The biggest change in China's drug management system in 2020 is the establishment of a drug patent link system, from the Sino-US economic and trade agreement in January to the judicial interpretation project plan of the Supreme People's Court in March, all of which indicate that the drug patent link system that has been brewing for nearly two decades will be completed and implemented this year.
On April 20, the State Intellectual Property Office (SIPO) issued a plan to promote the implementation of the Opinions on Strengthening the Protection of Intellectual Property Rights from 2020 to 2021, of which Article 8 "Establish an Early Resolution Mechanism for Pharmaceutical Patent Disputes (to be completed by the end of October 2020)" gives a clear time limit.
For most readers, and even most of the readers in the patent industry, drug patent links are still an unfamiliar term, and this series of articles begins with the Bora case to introduce the emergence, development and implementation of the drug patent link system in China.
<h2 class="pgc-h-arrow-right" > Episode 1: The Exception of Bora</h2>
<h2 class="pgc-h-arrow-right" >, what is the exception for Bora?
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In 1983, the American generic drug company Bolar (Bora) imported 5kg of raw materials for research before the expiration of Roche's sleeping drug fluoxepam hydrochloride related patent (1984-01-17), triggering a patent infringement lawsuit, Bolar won the first instance but lost the second trial, that is, Bolar v. Roche case.
Although Bolar lost the case, his claim was reasonable: If generic drug factories were not allowed to experiment until after the expiration of the patent, Roche could in fact continue to unreasonably monopolize the market for many years. Moreover, the experimental products of generic drug companies are not put on the market, which does not affect Roche's legitimate economic interests.
"There is nothing wrong with the FDA requiring pharmaceutical companies to conduct experiments for the sake of drug safety, and it is not wrong for the court to rule that Bolar infringed patents under the Patent Act, so why did it lead to such unreasonable results?" The Federal Circuit fell into deep thought.
As for the result of deep thinking: it must be a system problem! The FDA and the USPTO do not belong to each other, each has its own way, and the current legislation is also lacking coordination, which has led to this unreasonableness, and the judges cannot solve this problem.
The masters were very busy and took the time to listen to the debate between the two sides. Bolar's actions are reasonable but not illegal? Then let him be legal; the original pharmaceutical company also has requirements? Sounds reasonable, then add it to try it.
In 1984, the United States issued the Drug Price Competition and Patent Term Compensation Act (named the Hatch-Waxman Act, or H-W Act) under the name of the two members of the proposed lawmaker, which stipulates that "the purpose is not to infringe patent rights solely for the purpose of obtaining and submitting information requested by the FDA." This provision sets out a class of exceptions in the original patent infringement and is therefore called the Bolar exception/exemption.
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<h2 class= "pgc-h-arrow-right" > second, the exception of Bora is in Wuzhou</h2>
In the more than thirty years after 84 years, the interpretation of the Bora exception by U.S. courts has become increasingly lenient, from drugs to medical devices, from clinical trials to animal experiments (veterinary drugs), whether for commercial purposes or not, as long as it is to collect the data required for administrative approval, it is in the category of "reasonably relevant".
Canada's legislation, taking into account its weak drug development capacity, is more biased towards generic drugs/the public interest, and the Patent Act Amendment Act passed in 1992, in addition to providing for the non-infringement of patents for the purpose of obtaining administrative approval, has created a "storage exception", that is, "the purpose is to manufacture and store the product in question for sale after the expiration of the patent protection period, which does not constitute a patent infringement".
The bill sparked a dispute between Europe and Canada that lasted for years until 2000, when the WTO Dispute Settlement Panel used a report of more than 250 pages to determine that the Bolar exception was consistent with the TRIPS Agreement, but the "storage exception" was not.
The WTO report cleared legal hurdles for countries to introduce the Bolar exception in their patent laws, and the inclusion of the Bolar exception in patent law since then is "in line with international practice". In 2004, Europe amended the Directive on Medicines for Human Use to provide that "the conduct of the necessary research experiments and subsequent practical claims shall not be considered to conflict with patent rights or with the supplementary protection certificate of medicines", and Japan has adopted a similar approach to Europe.
