Drug Patent Reverse Payment Agreement: What does the Supreme Court's first statement mean? The first scene

For the first time, a Chinese court has suggested that paying generic drug makers to delay their launch could create legal risks for originators

In the case of AstraZeneca v.

Although AstraZeneca finally chose to withdraw the patent infringement allegations against Oxykang and settle with Oxykang, the Supreme Court noted that the settlement agreement signed in advance by BMS, the original researcher of saxagliptin, and Vcare, a generic drug manufacturer, has a reverse drug patent The appearance of the payment agreement

In a drug patent reverse payment agreement, the drug patentee compensates the generic drug manufacturer in exchange for delaying the launch of the generic drug or not launching a patent challenge

That means AstraZeneca, the British pharmaceutical giant, could face fines of up to 10% of its revenue in China the year before, once the monopoly is confirmed

"For the first time, the Supreme People's Court of China has proposed an anti-monopoly review precedent on reverse payment agreements

Dr.

AstraZeneca's case began in April 2019, when the patent for its diabetes drug saxagliptin was still valid in China, and China's National Medical Products Administration (NMPA) approved Osaikan's saxagliptin earlier that same year Generic drugs are launched

The 2012 settlement agreement is the settlement agreement signed by BMS, the original patentee of saxagliptin, and Vcare in 2012

Does it constitute unfair competition?

Dr.

The case can be judged from three perspectives: if the generic drug applicant decides not to withdraw the patent invalidation request, how likely is the patent invalidation; whether the original researcher provides unreasonable compensation to induce the generic drug manufacturer to withdraw the patent invalidation declaration whether the reverse payment significantly extends the market exclusivity period of the original drug or delays the listing of the generic drug, or even excludes it from competition

"If a generic drug applicant is determined to apply for a patent to be invalidated, it may send a strong signal that there is a loophole in the patent," explained Dr.

While it's unclear how Chinese regulators will define "unreasonable compensation," Dr.

In addition, the jury is still out on how long a "substantial extension" will take

She warned that drug companies should be wary of agreements with generic drugmakers, whether oral or written, subject to an antitrust compliance review ahead of time

Time difference between approval and expiration

Challenges faced by multinational pharmaceutical companies in China also include the time lag between NMPA approval and patent expiration
.

"This is really a problem.
NMPA does not check whether the patent has expired when approving generic drugs for marketing
.
Therefore, generic drug manufacturers can obtain approval in advance, but the subsequent market launch and sales will still be subject to patent infringement allegations
.
" Dr.
Xue Ying say
.

To solve this problem, China has introduced a drug patent linkage system
.
In July 2021, China's drug and patent regulatory authorities jointly launched measures to resolve drug patent disputes as early as possible before generic drugs are approved for marketing
.
Similar mechanisms exist in the United States, South Korea, and Canada
.

Expand reading Chinese version of drug patent link system landing drug patent link: advance or retreat?

But China's patent linkage system is not seamless, and loopholes still exist, a lawyer told R&D Client
.
When a generic drug manufacturer makes a false declaration of a relevant patent, the originator cannot file a lawsuit within the framework of the early resolution mechanism for drug patent disputes
.

Dr.
Xue Ying also pointed out that Chinese courts have held that it is not "illegal" for a generic drug manufacturer to seek and obtain a marketing authorization before the patent expires, as long as certain requirements are met
.

"According to Article 75, Paragraph 1, Item 5 of the revised Chinese Patent Law, the manufacture and use of patented medicines for the purpose of providing information required in the administrative examination and approval process does not constitute patent infringement.
There are certain difficulties in the marketing of generic drugs
.
" Dr.
Xue Ying added
.

How to do?

There are legal risks in patent reverse payment.
Dr.
Xue Ying provided some feasible suggestions to multinational pharmaceutical companies
.

Transnational pharmaceutical companies, she said, “could establish early warning and prevention and control mechanisms, pay attention to China’s listed drug patent information registration platform, and promptly apply for administrative rulings on generic drug infringements or file lawsuits with competent courts to prevent generic drugs from being listed on the market,” she said.

.
"

If a generic drug is approved before the patent expires, the patent holder can investigate the infringement as soon as possible and gather as much evidence as possible
.
If a generic drug manufacturer makes a promised sale or sale that does not qualify for the Bolar exception, the patent holder can file a normal infringement action and apply to the court for injunctive relief
.

According to the patent linking system, generic drug manufacturers are required to declare in the following situations: no relevant patent has been registered; the patent has expired or been declared invalid, or a license has been granted to the generic manufacturer; the generic drug is marketed after the patent has expired; the patent should be declared Invalid, or the technology related to the generic drug does not belong to the scope of the patent
.

Dr.
Xue Ying said that if the patent holder disagrees with the generic drug manufacturer's statement that the patent is invalid, it can seek an administrative ruling or file a lawsuit within 45 days after the generic drug marketing application is published
.

"All of these mechanisms are designed to balance the interests of originator companies and generic drug manufacturers, while ensuring a level playing field," she said
.