Introduction to patent linkage in Taiwan

On December 29, 2017 Taiwan’s Congress passed an amendment to the Pharmaceutical Affairs Act establishing a patent linkage mechanism in the pharmaceutical industry, similar to that of the United States. This should have a significant impact on both the practice of life sciences and the commercial decisions of companies in the sector. Attached please find the Pharmaceutical Affairs Act passed by our Congress along with an English translation.

Over the last three decades, the pharmaceutical industry has become one of several key sectors to be supported and sponsored by successive Taiwanese administrations, while a national development fund inaugurated by the government has invested billions of US dollars in local drug research. Unfortunately, the strength of IP protection has not kept pace with this support, leaving innovation-driven industry at a disadvantage. Brand name firms are now entitled to patent term extensions in addition to five years’ data exclusivity. Taiwan previously provided nothing like the US patent linkage (Orange Book), Purple Book or the European 11-year data exclusivity. While the effective date of the new law has not yet been decided, it is believed that it will come into force in late 2018 or early 2019.

Under the new law, holders of a new drug application (NDA) bear a legal obligation to list patents that are relevant to their drug. Listable patents include those covering a substance (i.e., a compound, salt, ester, isomer or polymorph), a composition or a formulation, as well as any medical use. When listing patents, claims for medical use patents need only be identified, with patent numbers alone being sufficient for those covering a substance, a composition, or a formulation. NDA holders need to list patents relevant to drugs under current market approval within three months after the new law takes effect. This is a legal deadline, which cannot be extended. For market approvals obtained after the effective date of the new law, NDA holders must list relevant patents within 45 days upon receipt of market approval. The Taiwanese Food and Drug Administration (TFDA) is establishing an IT system for operating future patent listings, which will be available online to ensure that all the listed information is accessible to the public. Any party is entitled to file opposing comments against patents listed online in order to challenge the relevancy between listed patents and the drugs that they cover. NDA holders have to respond to the opposing comments within 45 days and make a decision concerning whether to delist patents.

How the new system works – ANDA filers

When applying for generic market approval, the filer of an abbreviated new drug application (ANDA) needs to declare one of the following four scenarios:

  • it has no listed patents;
  • its listed patents have expired;
  • it is obtaining generic market approval until all the listed patents have expired; or
  • the listed patents are invalid or are not infringed.

While it is relatively straightforward to declare scenarios one to three (also known as paragraphs one to three), declaring scenario four triggers the most significant part of the mechanism: linkage litigation and a 12-month stay period against generic drugs. ANDA filers who choose the fourth scenario need to inform the NDA holder, the patentee and the TFDA in writing, along with reasoning and evidence to support the arguments of patent invalidation or non-infringement. If the patentee files a patent infringement suit against the ANDA filer at the IP Court within 45 days, the TFDA will stay issuance of the generic market approval to the ANDA filer for 12 months. During this period, the TFDA will examine the ANDA but will not issue the market approval. A tentative approval could be issued to the ANDA filer in the stay period for applying for the generic drug reimbursement price with the tentative approval authorizes nothing to the ANDA filer but is relevant to the NHIA’s price review. During this time, no manufacturing or selling is allowed.

An ‘ANDA filer’ – defined by the TFDA as the party who is the earliest to completely submit regulation documents – may enjoy 12 months of marketing exclusivity. No market approval will be issued to a second ANDA filer. If a settlement agreement between patentee and ANDA filer involves reverse payment, the settlement must be reported to the Taiwan Fair Trade Commission (FTC).

Our President promulgated the Pharmaceutical Affairs Act on January 31, 2018. The TFDA, the FTC and the NHIA are preparing enforcement rules and detailed plans for executing patent linkage; it is expected that more details will be released over the coming months. Though the particulars on enforcement and execution are still being finalized, there is no doubt that patent owners now have additional options when it comes to formulating their patent and business strategies to protect their life sciences innovations in Taiwan.