Under the active promotion of the United States, Australia, South Korea, Israel, Malaysia, Argentina and other countries have also accepted the Bolar exception system and written into their own laws, and each country has adjusted this according to its own different circumstances. China also introduced this system when it revised its patent law for the third time in 2008, of course, the Chinese characteristics of combining East and West, combining earth and ocean, and crossing the river by touching stones are indispensable.
< h2 class= "pgc-h-arrow-right" > third, the exception of Bora with Chinese characteristics</h2>
Before the third revision of the Patent Law, there had been more research and demonstration in the domestic academic circles on the Bolar exception, and a certain amount of exploration had been carried out at the level of judicial practice.
In the Patent Law, which came into force in 2001, the provisions on patent infringement are as follows:
Article 11 After the patent right for invention and utility model has been granted, except as otherwise provided in this Law, no unit or individual may exploit its patent without the permission of the patentee, that is, it may not manufacture, use, offer to sell, sell or import its patented products for the purpose of production and operation, or use its patented methods and use, promise to sell, sell or import products directly obtained in accordance with the patented method. Article 63 of the Patent Law provides for four exceptions: exhaustion of rights, prior use, temporary transit, scientific research and experimentation.
The clinical experiments of generic drugs for administrative approval are only a repetition of the research of the original research drugs in the same year, and it is difficult to be considered scientific research and experiments. Therefore, generic drug enterprises cannot use Article 63 of the Patent Law to defend themselves, but instead claim non-infringement of patent rights on the grounds that clinical trials are not for "production and operation purposes".
Before 2008, the judgments of the courts in various places were not uniform, and the first time the generic drug enterprise won the lawsuit was in the patent infringement case of Sangong v. Wansheng Pharmaceutical, where the court found that "for manufacturing, importing and using, it may be for the purpose of production and operation, or it may not have the purpose of production and operation", and the nature of the defendant's behavior is "an experimental act prepared for the next step of production and operation rather than a production and operation act."
Therefore, the three batches of products produced by the defendant to apply for a new drug production license are not acts of using patented methods for production and business purposes prohibited by the Patent Law." In the subsequent patent infringement case of Airerly Li v. Gan-Lee, the court once again reiterated that conducting clinical trials of new drugs and applying for production licenses are not acts for the purpose of production and operation.
This explanation is logically difficult to justify itself, generic drug companies spend money on clinical trials, not to make money in later production and operation? According to this logic, the patentee found that the possible competitors were not enough in production, because the production may also be an act without the purpose of production and operation, and it must wait until the other party is listed for sale and get the sales invoice before it can sue. Moreover, this logic is difficult to limit to the field of drugs and medical devices specified in the Bolar exception, and infringers from all walks of life can argue that "the production act is not for the purpose of production and operation", which is very unfavorable to the patentee.
On December 27, 2008, the Standing Committee of the National People's Congress adopted the Decision of the Standing Committee of the National People's Congress on Amending the > of the Patent Law of the people's republic of china <, and in article 69 of the revised Patent Law (i.e., article 63 before the amendment), the fifth paragraph was added: "In order to provide the information required for administrative examination and approval, the manufacture, use or import of patented drugs or patented medical devices, as well as the manufacture and import of patented drugs or patented medical devices specifically for them".
This provision is literally analyzed and can be divided into three sub-sentences:
(1) "In order to provide the information required for administrative examination and approval," stipulates the purpose of implementing patents, and this article does not limit it to administrative approval within China, so in theory, the implementation of patents in order to obtain the information required for administrative approval in other countries and regions can also be exempted;
(2) "Manufacture, use, or import of patented drugs or patented medical devices" stipulates the scope of implementation, and this sentence should be understood as an exemption from the infringement liability of generic drug manufacturers, which is no different from other countries, except that "drugs" and "medical devices" are generally understood as human use in China, and the scope of application is narrower than that of the United States;
(3) "and those specifically manufactured or imported for patented drugs or patented medical devices" is a very distinctive provision, which only writes "manufacturing" and "import" two situations, and does not clearly stipulate whether it can be "used", "sold" and "promised to sell", which has led to many disputes.
