At the end of 2017, Taiwan’s Legislative Yuan passed a bill amending the Pharmaceutical Act. These amendments establish a patent linkage system and create data exclusivity protection for an old drug’s new indications.

The government is investing more effort in the research and development of biomedical science and technology. To this end, this bill was passed as a declaration as a part of a move to boost Taiwan’s IP protection for medical products forward, so as to be in line with the advanced nations.

Drug Patent-Approval Linkage and Pharmaceutical’s Patent Database

The bill introduces a new chapter for patent linkage to the Pharmaceutical Act, systematically connecting the non-enforceability of new drug’s patent(s) and the market approval of a competing generic copy.

As a measure to implement patent linkage, the law affords the patented new drug company an obligation to report the patent(s) of the new drug. The patentee shall list associated information about new drug’s patent(s) for any of substance, composition or formulation, or medicinal use within 45 days from receiving Taiwan Food and Drug Administration’s (hereinafter referred to as “TFDA”) approval on new drug’s marketing (Article 48-3). When needed, the patentee may make a request for an update of the patent information so as to maintain the integrity and authenticity of patent information within 45 days of the occurrence of any incidents such as patent term extension, post-grant amendment of claim(s), revocation, extinguishment of right . (Article 48-6). Alternatively, the patentee shall provide updates to or explanations for patent information within 45 days in response to a notice from TFDA which receives written complaint(s) from any third party who identifies errors on the published information, or any inconsistency from the drug approved (Article 48-7).

The generic competitor bears a duty to advise the TFDA of new drug’s patent information when filing for an application of said generic copy’s market approval. A patent infringement dispute between the TFDA-approved generic and patented new drug can materially compromise patient accessibility to affordable medicinal alternatives. Therefore the bill imposes the generic drug applicant a duty to certify clearance of legal barriers from listed patents of the new drug upon its application for market approval (Article 48-9). The declaration should include any of the following:

  1. No patent information listed for the new drug;
  2. New drug’s corresponding patent(s) expire;
  3. The TFDA may approve the generic’s market approval after the expiration date of the listed patent(s); and
  4. The patent(s) are invalid or the generic is not infringing the patent(s).

Regarding a declaration of Item 4 of Article 48-9, the generic applicant shall notify the TFDA, the holder of the new drug approval, the listed patent owner(s) and the exclusive licensee within 20 days upon receipt of TFDA’s notice of application completion. As a core of the system, there will be a stay of generic approval if the generic competitor challenges listed patents. Where the generic applicant declares that the listed patent(s) of new drugs are invalid or when no infringement occurs, the patentee or the exclusive licensee may, if available, opt to file for a patent infringement action within 45 days upon receipt of the notice of non-infringement or patent invalidity from the generic applicant. The TFDA will then place a stay of 12 months on generic’s market approval unless the patentee fails to raise an action within 45 days or the conflict is otherwise settled (Article 48-13). It is worth noting that if the patentee raises a patent infringement action by asserting any patents not listed in the TFDA, it will not prevent the TFDA from issuing a market approval to the generic drug. (Article 48-13)

To create an economic incentive for stimulating pharmaceutical competition for the benefit of consumers, the first generic challenger who prevails in infringement action will be granted sales privilege for 12-months long, thus excluding other generic manufacturers from entering the market (Article 48-16).

Measures against Potential Pay-for-Delay Deals

Any parties of new drug patentee, generic applicant, or generic marketing approval holder who engaged in an agreement with respect to the drug’s manufacture, sales, or term of marketing exclusivity shall report to the TFDA within 20 days. The TFDA holds discretion in forwarding the agreement to the Fair Trade Commission for further investigation should there be any unfair competition issues(Article 48-19).

Data Exclusivity on New Indications of Repurposed Existing Drugs

As an efficient measure extending the term for drug protection, the bill broadened data exclusivity to further include “indication” of an existing molecular entity. The Pharmaceutical Act added a new provision as Article 40-3, granting a three-year term to a pharmaceutical company for newly invented indications of an existing drug. Other applications for drug approval cannot cite data for the same indication within two (2) years from the approval of the addition or change of indications of the existing drug. The TFDA may issue other drug approvals citing the same data for the same indication only after three(3) years from the repurposed drug approval for new indication.

Furthermore, if the clinical trials for new indication are operated in Taiwan, the pharmaceutical company may enjoy an exclusivity term lasting a period of five (5) years. This extra period is provided as an economic incentive aimed at encouraging development of Taiwan’s medicinal and clinical studies.

Oppositions Remaining Strong

The new bill has been accused of being part and parcel of partisan policy, thus inviting harsh criticism from some lobbying groups, especially those from the local drug industry. Arguably, patent linkage is expected to cater to the interests of international pharmaceutical giants as the Taiwanese companies are mostly profiting on generic drugs. Statistics released by the IP Court reveal that the winning rate for Taiwanese generic manufacturer has been 85% and more for the past 10 years. But that is the result of spending expensive costs in coping with frivolous actions initiated by patentees. Patent linkage is expected to bring more litigious challenges on generic competitors, which is translated as more financial cost to be borne. The National Health Insurance Program as well as the patients have allegedly been bearing great costs on patented drugs due to delayed entrance of generic copies2. As per the new bill, once the patentee files for an action, in due course, the TFDA shall place a 12-month stay in granting approval to generic drugs. The generic manufacturers insist that this is nothing less than a presumption of infringement in favor of the patentee, who is free from duty to make a request for the stay, to make necessary statements, or to pledge any collaterals or funds3.

The amendment to Pharmaceutical Act is regarded as a prominent effort negotiating for the accession to the former Trans-Pacific Partnership (TPP) and the conclusion of the Trade and Investment Framework Agreement (TIFA). Now the bill has been officially passed, but meanwhile, the TPP has moved to an awkward halt and has been renamed Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The bargain is seemly become moot. Thus for sake of reducing foreseeable impacts on local industry, drug manufacturers are calling on the legislature to postpone the effectiveness of the amendment to at least a date after the implementation of TIFA or CPTPP should cancellation be not possible.

Counterpart System across the Taiwan Strait

In December 2017, the PRC General Office of the State Council released an administrative document titled “Opinions on Deepening the Reform of the Evaluation and Approval System and Inspiring Innovation of Drugs and Medical Devices,” which specifically ordered the implementation of patent linkage between the authoritative functions of the China Food and Drug Administration (CFDA) and the State Intellectual Property Office (SIPO), in addition to more policies regarding clinical trials administration, expedited examination on market approval applications, product administration cycles, etc4. An official press release is available at: http://big5.gov.cn/gate/big5/www.gov.cn/zhengce/2017-10/08/content_5230105.htm(please refer to Paragraph 16). Information in the foregoing web link is in Chinese language.