My new article “Process Tracing China’s Pharmaceutical IP Reforms: Foreign Pressure, Domestic Innovation, and Institutional Change” is now available on SSRN at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7472640.

I traced four major pharma-specific IP reforms in light of endogenous and exogenous pressure, as well one trade secret reform that also had direct impacts on pharmaceutical R&D. The overall landscape is complicated with rich implications for how to understand China’s changing IP landscape, and how IP and trade policy is formulated. Here is my abstract:

“China’s rise as an innovative economy with a vibrant intellectual property (IP) system has increasingly attracted global attention, particularly in light of its potential to out-compete Western economies and the remarkable changes that have occurred since China joined the WTO in 2001. One key aspect of that change has been China’s emergence as a pharmaceutical and biotech innovator. China’s economic interests in an innovative pharmaceutical sector have changed concurrently with those changes. As early as 1991, China had been accused by the U.S. of failing to provide adequate protection for innovative pharmaceutical IP. As a result, Western countries have often pursued a range of pressure tactics to provoke additional reforms in China’s pharma IP system. These high-pressure actions have included tariff-based penalties, accession commitments in the WTO or in free-trade agreements (FTAs), and other forms of external leverage. These pressures were also an essential component of the Economic and Trade Agreement Between the Government of the United States of America and the Government of the People’s Republic of China (January 15, 2020) (“Phase One Agreement”) with the United States which was intended to address over $600 billion in losses due to Chinese “IP theft.” In the dramatic buildup to these and other sanctioning activities, less attention has been paid to the interaction of those external pressures with China’s pre-existing domestic policy objectives and with less dramatic, but nonetheless influential forms of engagement including government-to-government technical negotiations, regulator-to-regulator dialogue, professional and academic
exchanges, judicial exchanges, industry engagement, and Track II private dialogues.”

I plot a “Wide V” shaped progression in China’s pharmaceutical IP reform in certain areas such as post-filing supplementation of data and regulatory data protection, where IP protection decreased until 10-14 years ago, after which there were significant improvements. The “Wide V” may be a surprise to those who believe that China’s IP regime has consistently improved, or that it has improved based on incrementally improving economic factors, such as China’s capacity to innovate. I also show how a Track II dialogue complements government to government exchanges on IP and how endogenous factors, including China’s changing approach to health care have had significant impacts on China’s willingness to reform. These reforms were also largely made in advance of the US-China Phase I Trade Agreement (2020), although that agreement helped to provide additional support for the reforms. The paper provides concrete examples of how the Chinese IP system embraces frontier technologies which can be useful to negotiators looking at rapidly changing areas of technology that have emerged in AI and other areas.

Due to difficulties in tracking enforcement outcomes in China, the paper focuses on doctrinal improvements (changes to laws, regulations, and patent examination guidelines). I do, however, occasionally refer to significant cases.

I look forward to your comments on the draft!