<h2 class="pgc-h-arrow-right" >4. Discussion on whether the sale of experimental drugs is infringing</h2>
The business of "manufacturing and importing patented drugs or patented medical devices specifically for them" is generally referred to as CMO (Contract Manufacturing Organization), which is entrusted by pharmaceutical companies to provide process development, formula development, clinical trial drugs, chemical or biosynthetic API production, intermediate manufacturing, preparation production (such as powders, injections) and packaging services required for product production.
China's CMO industry started late, and gradually emerged after 2000, but it has developed rapidly in recent years, and the current annual output value is tens of billions of yuan. Just as countless component and parts manufacturers provide a supply chain ecosystem for terminal mobile phones and automobile manufacturers, CMO companies provide a development ecology for pharmaceutical companies, which is an important factor in the rapid development of pharmaceutical companies in China in recent years.
The common business of CMO companies is to synthesize compounds according to the structural formula given by customers, similar to the business of processing custom manufacturing. If the patent rights of the drugs customized by the generic drug companies have not expired, the CMO companies will face the risk of patent infringement.
The typical problem is: if the generic drug company A is ready to declare a generic drug, but for various reasons, such as lack of ability, unable to vacate the production line, hurry, it is better to build it yourself than to buy cheap, and it does not produce it itself, but buys the drug/API/intermediate from CMO Company B. So, does Company B's act of selling and promising to sell constitute infringement? This issue is not clear in the current law, in order to avoid falling into infringement litigation, many CMO companies do not dare to undertake such business, and their interests have been damaged.
Before the new Patent Law and the judicial interpretation of the Supreme People's Court this year, the author made the following academic analysis of the law, and listed here the hopes to receive criticism and correction:
(1) Semantic interpretation
If only the literal meaning of "and the manufacture and import of patented drugs or patented medical devices specifically for them" is considered, because "sale" and "promise to sell" do not appear in the sentence, so Company B is definitely infringing, this understanding is simple and crude and difficult to refute.
However, if we understand from the sentence structure of the entire subparagraph (v), the second sub-sentence stipulates that the generic drug company A company can manufacture, use and import, and the third sub-sentence obviously stipulates that when company A is unable/unwilling to "manufacture and import" itself, other enterprises such as company B can "manufacture and import" specifically for it.
According to the simplest common sense of life, if company A does not pay for it, will company B "manufacture and import" it exclusively? Therefore, the legislator has taken into account the situation that generic drug companies are unable/unwilling to "manufacture and import" themselves, and the third sub-sentence specially added to this end should undoubtedly imply the meaning of allowing "sale" and "promising to sell". Note: This view has long been similarly elaborated in Mr. Yin Xintian's Detailed Explanation of China's Patent Law.
As for the reasons for not explicitly writing "sales" and "promising sales", the author believes that it is a matter of language habits from the Chinese: "specially manufacturing and importing patented drugs or patented medical devices" is in line with language habits; however, "specifically for the sale and promise of selling patented drugs or patented medical devices" is very difficult to read; "specifically for them to manufacture, import patented drugs or patented medical devices and provide them to generic drug enterprises by way of sales and promise sales" is too lengthy. Therefore, it is such a relatively concise law that is finally written into the patent law.
(2) Explanation of purpose
The addition of the Bolar exception to the Patent Law is clearly intended to facilitate the filing of generic drug companies, not to create obstacles. Since the legislation has taken into account the situation that generic drug companies are unable/unwilling to "manufacture and import" themselves, it is normal to allow them to conveniently and legally purchase cheap experimental drugs.
If domestic enterprises are prohibited from selling, it is tantamount to forcing Company A to "import" and send this part of the market to foreign CMO companies. In this case, generic drugs may be delayed in listing, domestic company A increases costs, company B loses orders, and the government loses jobs and taxes, presumably it will not be the intention of the legislators.
It is worth mentioning that article (3) of chapter 5, section 1 (7) of the administrative approval defense for drugs and medical devices in the Guidelines for Handling Administrative Rulings on Patent Infringement Disputes stipulates that the administrative approval defense for drugs and medical devices is only applicable to the three acts of manufacturing, use and import, and the administrative approval defense for promising sales and sales is not applicable. Many original pharmaceutical companies have defended their rights through administrative channels and have gained a lot of gains, and CMO companies are generally unwilling to bear the high litigation costs, so most of them settle or accept penalties.
