1. Background

China has tried to establish a drug patent linkage system since 2019. After several years, the patent linkage system was finally officially implemented this year. The purpose of the system is to protect the legitimate rights and interests of drug patentees, reduce the risk of patent infringement after generic drugs are listed, and ensure the early settlement of patent disputes before generic drugs are listed. The implementation of this system involves the revision and promulgation of a series of relevant laws and regulations, which has taken a long time to realize and is still being improved.

  1. Relevant laws and regulations
  • On October 17, 2020, CNIPA issued the fourth amendment to Chinese Patent Law[1], which came into effect as of June 1, 2021. Article 76 of the newly amended Patent Law introduces the drug patent linkage system for the first time, clarifying the cause of action and routes of patent linkage litigation. The cause of action includes confirming whether the drug of the approval application falls within the scope of a relevant patent, and disputes shall be resolved through judicial or administrative means.
  • On July 4, 2021, the National Medical Products Administration (NMPA) and CNIPA jointly issued the Measures for the Implementation of Early Resolution Mechanisms of Drug Patent Disputes (Trial) (hereinafter referred to as “Trial Measures”)[2], which was effective from the issue date and includes the following:

-Patent registration system

The Drug marketing authorization holders shall register the patent information related to drugs on the "China listed drug patent information registration platform (CDE)" (https://zldj.cde.org.cn/home) within 30 days of receiving the drug registration certificate as well as update their registrations within 30 days of any change, which will be the basis for the generic drug applicant to make a patent declaration. At present, the types of patents allowed to be registered for chemical drugs and biological drugs include: compound patents for active ingredients of chemical drugs, combination patents containing active ingredients of chemical drugs, and patents for pharmaceutical uses of chemical drugs; traditional Chinese medicine composition patents, Chinese medicine extract patents, and pharmaceutical use patents of traditional Chinese medicine; patents for sequence structure of active ingredients of biological products, patents for pharmaceutical uses of biological products. Please note that relevant patents do not include: patents for intermediates, crystal forms, metabolites, preparation methods, and detection methods.

-Generic drug patent declaration system

When submitting the approval application, the generic drug applicant shall make a declaration on each relevant drug patent. The declaratory statement should fall under one of the four categories: 1. there is no patent information related to the generic drug in the "China Listed Drug Patent Information Registration CDE "; 2. the relevant patents of CDE have been terminated or declared invalid; 3. the CDE contains relevant patents, and the generic drug applicant promises not to be listed before the expiration of the patent period; 4. the relevant patent rights included in the CDE should be deemed invalid, or the generic drug does not fall within the scope of the patent.

Only when the generic drug applicant makes the fourth declaration and the patentee or interested party has an objection, it is possible to file a lawsuit or apply for administrative adjudication within 45 days from the publication date of the application on the CDE platform.

-Judicial or administrative linkage system

According to Article 7 of the Trial Measures, if the patentee or interested party raises an objection, he/she can choose to take action through either a judicial or administrative route. If an administrative ruling from CNIPA is sought, it will still be possible to bring a lawsuit to the Beijing Intellectual Property Court. On the contrary, according to Articles 4 and 10 of the Trial Measures, if the case has been brought before the court, CNIPA will no longer accept it. After the generic drug applicant makes the fourth declaration, the patentee may file a confirmation lawsuit or apply for confirmation administrative adjudication in accordance with Article 76 of the Patent Law and Article 7 of the Trial Measures. Then the patentee shall notify the generic drug applicant within 15 working days from the date of acceptance of the confirmation lawsuit or confirmation administrative adjudication. Accordingly, the NMPA will suspend the approval procedure of the generic drug and set a nine-month waiting period for administrative approval.

On the other hand, if the patentee fails to file a confirmation lawsuit or apply for confirmation administrative adjudication within 45 days, the waiting period for administrative approval will not be triggered, and the generic drug will smoothly enter the administrative approval procedure. The patentee also has no right to raise any objection to the approval decision of the generic drug marketing license issued by NMPA.

-Approval waiting period system

As mentioned above, from the date of filing or acceptance by the court or the CNIPA for the confirmation lawsuit or confirmation administrative adjudication, NMPA shall set a waiting period of nine months for the approval application of the chemical generic drug. During the waiting period, the National Drug Review Institution shall not stop the examination.

It should be noted that the "waiting period" only applies to chemical drugs. There is no waiting period for biological drugs.

