June 16, 2017

China FDA Proposes Hatch-Waxman-Like Regulatory Framework Linking Drug Approval to Patent Rights

David Hoffmeister, Lou Lieto, Shan Liu, Vern Norviel, Richard Wang, Karen Wong

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Recently, the China Food and Drug Administration (CFDA) issued a policy proposal linking drug approval to patent rights.¹ The proposal is intended to promote innovation in the development of both drugs and medical devices and to protect innovators' rights. It also encourages generics to challenge patent rights. If enacted, the proposal should benefit innovator pharmaceutical patent holders in China, as well as first-filing generic challengers. In this WSGR Alert, we present a brief summary of the CFDA's proposal, which has some similarities to the U.S. Hatch-Waxman framework that governs interactions between generics, 505(b)(2) new drug application filers, and branded pharmaceuticals for (primarily) small-molecule drugs.

Drug-Patent Linkage

The CFDA's proposal plans to link new drug approval to patent rights. That is, when filing an application for drug approval, the drug applicant (e.g., a generic drug applicant) will have to declare whether the drug product violates the intellectual property rights of others.² To challenge relevant patents, the applicant must declare non-infringement and put the patentee on notice within 20 days after the application is filed.³ If the patentee (innovator) disagrees with the declaration, the patentee must bring a patent infringement suit and inform the CFDA within 20 days after receipt of the notice.⁴ The CFDA can stay the market approval up to 24 months from the date of receiving proof of court acceptance of the suit.⁵ During the stay, the CFDA will continue its technical review of the generic drug application and decide on market approval based on the outcome of the patent litigation (or a settlement agreement) between the parties. If no court decision or settlement is reached within the stay period, the drug application may be approved by the CFDA.⁶

Data Protection

Innovator drug applicants can submit a request for protection of the data included in a drug application when filing the application. The period of protection ranges from 1.5 years to 10 years starting from the date of the market approval. For example, innovative drugs, or New Chemical Entities (NCEs), will receive six years of data exclusivity, and NCEs that are also orphan drugs will receive 10 years of data exclusivity.^7,8,9 Innovative biologics will receive 10 years of data exclusivity.¹⁰ During the data protection period, the CFDA may not approve other applications for the same drug, except with data created by the same applicant.¹¹

Catalog of Marketed Drugs in China

Similar to the U.S. FDA Orange Book, a catalog (drug patent registry) will list the drugs approved for marketing in China and include information about their active ingredients, dosages, specifications, marketing authorization holders, and exclusive rights related to patents, monitoring periods, and data protection.¹²

Confidentiality

The proposal includes new guidelines to enforce confidentiality obligations for the CFDA staffs.

Conclusion

If enacted, the CFDA's proposed patent linkage regulatory framework should benefit innovator pharmaceutical patent holders in China. It will also benefit successful first-filing generic patent challengers.

¹See, e.g., http://www.sfda.gov.cn/WS01/CL0087/172606.html.

² This is similar to the certification process described in 21 U.S.C. § 355(b)(2)(a).

³ Abbreviated new drug application and 505(b)(2) application filers in the U.S. also have 20 days after the FDA's application acceptance to provide notice.

⁴ The requirement for the innovator to bring suit within 20 days of receiving notice differs from the U.S. In the U.S., the innovator must bring suit within 45 days of receiving notice. Thus, if the CFDA's proposal is enacted, innovators will need to move quickly to protect their franchises by bringing suit.

⁵ In the U.S., the stay of market approval is 30 months and can, depending upon the circumstances, be lengthened or shortened.

⁶ The proposal also encourages generics to challenge innovator patents because the first successful generic challenger will be eligible for 18 months of market exclusivity. In the U.S., first-filing generics are eligible for 180 days of market exclusivity against other later-filing generics.

⁷ The six years of NCE exclusivity in China is one year longer than the five years granted in the U.S. by the FDA. It is worth noting, however, that patent term adjustment (PTA) and patent term extension (PTE) are not available in China.

⁸ This combined exclusivity provision is more generous than in the U.S., where NCE drugs get five years of exclusivity and orphan drugs get seven years—but the exclusivities run concurrently.

⁹ The same data protection rules apply to drugs first approved outside of China if a request for data protection is filed in China within one year after the approval in Europe, the United States, or Japan. If the request is filed later than the one year, a shortened protection period will apply, but in no event will this be less than 1.5 years.

¹⁰ In the U.S., first-licensed biologics get 12 years of exclusivity.

¹¹ This is similar to the U.S., where a generic could, in theory, bring a generic drug to market by filing a 505(b)(1) application. In practice, this is not common.

¹² It is not clear whether the catalog, in final form, will also list estimated patent expiration dates, and involve other details such as use codes.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.