Today, December 13 is the last day for comments on proposed revisions to the China Food and Drug Administration’s proposed amendments to the Drug Registration Rules. Normally, one wouldn’t look to CFDA for IP-related policy making. However there are several key areas where CFDA plays a leading role: anti-counterfeiting/substandard products; control of active pharmaceutical ingredients used to make counterfeit drugs; regulatory data protection (TRIPS Article 39); and patent linkage.
The proposed revisions will significantly undercut China’s already weak patent linkage regime. In the United States, China and many developed countries, pharmaceutical regulators “link” their marketing approval with patent grants, effectively denying marketing approval to drugs that would infringe the innovator’s patent rights. Linkage in principle should provide a measure of predictability to both innovators and generics. An innovator obtains assurances that a drug will not obtain regulatory approval unless there is no patent infringement or the patent has been declared invalid. A generic company will be provided assurances that certain pre-regulatory approval efforts, including research and development, may be free of the innovator’s claims of infringement. The limited “freedom to operate” provided by linkage stems is frequently called a “Bolar exemption”, following the landmark US case, Roche Products Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858 (Fed. Cir. 04/23/1984).
Typically, Bolar exemptions are established in conjunction with an extension of the patent term for the innovator. The “grand bargain” /balancing of interests is that generic companies get a limited freedom to operate which might otherwise constitute infringement in exchange for the extension of the patent term for the innovator. Such extension policies are typically called “patent term extension” or “patent term restoration” policies.
Since the 2008 patent law amendments came into effect, China has had a “naked” Bolar. A “naked Bolar” as I have described elsewhere is a system that lacks a patent term restoration or extension mechanism. In essence, innovative pharmaceutical companies have had the final period of their patent term eroded, without any compensatory mechanism and are thus left “naked” of patent term extension.
However, China nonetheless also had a modest patent linkage system in place which at least denied final market entry for pharma products if there was a risk of infringement. This system, under Article 19 of China’s Drug Registration Rules, required applicants for marketing approval to set forth if their products would infringe another’s patents and would permit them to conduct regulatory testing during the last two years of the patent term.
The CFDA has now proposed removing Article 19 of its Drug Registration Regulations which would essentially leave all issues involving invalidity of patents to the patent law, which already creates a broad exemption. The intention of this regulation seems to be to give an additional “free pass” to generics to conduct pre-marketing approval operations beyond the two year period that was originally specified in the DRR. China’s naked Bolar is in a sense now more fully “exposed” without regulatory limitations on generics’ operations.
China has a number of laudable goals to become an innovative biotech country with metrics such as new drug registrations, patent grants, and developing the largest biotech labor pool in the world. Will these new developments help China become an innovative economy in the life sciences?