7 May
2020

Market exclusivity for pharmaceutical products in Japan

TMI Associates

Unlike other countries, Japan has no data exclusivity system. Instead, the major factors that prevent the entry of generics into the market are:

  • the re-examination period provided in pharmaceutical regulations; and
  • the terms of patents covering existing products.

Price listing may also be relevant under the universal national insurance system. This chapter provides a concise introduction to these unique systems that constitute de facto market exclusivity for new pharmaceutical products in Japan. The terms ‘pharmaceutical product’ or ‘drug’ are used to refer to medicinal items categorised as pharmaceuticals or regenerative medicine products under the Japanese Act on Securing Quality, Efficacy and Safety of Products including Pharmaceuticals and Medical Devices (the PMD Act).

Exclusivity by re-examination period

The re-examination system is a post-marketing surveillance system. Re-examination periods are designated by the minister of health, labour and welfare following the grant of marketing approval. During the re-examination period, further data is collected and, on expiration, the safety and efficacy of the approved product will be re-examined.

If during the re-examination period someone other than the applicant of an approved item intends to apply for marketing approval of another item of which the active ingredients, among other things, are identical to the approved item, that person is required to submit the same level of data and documents as those required for the approved item. In other words, submissions cannot be abbreviated or simplified during the re-examination period. However, after the re-examination period of the previously approved item has passed, other items can apply for marketing approval with the data and materials abbreviated to some extent. In such case, the data and materials required for a generic drug application are simpler than those required for a new drug application. As a result of these requirements, the re-examination period works as an exclusivity period for an existing drug.

Duration of re-examination period

The duration of re-examination periods from the approval date are decided and designated by the minister of health, labour and welfare following the grant of marketing approval.

The duration of a re-examination period is designated within the range stipulated by the PMD Act and the PMD Act Enforcement Regulations, (see Column A, Table 1). Regardless of the type of drugs, the minister of health, labour and welfare may extend the re-examination period to a period not exceeding 10 years, if the minister believes that the extension is particularly necessary (see Column B, Table 1). In addition to the PMD Act, the relevant notifications issued by the Ministry of Health, Labour and Welfare provide general principles for the designated periods for each type of drug (see Column C, Table 1).

Table 1: duration of re-examination period

Table 1: duration of re-examination period

There is no specific categorisation for paediatric medicines in this regard, but the re-examination period may be extended (not exceeding 10 years) as per the necessity to collect clinical data required for the re-examination of dosage or administration for child use.

Exclusivity by patent term

The act of filing for marketing approval of a drug does not itself constitute an act of patent infringement. However, during the term of the patent that covers a new drug, the working of the invention of the patent (eg, manufacturing, using or selling an item that falls under the technical scope of the patented invention) would constitute infringement. Therefore, the patent term prevents the entry of generics and constitutes exclusivity for a new drug.

Article 69 of the Japanese Patent Act provides a limitation on the scope of a patent right by providing that a patent right is not effective against the working of a patented invention conducted for “experimental or research purposes”. According to established court precedents concerning the interpretation of the phrase ‘experimental or research purposes’, conducting clinical trials for a generic drug that are necessary for obtaining marketing approval and aiming the marketing of the generic drug after the expiration of the term of the patent covering the existing drug are not considered infringing acts under Article 69. Therefore, a company may perform clinical trials of a generic drug for the purposes of marketing it after the expiration of the patent of the new drug and may file for and obtain marketing approval for the generic drug before the expiration of the patent term without infringing the patent. The Ministry of Health, Labour and Welfare would not necessarily withhold approval of a generic drug until the expiration of the patent term. However, in cases where the ministry sees that a patent covering the application programme interface or the specific indication, dosage and administration will likely prevent the manufacture of the generic drug or sales thereof for certain uses, the ministry would not approve the generic item to the extent covered by the patent, in view of securing a stable supply to the market. Generic makers often need to negotiate with the patentee to solve this problem. However, even if the item is approved before the patent term expiration, manufacturing in preparation for marketing before expiration would constitute infringement. The exception under Article 69 is limited only to the working of the patented invention for clinical trials.

In addition, the applicability of the abovementioned court precedents where clinical trials for a new drug fall under the technical scope of a third-party patent has not been made clear under current court practice; further cases are awaited in this regard.

