On 6 July, China’s National People’s Congress (NPC) published additional amendments to its draft patent law, which was first released in January 2019. As we reported at that time here, the proposed Chinese Patent Law complements other efforts to establish and strengthen incentives to develop new, innovative drug products. These actions are consistent with "Opinions on Deepening the Reform of the Examination and Approval System and Encouraging the Innovation of Pharmaceutical and Medical Devices," which the General Office of the State Council issued in October 2017. The new amendments would revise the 2019 draft law to further encourage manufacturers to seek approval of new products in China.

The recently-proposed amendments would make significant changes to the proposed patent law, which itself would fundamentally overhaul the rules applied to pharmaceutical products. Two amendments in particular would materially affect the statutory legal framework for China’s “Hatch-Waxman” system in the favor of manufacturers of innovative products:

• Article 42: The 2019 proposed patent law would have provided for patent term extension (PTE) to compensate for the patent term loss when the new drug application is pending at the National Medical Products Association (NMPA). Presumably to ensure that China was among the first tier of countries where new drugs are introduced, the 2019 proposal would make PTE available only where the application represented the first time a new drug was submitted for marketing approval to China and another country. As we previously noted, this restriction would, as a practical matter, limit the availability of PTE and thus limit its usefulness as an incentive. Under the 6 July amendments, the prerequisite for PTE is only that the Chinese application represent the first time the product was submitted for approval in China. This should make PTE more frequently available, providing an incentive for companies to bring to China products that, although approved elsewhere, are not marketed in China.
  
  At least one issue important to determining the value of PTE remains unclear, however. Whether PTE will be available for the first marketing approval of a given product, an active ingredient, or an active moiety will have a tremendous impact on the usefulness of PTE as an incentive. The public comment period for the proposed amendments provides an opportunity for companies to propose clarification on this essential point.

• Article 75: A key Hatch-Waxman provision for innovators is the ability to sue to protect their patents while a proposed generic product is undergoing review at FDA. The 2019 proposed patent law contained no such provision, and the 6 July amendments remedy that, allowing patent litigation to be initiated while a competitor’s follow-on application is still pending at NMPA. With the proposed amendments, a patent holder could launch its legal challenge within 30 days of a competitor’s publication of its application, and there would be a nine-month timeline for the dispute to be resolved with a court or the patent office. The enhanced protection provided by this stepped-up timing may also encourage manufacturers to seek approval for their products in China.

The public comment period runs through August 16.

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