Opportunities, Challenges & Solutions for Generic Drugs

Opportunities and challenges brought by generic drugs entering the market during the validity period of original drug patents and the solutions

From January to October 2019, there have been 10 generic drugs in China that have been approved for entry into the market during the validity period of the original drug-related compound patents. Furthermore, it is known that several approved generic drugs have now successfully joined the government's “4+7” quantity-based procurement catalog or won the bid in bidding procurement in several provinces.

It is stipulated in Measures for the Administration of Drug Registration that, for other’s drug that has obtained Chinese patent right, the applicant may file an application for registration within 2 years before the expiration of the patent period. The National Medical Products Administration (NMPA) shall examine it in accordance with the Measures. If it meets the requirements, it shall issue the drug approval number, the "Imported Drug Registration Certificate" or the "Pharmaceutical Product Registration Certificate" after the expiration of the patent.

The third revision of the Patent Law of the People's Republic of China in 2008 introduced a clause on Bolar exception, which was the product of the collision between US drug administration system and patent system, so that Bolar exception was formally written into law in China. The clause implies that, for generic companies, conducting clinical trials and collecting data required for approval before the expiration of the relevant patents are not considered infringement.However, in the current practice, regarding whether the administrative examination and approval act belongs to the Bolar exception, the opinions of the NMPA, the courts, the original drug companies, and the generic drug companies on this issue remain unresolved and no consensus has been reached.

A person in charge of intellectual property of a pharmaceutical company said: “In the case that generic drug companies voluntarily bear the risk of infringement, the entry of generic drugs into the market before the expiration of patents seems to have no legal obstacles.”The common idea of many persons in charge of intellectual property in pharmaceutical companies is in the process of pre-approval of generic drugs, because of the lack of timely and effective legal remedies, most of the original drug companies can only watch the generic drug companies go through the procedures and go on sale. Of course, some generic drug companies have obtained approvals in advance, but their attitudes are still cautious and there is no large-scale market exploitation.

"Documents for Centralized Procurement of Drugs in 4+7 Cities", the vital documents in the pharmaceutical industry released on November 15, 2018 do not involve patent issues in the qualification of application, and more attention is paid to whether the company has obtained valid registration approval documents for the specified specifications of the purchased varieties.Obtaining approval by the NMPA means that pharmaceutical companies have the qualification to participate in the government's “4+7” quantity-based procurement and bidding procurement. Cheng Yongshun, director of the Beijing Intellectual Property Institute and former vice president of the Intellectual Property Court of the Beijing High Court believes that, whether it is the emerging “4+7” quantity-basedprocurement or the traditional bidding procurement, it is essentially offering for sale, which may constitute patent infringement before the original drug patent expires. Cheng Yongshun told the reporter: “The administrative approval of a generic drug does not mean that its sale on the market during the patent period does not violate the Patent Law.”

As a result, there is a chaotic and contradictory situation in the entire pharmaceutical industry: First, the generic drug company obtains the approval of the NMPAthrough its own efforts and qualifies for entering the market. Second, the patent of the original drug company is still in the protection period, and the sale of generic drugs is likely to infringe the related patent. Third, once an infringement dispute arises, the patentee, the generic drug company, and the consumers (patients) will jointly pay for the infringement damage result, which is very unfavorable to the transformation of the entire industry. And for the judiciary, making the judicial decisions in the public interest will also face enormous social pressure.

When the generic drug enters the market ahead of the patent validity period, litigation is not the first choice for the original drug company. “It may take more than a month to prosecute, the trial will be held after 4 months, and the period of patent infringement lawsuits often drags on for a very long time. Soby the time the final judgment comes out, the patent validity period of the drug is likely to have expired.” Xu Feng, AstraZeneca China and Asia Intellectual Property Director said, “It lacks timely and effective quick legal remedies. Even for companies that intentionally infringe, the current legal effect is still slow and limited.”

Some experts have suggested that the judicial authorities can take high compensation in the relevant judgments to make up for the losses. However, Li Ming (a pseudonym), patent director of a foreign-funded pharmaceutical company said: “There is a natural price difference between the original drug and the generic drug, and it is unrealistic to calculate the loss according to the gross profit of the original drug. However, if the compensation is calculated by statutory compensation or the infringer’s profit, it is not enough to make up for the actual loss of the original drug company at all.”

In the absence of a patent link in China, a timely and effective injunction is the most desired direction for the original drug companies. As everyone knows, the threshold for setting up a pre-trial injunction or a temporary injunction is very high, and it is still difficult to obtain an injunction. “Based on the actual situation of the current domestic judicial compensation, once the generic drug is on the market while the original drug company can’t an injunction, from a certain perspective, it can be said that the original drug company is completely helpless”, Liu hongqiang, Bayer's Greater China Intellectual Property Director said, “In the field of medicine, the court should reasonably consider the particularity of its distinction from other industries. Because the generic drug enters the market before the patent expires, resulting in reduced drug prices of the original drug and market erosion, the damage must be irreparable.”

In fact, in the interview process of the reporter, it has been found that generic drug companies do not completely ignore the risk of patent infringement. A generic drug company staff told the reporter: “The key point is that the relevant legal mechanisms have not been established, the patent issues have become a ‘no man's land’, and all parties hoe their own potatoes. We also look forward to clear and enforceable rules and benign market competition.”

A seminar on patent issues in the approval and entry of generic drugs was held by the Beijing Intellectual Property Institute on August 16, 2019. The participating experts believe that, it is not realistic to require the drug administration department, the health department, and the medical insurance bureau to review the intellectual property status of drugs. In the case that China has not established a patent linking system, it is suggested that the “joint meeting mechanism” can be used to strengthen the information disclosure and sharing mechanism between relevant departments. If the relevant original drug patent has not expired, and the generic drug has passed the technical approval, it may be considered to indicate the time when the generic drug can be started to be produced and sold on the production license issued, which should be after the expiration of the original drug patent.

The market entry of generic drug during the validity period of the original drug patent has caused opportunities, but also challenges, such as instability and potential chaos in the drug patent market in many aspects.Seeking solutions is the unanimous appeal of all parties.

Source: ChinaIPMagaine

Original author: Lu Zhouhuang