Perhaps because of this, the author has not found any precedents in relevant administrative litigation, nor has it found a precedent for successful defense based on "and specifically manufactured or imported patented drugs or patented medical devices". That's probably not what lawmakers want to see.
(3) Comparative interpretation
The Bolar exception in the United States is the most thoroughly enforced, according to the U.S. jurisprudence, as long as the product in question is used to provide experiments with the data required for approval, the CMO's business practices do not infringe patent rights (SHIRE LLC v AMNEAL case 802 F.3d 1301 (2015)), and even allow more to be produced within a reasonable range as experimental backup (when several more sets of data need to be made, there is no need to reopen the production line).
Europe and Japan are wary of not allowing CMOs to profit from it. However, it should be pointed out that the relevant laws of Europe and Japan only exempt generic drug enterprises, and there is no expression similar to the third sentence in Article 69 (5) of China's Patent Law, so it has no reference significance.
Through the above analysis, the author believes that it should be in the form of amending the language of the law or issuing judicial interpretations to clearly stipulate that the behavior of Company B does not infringe on patent rights; the adoption of such legal provisions or interpretations is beneficial to the development of domestic generic drug enterprises and CMO enterprises, and is also conducive to the timely listing of cheap generic drugs after the expiration of patents, reducing the burden on patients and the pressure on medical insurance funds. Because he did not come from an illegal discipline class and did not participate in legislative work, there were inevitably imprecise points in the reasoning process, and he also asked all the Fang family to criticize and correct it.
< h2 class= "pgc-h-arrow-right" > five, Zhang Liangji and the ladder over the wall</h2>
If this year's new patent law and judicial interpretation still do not allow "sale" and promise to sell, or allow "sale" and "promise to sell" but do not explicitly allow "use", then Company B may have to adopt the following circumvention methods in the future:
1. Joint declaration, joint development by both parties (there are already non-infringement cases in China).
2.B Company "manufactures drugs exclusively for Company A" for free, which can claim not to constitute a sales act; after Company A's drugs can be listed, Company B sells the raw materials (APIs) to it for profit. This method is similar to the merchant issuing "trial packs" to consumers, but in practice it may still be considered a sale or a promise to sell, which has certain legal risks.
3.B company will be skilled employees, plant, equipment leased to company A to use, company A production of the required drugs can be (there may be a lease / labor dispatch business qualification problems, this market demand may also give rise to the future specialized in equipment leasing and labor dispatch C company.
4. Go abroad to open a factory, produce and sell domestically.
Next episode preview:
Generic drug companies have promoted the establishment of a Bora exception system, so that generic drugs can be listed for the first time after the end of the patent period; the original research pharmaceutical companies have thus begun to truly feel the pain of the patent cliff, the loss of mulberry elm, naturally to harvest the east corner, the original research pharmaceutical companies will naturally launch a counterattack, to promote a favorable system for themselves. In the next episode, you will introduce the basis of patent connectivity - the orange book system.
bibliography:
[1] Yin Xintian . Detailed explanation of China's patent law[M]. Beijing: Intellectual Property Press, 2011
【2】Li Hongtuan . Construct a drug patent link system according to national conditions[J]; China Journal of New Drugs; No. 17, 2018
【3】 HAN Lei;LIU Guiming . A Brief Analysis of the Opportunities and Challenges Brought by the Drug Patent Link System[J]. Chinese Inventions and Patents, No.3, 2019
[4] ZHANG Weijun. On the Convergence of Drug Patent Link System and the Current Patent Law[J]. China Inventions and Patents, No.3, 2018
[5] YAO Xuefang. Feasibility Study on the Implementation of Drug Patent Linking System in China:Based on Stakeholder Analysis Method[J]; China Journal of New Drugs, No. 17, 2018
[6] CHENG Yongshun. An Exploration on the Establishment of Drug Patent Link System in China[J]. Technology and Law, Issue 3, 2018