According to a 2017 research “Evaluation of China’s intellectual property regime for innovation: Summary Report”[1]:
1) China’s IP laws and regulations have improved significantly over the years, and currently are generally in line with international standards.
2) Despite the surge in the quantity of patents in China in recent years, patent quality has not risen proportionately. Proliferation of low-quality patents can restrain China’s ability to
transition towards an innovation-based economy.
3) Based upon our quantitative and qualitative research, we find that, generally speaking, the courts in China handling IP disputes are more efficient and effective today than in the past. Despite these positive developments in IP enforcement in China, the effectiveness of judicial IP enforcement remains undermined by the low damages traditionally awarded in IP cases
In terms of IP regime for the pharmaceutical industry in China, several improvements have been made recently:
- Patent Term Extension
Generally, the patent term in China is 20 years, similar to that in the US. But China didn’t provide other protections such as Patent Term Extension for drugs.
For drugs, which require years of premarket development and marketing approval before they can be commercialized, additional protections are usually available. In the US, a pharmaceutical patent may be extended by up to 5 years to compensate for any clinical trials and FDA regulatory time. However, the amount of time that a manufacturer has both patent and regulatory exclusivity cannot exceed 14 years. A study for 170 top-selling drugs that had a generic approved from 2000 to 2012 shows that nearly half (49%) of those drugs received a patent term extension, with a median extension of 2.75 years resulting in a total exclusivity period of 13.75 years[2],[3].
The State Council in China announced its intention to extend patent protection (and other improvements) in October 2017 《关于深化审评审批制度改革鼓励药品医疗器械创新的意见》.[4]
On April 12 2018, the State Council meeting said that 5-year patent term extension will be available for innovative drugs which apply for commercialization on domestic and oversea markets simultaneously[5].
In December 2018, the patent term extension was part of the fourth amendment (draft) of China’s IP Law[6].
- Data exclusivity
Also an important protection for drug innovation, data exclusivity is newly structured in April 2018, following the October 2017 opinion[7].
The protection (6 years) was in place before, but can be applied only in limited circumstances[8].
Innovative drugs that are approved to enter the domestic market will be entitled to enjoy a data protection period of six years, doubled to 12 years for innovative biological products for curative uses, which is comparable to that of the United States and exceeds the ten-year protection period in the European Union
The exclusivity protection may be reduced or revoked under any of the following circumstances[9].:
- when a drug application uses data from an international multi-center clinical trial in China and the drug application filed in China is later than those outside of China, the exclusivity period is one to five years, depending on the delay, and if the delay is more than six years, there is no data exclusivity;
- if the drug application uses data from clinical trials conducted outside of China without involving any Chinese patients, the data exclusivity period is 25% of the foregoing;
- if the drug application is supplemented with clinical trial data in China, the data exclusivity period is 50% of the foregoing; and
- if a company fails to launch an approved drug into the market within one year of obtaining regulatory approval, the data exclusivity will be revoked.
Generally speaking, the recent reforms are pretty much playing a “catch-up” with the drug protection/exclusivity in the US. They serve both as a way to protect multinational drug companies and a way to promote domestic innovation. China’s own pharmaceutical industry has long been seen as a market filled with generic drug makers. But it is expected that more innovative drugs/therapies will be developed in China.
Another thing worth noting – China joined ICH in 2017. The ICH Assembly approved the CFDA as a new Regulatory Member in June 2017[10],[11]. China’s signing of the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use now exposes Chinese companies to litigation if registered patents are not honored19. This will make Chinese drug makers operating higher standard stand out and raise the play field for all the companies.
[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3118079
[2] https://www.uspharmacist.com/article/patent-and-regulatory-exclusivities-the-two-keys-driving-generic-and-followon-market-availability
[3] https://www.raps.org/news-and-articles/news-articles/2019/2/study-patent-term-restoration-extends-drug-patent
[4] http://www.gov.cn/zhengce/2017-10/08/content_5230105.htm
[5] http://www.gov.cn/guowuyuan/gwycwhy/20180412c06/index.htm
[6] http://www.phirda.com/artilce_19014.html?cId=1
[7] https://www.yigoonet.com/article/22344782.html
[8] https://www.hankunlaw.com/downloadfile/newsAndInsights/a180eb45f6f6f4a7c3530da2cdd6b463.pdf
[9] http://www.zhonglun.com/Content/2019/04-16/1353562780.html
[10] https://www.fda.gov/media/108538/download
[11] http://www.xinhuanet.com/health/2017-06/19/c_1121171609.htm