Do you know where you're going to? Patent linkage proposals raise debate

In the past the Taiwanese authorities did not recognise a US-style patent linkage system – a form of patent approval linkage to delay the marketing of a generic medicine while the originator is still patented – because they believed that the judicial system was adequate to protect originators’ IP rights. However, in recent years patent linkage has become a critical issue in free trade agreement and Trans-Pacific Partnership negotiations with the US government. Due to its desire to join these negotiations, the Taiwanese government has pledged to establish a patent linkage system in the near future.

Trends in patent linkage system legislation
Since late 2014, patent linkage has taken centre stage. First, the Taiwan Intellectual Property Office (TIPO) held a seminar to help industry and government agencies to learn more about the issue and examine the US patent linkage system. Then, on January 19 2015 TIPO published online “A Study on US Patent Linkage and Orange Book Listing System” to discuss the relevant issues. Some of the issues in the proposed legal framework are as follows.

Deemed infringement article for generic approval
Under 35 USC §271(e)(2), the act of filing an abbreviated new drug application (ANDA) (or a 505(b)(2) application) is deemed to be an act of infringement, enabling the patent holder (eg, the brand-name drug manufacturer) to bring a lawsuit before Food and Drug Administration (FDA) approval if the purpose of the ANDA is to obtain FDA approval before expiry of a patent claiming use of the drug. This 'deemed infringement' article provides a jurisdictional hook in that Section 271(e)(2) establishes jurisdiction for an infringement action against an ANDA applicant which has not yet engaged in traditional, statutorily defined acts of infringement: the manufacture, use, sale or import into the United States of the patented product. The additional benefits of the statutory hook include the FDA's automatic 30-month stay of approval of the generic drug pending judicial determination of the complaint.

Similarly, under Article 58 of the Taiwanese Patent Act, mere filing for generic approval (ie, an ANDA with a Paragraph IV certification in the United States) does not constitute a traditional, statutorily defined act of infringement. Therefore, the report recommends the inclusion of a deemed infringement article (similar to 35 USC §271(e)(2)), which would constitute the legal basis for an automatic stay of generic approval if the legislature wishes to establish a mechanism for resolving patent infringement disputes of generic approval initiating from originators or patent owners.

Patent listing
As the patent list plays a fundamental role in the patent linkage system, the report suggests the adoption of certain measures introduced in the United States by the Hatch-Waxman Act and the Medicare Prescription Drug, Improvement and Modernisation Act 2003 regarding the following issues.

Scope and timing of patent to be listed: As discussed in Chapter 2, Section 2 and Chapter 3, Section 1 of the report, eligible matter to be listed in the US Orange Book is limited to material, composition and method-of-use patents. As a result, patents regarding processes, packaging, metabolites and intermediates cannot be listed in the Orange Book. Thus, to avoid unnecessary disputes in future, the Taiwanese legislature should stipulate clearly the scope of eligible matter and ineligible matter. Moreover, as the report advocates from US experience, Taiwan’s legal framework should establish measures to guard against potential multiple automatic stays due to late patent listing. For example, the Medicare Prescription Drug, Improvement and Modernisation Act precludes 30-month stays for patents which were submitted to the FDA on or after the date on which the ANDA was submitted. Accordingly, although NDA holders can obtain and list additional patents regarding the drug at issue after the ANDA filing, this does not extend the regulatory stay of the ANDA approval.

Correction of patent listing: To reduce the authorities’ burden, the report favours the US method of publishing the patent information submitted by applicants in the Orange Book without reviewing it for accuracy. Further, in regard to the correction of incorrect information in the patent list, the report states that generics have limited opportunities to challenge the patent listing in terms of accuracy – a generic company can challenge the accuracy of an originator's use code only by bringing a counterclaim against the originator in a patent infringement suit.

Automatic stay of generic approval
In the United States, an automatic stay of generic approval applies once a patent owner initiates patent litigation on receipt of notification of an ANDA filing. At the same time, the ANDA approval is stayed for a period of 30 months. For Taiwan, the report suggests an automatic stay of 18 months, in consideration of the average length of a patent litigation in Taiwan (11 to 13 months) and criticisms of shorter trial periods.

Market exclusivity of first generic
Contrary to ordinary market exclusivity granted to originators, the US Hatch-Waxman Act gives competitors (ie, generic manufacturers) 180 days of market exclusivity. From a long-term perspective, the report acknowledges that the market exclusivity incentive system is certainly advantageous to generic manufacturers. It suggests a period of 180 days as an appropriate timeframe to maximise consumer benefit by enabling them to access cheaper generic drugs.

Do you know where you're going?
Consideration of the existing schedule for the Taiwanese legislation on the patent linkage system brings to mind the Diana Ross song “Do You Know Where You're Going To?” Debate is still ongoing as to the necessary balance between keeping costs down through generic versions of brand-name drugs and encouraging and rewarding originators’ lengthy and costly innovations. Only time will tell how the debate will play out. As government policy is still unclear, both originators and generic manufacturers must pay close attention to how the patent linkage system unfolds and be prepared to resolve the resulting challenges.