Patent term extension

Article 67.2 of the Japanese Patent Act provides that, if there is a period during which it is not possible for a patentee to work the patent invention due to the need to obtain certain types of legal permission that are designated by a cabinet order (eg, marketing approval of a pharmaceutical product), the term of the patent right may be extended for a maximum of five years. In order to be granted an extension of a patent term, it is necessary to register an extension and file an application. A patent term extension is applied and registered based on each disposition (ie, each marketing approval). In a typical example where the patented invention claims ‘a pharmaceutical agent containing X’ and the patentee, as the marketing authorisation holder, obtains marketing approval for an item containing X for the treatment of disease A (Disposition A) and then obtains another approval for the treatment of another disease B (Disposition B), the patentee may file for the registration of a patent term extension first based on Disposition A and then file for another registration based on Disposition B.

If it is found that the patented invention could have been worked without waiting to obtain the disposition on which the application is based, the application for extension registration will be rejected (Article 67-3(1)).

Scope of extended patent rights

Under Article 68-2, where a patent term extension is registered, the extended patent right is effective only with regard to the working of the patented invention of a product specified as the subject of the marketing approval that constitutes the grounds for the extension registration (ie, a product identified by “the usage, ingredient (not limited to the active pharmaceutical ingredient), dosage, form, administration and indication”). It is not effective against any other working of the invention.

For example, where a patented invention claims ‘material X for treatment of disease Y’ and a patent term extension is registered based on marketing approval for ‘a pharmaceutical containing material X, in the form of a 50mg tablet, with the indication of disease Y, for use of 100mg/day’, the patent right is effective to the full extent of the claimed scope and is therefore enforceable against any infringing product containing material X to be used for treatment of disease Y until the expiration of the original patent term. However, afterwards and during the extended patent term, the extended patent is effective against ‘any pharmaceutical product containing material X, in the form of a 50mg tablet, with the indication of disease Y, for use of 100mg/day’.

Also, any product substantially the same as such specific product will be considered to be within the scope of the extended patent right.

Other influencing factors

In addition to the re-examination period and patent terms, there are other factors that create de facto exclusivity. After the re-examination period, in order to market a generic in the Japanese market, the generic maker must submit both an application for marketing approval of the generic drug, which takes about one year on average for generic drugs or more for bio-generics, and an application to be listed on the National Health Insurance (NHI) Drug Price List, which takes another four to 10 months. In Japan, it is of great importance that drugs are listed on the NHI Price List. As Japan has adopted a nationwide universal health insurance system, a generic drug that is not listed on the NHI Price List would not have market competitiveness in terms of pricing against pioneer drugs. The NHI Price List is revised only during specific months of the year, depending on the category of the items; under current practice, the revision is usually in June and December for generic drugs and in May and November for biosimilars, specifically. Thereby, the generic or biosimilar maker would have to wait until the revision, even if marketing approval is obtained earlier and the application to be listed on the NHI Price List is submitted soon after the approval.

Comment

Depending on the case, the re-examination period and the relevant patent term may or may not overlap. In addition, the interpretation of the scope of patent rights differs between the original patent term and the extended term. Thereby, the scope and timing of the permissible entry of generics is not always simple.

TMI Associates

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Hiroshi Nemoto

Partner

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Hiroshi Nemoto is a partner at TMI Associates who focuses his practice primarily on patent litigation, patent-related trials before the Japan Patent Office, and other pre-litigation counselling, including preparing successful strategies to avoid threatened litigation, adversarial negotiation and opinion work. He has significant experience in litigation involving pharmaceutical products, medical devices and chemical products for both domestic and foreign clients. He also has broad expertise advising on transactions involving players in the life sciences, pharmaceuticals, medical care, healthcare and biotechnology industries, such as licensing, conducting IP due diligence for initial public offerings and mergers and acquisitions.

Taku Yamada

Partner

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Taku Yamada is a patent attorney and partner in TMI Associates’ patent and trademark group. He focuses on all aspects of pharmaceutical and biotechnology patents. He graduated with a PhD in organic chemistry and has a strong background and experience in pharmaceutics and biotechnology as a medicinal chemist at a specialty pharma company in the fields of antibiotics and the central nervous system, and as a patent examiner in the field of pharmaceutics. His areas of specialised experience include patent applications, invalidation trials, patent term extensions, infringement litigation, licensing and IP due diligence for initial public offerings and mergers and acquisitions.

Sayaka Ueno

Attorney at law

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Sayaka Ueno is an attorney at law and senior associate in TMI Associates’ IP group. She has a scientific background with a master’s in pharmaceutical science, as well as pharmacist qualifications. Ms Ueno specialises in patent infringement litigation, patent invalidation trials at the Japan Patent Office and appellate litigation before the IP High Court. She handles licence negotiations and contract drafting, and provides legal advice concerning patents, representing companies in the pharmaceutical, healthcare and biotechnology industries. She is also experienced in pharmaceutical regulation issues.