Why brand-name pharmaceuticals should look to China’s patent linkage system

This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight

The patent linkage system refers to the linking between the marketing approval of generic drugs and the status of patents covering brand-name drugs. It usually requires that marketing approval for a generic cannot be granted prior to the expiration of the patent term of the innovator’s patent or until the relevant authority has determined that the patent will not be infringed or is invalid. This system originated from the Hatch-Waxman Act 1984 in the US.

China recently introduced a unique patent linkage system. This article will discuss how brand-name pharmaceutical companies should take advantage of this system and adapt their IP strategies to it.

A brief overview of China’s patent linkage system

Article 76 of the amended Chinese Patent Law, which came into effect on 1 June 2021, provided a basic framework and legal basis for China’s patent linkage system. On 4 July and 5 July 2021, the National Medical Products Administration (NMPA), the Chinese Patent Office (CNIPA) and the Supreme People’s Court promulgated specific rules to implement the patent linkage. As these laws took effect, China’s patent linking system became fully operational.

China’s patent linkage covers traditional Chinese medicine, chemical (small molecule) drugs and biological products (illustrated using chemical drugs as an example in Figure 1).

Figure 1. China’s patent linkage

Patent information registration

Within 30 days of obtaining the drug registration certificate, the drug marketing authorisation holder (the MA holder) must register information about the drug registration, patent and other related information on China’s registration platform of marketed drug patent information (the Registration Platform). If the related information changes, the MA holder must update it within 30 days of the information change taking effect. A patent can be listed within 30 days of the patent being issued. Unlisted patents do not qualify for patent linkage.

The specific drug patents that can be listed on the Registration Platform include:

  • chemical drugs: patents for active ingredient compound, active ingredient-containing pharmaceutical composition and medical use;
  • traditional Chinese medicines: patents for composition, extract and medical use; and
  • biological products: patents for active ingredient sequence structure and medical use.

Patents for intermediates, metabolites, crystal forms, preparation methods and detection methods are non-listable.

Patent certification

When a generic drug applicant applies for a drug marketing authorisation (ie, an abbreviated new drug application (ANDA)), he or she must make a certification regarding each of the patents listed on the Registration Platform. There are four types of certification:

  • Type 1: no patent information related to the reference-listed drug (brand-name drug) on the Registration Platform.
  • Type 2: the patent has been terminated or declared invalid, or the generic drug applicant has obtained a patent licence from the patentee.
  • Type 3: the generic drug applicant promises that the generic drug will not be marketed before the expiration of the listed patent.
  • Type 4: the patent shall be declared invalid, or the generic drug is not covered by the protection scope of the patent.

The patent certifications will be publicised on the Registration Platform, and the generic must notify the MA holder (patentee) of the certifications within 10 working days.

Right to sue

The patentee or interested party (collectively, the patentee) has the right to take legal action before the Beijing IP Court or file a request for administrative adjudication with the CNIPA against a Type 4 patent certification within 45 days of the date when the patent certification is publicised. The patentee must notify the NMPA of the acceptance of the case.

Waiting period

After receiving a copy of the case acceptance notice, the NMPA shall set a waiting period of nine months for the ANDA from the date of acceptance of the case, during which the generic drug will not be approved, but the technical review of the generic drug continues.

NMPA’s decision

After the waiting period expires, if an effective judgement or an administrative adjudication decision holds that the generic is covered by a listed patent, the NMPA shall make a decision to suspend the approval of the ANDA until the patent is close to expiration. Otherwise, in cases of no infringement, of invalid patent or where no timely judgement or decision is available, the ANDA can be approved.

Market exclusivity period for the first chemical generic

A 12-month market exclusivity period will be given to the chemical generic drug applicant, who not only must obtain the first generic marketing approval but also must be the first successful patent challenger.

Biologics differ from small molecule drugs in that biologics are not entitled to a nine-month waiting period and there is no market exclusivity period for the first biosimilar.

