Regulations (amended in 2023) specify the method of calculating the compensation period as follows: “Art. 82. Duration of the extension of the term of validity of a patent granted in accordance with Art. 42 section 3 of the Patent Law is determined by subtracting five years from the number of days between the date of filing the patent and the date on which the new drug obtains marketing authorization in China, while meeting the requirements of Art. 42 section 3 of the Patent Law.”

Therefore, the compensation period for drug patents should be calculated according to the following formula:

Total duration of the patent T = 20 years + X (compensation period), where patent expiry date (including compensation period) – date of marketing authorization in China ≤14 years.

The concept of “effective period of protection”

In addition to the market exclusivity of medicinal products provided by patent, national drug regulatory authorities in different countries have established different systems of periods of protection to compensate for the period of exclusivity taken up in the process of approving a new pharmaceutical product to the market. For example, the European Union and the United States have launched a data protection regime for pharmaceutical products. To assess the impact of drug patent life compensation schemes from a comprehensive perspective, the concept of ‘effective protection period’ is introduced here to indicate the period from the date of marketing authorization for a new medicine to the last day of its expiry. date of market protection obtained under various policies.

SPC system, data protection and market protection in Europe

The EU proposes a system of SPCs (Supplementary Protection Certificates), which extends the validity period of a patent by up to 5 years. The extended patent term is calculated as follows: SPC duration = date of first authorization for use in the EEA – date of completion of the relevant patent – 5 years. It can be seen that China’s drug patent term compensation system is essentially based on the same strategy as the EU SPC system.

The SPC system provides for 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.

In addition to the SPC, the EU has also established data protection and market protection. Specifically, for a period of 8 years from the date of marketing authorization of the originator drug, the medicines regulatory administration shall not accept applications for marketing authorization of the generic drug based on data on the originator drug provided during the marketing authorization review process. After 8 years, despite the acceptance of the application for marketing of the generic drug, the generic drug will not be admitted to marketing before 10 years from the date of obtaining marketing consent of the original drug. In other words, the original drug is covered by 8 years of data protection and 10 years of market protection from the date of obtaining marketing authorization. Moreover, in the case of an original drug approved for use in a second indication or providing significant benefits, market protection may be extended for one year based on the 10-year protection.

In light of the above, the protection provided by the EU to originator medicines can be summarized as follows:

Dig. 1 EU protection period for original excavations

Therefore, the actual “period of effective protection” obtained by the drug is as follows:

Fig. 2 “Period of effective protection”

As can be seen from the above figures, based on SPC, data protection and market protection, the EU provides at least 10 years of effective protection for medicinal products. On the other hand, although China is introducing an SPC framework to establish a drug patent term compensation system, additional data protection and market protection are not provided. In particular, according to the implementing provisions of the Drug Administration Act, “The State shall protect undisclosed drug research and other data that are independently acquired and transferred by drug manufacturers or sellers in order to obtain approval for the production or marketing of the drugs in question that contain new chemical units. No one may use the said data in an unfair or commercial manner. Within six years from the date on which the manufacturer or seller of the drug obtains documents authorizing the production or marketing of a drug containing new chemical entities, if any other applicant uses the data referred to in the previous paragraph to apply for authorization to manufacture or market the drug in questions without the consent of the original applicant who obtained consent, the Department of Drug Regulatory Affairs cannot grant consent to any other applicant unless the data submitted is independently obtained.” The above can be considered data protection. But China does not provide market protection. Therefore, the currently available effective protection period for medicinal products in China is presented in the figure below.

Calculation examples

Ravatio

For example, Ravatio, a drug produced by Pfizer for the treatment of pulmonary arterial hypertension. Its active ingredient is the well-established sildenafil, which has been on the market for a long time. The timeline of this drug in Europe is shown in the figure below:

Based on the SPC, Ravatio’s active ingredient patent Sildenafil 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 drug product protection.

In contrast, in China, the effective protection period obtained for a drug is only 8 years (2013–2005), under the current drug patent life compensation system.

Application

On April 25, 2018, the former China Drug Regulatory Agency published “Pharmaceutical Test Data Protection Implementation Measures (Interim)” (draft to solicit public input). However, due to the resulting huge size, the project has not yet been adopted. The current regulations on the protection of pharmaceutical test data in China remain the articles of the Implementing Regulations of the Drug Administration Law and the Pharmaceutical Registration Administration Regulations, while the detailed and enforceable implementing regulations.

The fourth amendment to the Patent Law in 2020 aims to strengthen the protection of drug patents and establishes two important systems, i.e. compensation for the duration of a drug patent and a mechanism for the early resolution of patent disputes. These two regimes concern the rules relating to patents, while market protection and data protection for pharmaceutical tests concern the rules relating to medicinal products. Although they fall under different jurisdictions, they are all essential elements in the protection of medicinal products. As intellectual property practitioners, we still need to seek an effective cross-departmental cooperation method that is suitable for local situations in China, with reference to overseas research results and practical experiences, so that China’s drug protection systems are consistent with each other, forming an organic whole that facilitates Effectively implement the protection of drug-related research, development and innovation in China.