-Classification system for drug approval

If a judicial or administrative ruling is received within nine months, NMPA shall handle the application as follows: I) if it is confirmed that the generic drug falls within the scope of patent protection, the approval procedure of the chemical generic drug application will be suspended until 20 working days before the expiration of the patent; II) if it is confirmed that the generic drug does not fall within the scope of patent protection, if a settlement has been reached between the two parties, or if the patent is declared invalid, the application for the chemical generic drug shall be transferred to administrative examination for approval.

-First generic drug market monopoly system

For the chemical generic drug that is the first to have successfully challenged the relevant patent and the first approved for listing, a market monopoly period shall be given. NMPA shall no longer approve the listing of generic drugs of the same variety within 12 months from the date of approval of the drug, and the market monopoly period shall not exceed the patent period of the challenged drug.

  1. On July 5, 2021, the Supreme People's Court and CNIPA respectively issued the Provisions on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Patent Disputes Related to Drug Registration Applications (hereinafter as the “Civil Provisions”)[3] and the Administrative Adjudication of the Early Settlement Mechanism of Drug Patent Disputes (hereinafter as the “Administrative Adjudication Measures”)[4], which came into force as of the date of promulgation.

According to Article 1 of the Civil Provisions, a case of first instance brought by a party to confirm whether a drug falls within the scope of patent protection shall be under the jurisdiction of the Beijing Intellectual Property Court. In terms of acceptance conditions, in addition to the general acceptance conditions for civil litigation, the following materials shall be submitted: (1) relevant patent information registered in the CDE, including the title, number, relevant claims, etc. of relevant patents; (2) relevant information of the drug, including the drug name, drug type, registration category, and the corresponding relationship between the drug of the registration application and relevant listed drugs;(3) the fourth declaratory statement made by the applicant and the basis of the statement. However, if the applicant is not satisfied with the judgement of first instance, he/she may appeal to the Supreme Court.

The Administrative Adjudication Measures stipulate that CNIPA shall establish an administrative adjudication committee, and organize and carry out the work related to the administrative adjudication.

  1. Conclusion

Sine the new patent linkage system has just come into force, there are some points worthy of attention.

  1. To register or not?

The first step is information disclosure/patent registration. The holder of a drug marketing license shall register all relevant patents within 30 days after obtaining the drug registration certificate. At this time, since registration is not mandatory according to existing legal documents, whether to register or not depends on the commercial consideration of the drug marketing license holder. Without registration, it is impossible to use the drug patent link system to solve disputes early, or to prevent or delay the listing of generic drugs.

  1. When a relevant patent has been invalidated, the administrative waiting period ends and the generic drug enters the approval procedure. An invalidation decision often goes through litigation procedures of first and second instances, and the effective cycle of the invalidation decision is much longer than the nine-month waiting period, so it is doubtful whether a valid judgment can be obtained within nine months.

In addition, administrative rulings are not final. If a party is not satisfied with an administrative ruling, the party can bring an administrative lawsuit to the court. According to the Measures for Patent Administrative Law Enforcement, the trial time limit of a patent administrative ruling is three months and can be extended by one month if the case is complex. That is, the results of administrative adjudication can be obtained in three to four months, which has the advantage of rapidity. In contrast, according to the Civil Procedure Law, the trial time limit of civil cases of first instance is six months and that of second instance is three months. Moreover, in view of the current backlog of cases at the Beijing Intellectual Property Court, it is basically impossible to receive a judgment within the nine- month waiting period. To sum up, under the current situation, the administrative route will likely be the first choice in most cases.

  1. Under the "first generic drug market monopoly system" for the generic drug applicant, NMPA will no longer approve the listing of generic drugs of the same variety within 12 months from the date of approval of the "first generic." Generic drug companies may have greater motivation to challenge the patents of original drugs.
  2. At present, China's patent linkage system does not have any provisions similar to the "data protection period" in other countries. For example, the time interval between the approval of a small molecule new drug and the submission of Abbreviated New Drug Applications (ANDA) for generic drugs in the United States is at least 4 years; and in Japan and nearly 30 EU countries, this period is at least 8 years. However, at present, the time between the approval of a new drug application (NDA) and ANDA is legally "zero interval" in China.

As can be seen from the foregoing, there remain many problems that need to be addressed, especially with respect to the balance between the interests of innovative drug developers and generic drug manufacturers. The evolution of this new patent linkage system will no doubt be the focus of attention of many drug developers and manufacturers in years to come.