Strategies of brand-name pharmaceutical companies for China’s patent linkage system

To leverage the new patent linkage system, brand-name pharmaceutical companies will need to formulate their own strategies for patent portfolio management, new drug development, patent information registration and ANDA litigation accordingly.

Strategy for patent portfolio management

In addition to conventional considerations, the newly implemented patent linkage and patent term extension (PTE) should also be fully considered when managing the patent portfolio.

First, when brand-name companies routinely deploy primary patents and secondary patents to obtain comprehensive protection and a longer protection period, they should focus more on the portfolio of patents for compounds, pharmaceutical composition and medical use, because only these three types of patents (for chemical drugs) can be listed for patent linkage.

Second, more patent applications or divisional applications need to be filed for the same invention. According to China’s PTE, only one PTE is available per drug per patent. This requires different patent applications to be filed for primary compound patents and secondary patents in succession. In the same type of patent, the technical solutions that may generate different drugs shall be divided into different patents. For example, a patent for compounds may be divided into several patents to protect different lead compounds respectively; a composition patent may be divided into different patents based on different active compounds, different dosage forms, etc; and a medical use patent may be divided into different patents based on different indications.

Third, considering that there may be more patent challenges under the patent linkage system, the distribution of the patent protection scope for the brand-name drug should be more reasonable. In other words, advantageously, there should not only be patents with a wide and diverse scope of protection, but also patents with a narrow and strong scope of protection. This can prevent generic drugs from easily bypassing the patents and retain at least minimum protection even if the patents are partially invalidated.

Finally, patent validity challenges are expected to increase and must be well prepared for. In the patent invalidation proceedings, brand-name pharmaceutical companies can take full advantage of the amended Examination Guidelines (implemented in January 2021), which allow supplemental experimental data in pharmaceutical patent prosecution and invalidation and have improved the manner of assessing the inventive step of compounds and biotech inventions.

Strategy for global new drug development

To take full advantage of drug intellectual property rights in China, it is suggested that when developing new drugs and applying for new drug marketing authorisations, brand-name pharmaceutical companies should conduct simultaneous global research and development, and almost simultaneously file new drug marketing applications in China and in other countries.

The process of applying for the marketing of a new drug in China and the related intellectual property rights are outlined in Figure 2 (exemplified by primary compound patents). Drug-related intellectual property rights include patents, patent listing, patent linkage, patent term adjustment, PTE and data exclusivity. It can be seen that drug-related intellectual property rights are based on both the filing of patent applications and the submission of new drug marketing applications (NDAs) in China. The early submission of NDAs in China is extremely important to obtaining relevant intellectual property protection.

The importance of early NDA submission in China can be illustrated by the common scenario shown in Figure 3 in which a brand-name chemical drug is approved for marketing outside China (eg, in the US) before the corresponding NDA is filed in China. According to the latest draft amendment to the Patent Examination Guidelines published in August 2021, the brand-name drug in this situation is not eligible for PTE as the drug was not new in the world when the NDA was filed in China. According to the Draft Implementation Measures for the Protection of Drug Trial Data (Interim) published in 2018, the data exclusivity period in China will be shortened for the brand-name drug for which the NDA is filed in China later than in other countries or regions.

In addition, after the brand-name drug is approved outside China, applications for generic drugs in China based on the brand-name drug marketed outside China (ie, Class 3 generic drugs) can be started; therefore, Class 3 generic drug ANDA filers may even make a Type 1 patent certification (ie, no patent listed in the Registration Platform), as the brand-name drug has not been approved in China (as shown in the Figure 3) and the brand-name pharmaceutical company cannot yet list its patents, resulting in no patent linkage being available.

Therefore, under the current rules, to obtain a PTE, the whole data exclusivity period and full use of the patent linkage system, brand-name pharmaceutical companies are recommended to file new drug applications almost simultaneously in China and other countries. In particular, it is essential that the NDA be filed in China before any marketing approval of the drug in other countries.

Figure 2. The process of applying for the marketing of a new drug in China and the related intellectual property rights

Timely registration and update of the patent information

As patent linkage does not apply to drug-related patents that have not been registered on the Registration Platform, it is essential that the brand-name pharmaceutical companies remember to register and update timely the relevant information on the Registration Platform.

Under the amended Patent Law, two patent-­related time limits are triggered on the date the brand-name drug marketing authorisation is issued: (1) the patent information must be registered on the platform within 30 days to participate in the patent linkage system; and (2) a request for a PTE of the related patent or patents must be filed to the CNIPA within three months of the MA issuance (see Figure 2).

ANDA litigation strategy

It is suggested that brand-name pharmaceutical companies could actively file a lawsuit or apply for an administrative adjudication against Type 4 certification, make full use of the nine-month waiting period and strive to obtain a judgement or ruling that the generic drug falls into the scope of the patent protection, to prevent the generic drug from being approved before the listed patents expire.

Brand-name pharmaceutical companies may closely monitor the generic drug-related information publicised on the Registration Platform. The period for the MA holder (or patentee) to take action against Type 4 patent certification is only 45 days from the publication of Type 4 patent certification in the Registration Platform, but notification by the generic drug applicant to the MA holder can take up to 14 days, and the generic drug applicant may fail to notify the MA holder in a timely manner. Without monitoring the Registration Platform, the brand-name pharmaceutical companies may miss the 45-day deadline or there may not be enough remaining time to initiate the action.

There are two routes to enforcing patents in the patent linkage system: civil action before the Beijing IP Court and administrative adjudication before the CNIPA. If a civil action has already been filed in the court, the CNIPA will not accept a request for administrative adjudication directed to the same dispute. However, if the request for administrative adjudication has been accepted, the court can still accept a civil lawsuit for the same case, making it possible to file both a request for administrative adjudication and civil action.

Each of the two enforcement routes has pros and cons. The first, and probably decisive, factor to consider when choosing a proper enforcement route is how easily a route can be initiated and how long a route takes to get a decision that can be accepted by the NPMA to prevent the approval of the generic drug. According to the patent linkage rules, and in our experience, in the administrative adjudication route, the requirements of formality documents are low, foreign pharmaceutical companies can readily prepare all necessary documents for initiating a case within the 45-day deadline, the CNIPA is likely to make a decision within the nine-month waiting period, and the decision of the CNIPA (although appealable) is acceptable to the NPMA.

Figure 3. The process of application for generic drugs in China based on a brand-name chemical drug approved outside China (ie, a Class 3 generic drug)

However, for the civil action route, according to guidance on the filing of patent linkage civil cases issued by the Beijing IP Court recently, the requirements of formality documents are very high. A foreign pharmaceutical company must file the original copies of the notarised and legalised certificate of good standing and power of attorney, etc, by the 45-day deadline, which it is very unlikely to complete in practice. Furthermore, for the civil action route, the NMPA only accepts an effective judgment, which usually means a judgment of the second instance court (ie, the IP Court of the Supreme People’s Court) instead of a judgment of the first instance court (ie, the Beijing IP Court), but it is generally believed that it would be very difficult to complete two-instance trials within the nine-month waiting period. Therefore, the administrative adjudication route is superior to the civil action route in terms of feasibility and will probably be the main route for patent linkage litigation in the future.

A second important factor to consider is the availability of preliminary injunction. Preliminary injunction is available in the civil action route, but not in the administrative adjudication route. Nevertheless, it is likely that preliminary injunction will be granted only when the generic drug has been approved during civil action (in either the first instance or the second instance) and where the usual requirements for preliminary injunction, such as high likelihood of success and irreparable harm are met. There is no clear basis to say that the rate of granting a preliminary injunction in patent linkage civil action will be significantly higher than in normal patent infringement cases.

In conclusion, the administrative adjudication route is easier to initiate, quicker to get a useful but less stable decision and has no preliminary injunction, while the civil action route is difficult to initiate, much slower to get a useful and more stable decision and has preliminary injunction. In theory, dual filing of two routes is possible if the request for administrative adjudication is filed prior to the filing of a civil lawsuit by the 45-day time limit.

Unlock unlimited access to all IAM content