ARRC endorses CME 12-month Term SOFR
On May 19, 2022, the Alternative Reference Rates Committee unanimously endorsed using the CME 12-month Term SOFR.
The fourth amendment to the Patent Law of the People's Republic of China (PRC) was recently passed on October 17, 2020 and will come into effect on June 1, 2021. Amongst the various changes, the decisions to implement a patent linkage system and to allow patent term extension for new drugs are perhaps most interesting to pharmaceutical patent owners. The impact of these and other amendments to the PRC Patent Law on the strength of patent rights in China may prove to be an important consideration for pharmaceutical patent owners in the design and implementation of patent filing and regulatory approval strategies in key jurisdictions around the world.
The amended PRC Patent Law sets out an overarching framework for codification of changes to pharmaceutical-related patent rights in China but delegates the substantive legislative work to the National Medical Products Administration (NMPA) and the China National Intellectual Property Administration (CNIPA).
On September 20, 2020, the NMPA and CNIPA jointly published the Implementation Measures for the Early Resolution Mechanism for Drug Patent Disputes (Trial) (Draft for Comment) (Draft Measures) for public consultation. The Draft Measures detail how the patent linkage system provided for by the amended PRC Patent Law might be implemented. In particular, the Draft Measures provide for establishment of a register of patented drugs approved in China. Patents for small molecule drugs (Innovator Drugs), biologic drugs (Innovator Biologics), and traditional Chinese medicines can be recorded.
In China, a subsequent manufacturer of generic drugs (Imitation Drugs), biosimilars (Imitation Biologics), or traditional Chinese medicines with identical names and formulations must make one of the following declarations when applying for marketing approval:
These declarations are in line with those that must be made under the Hatch-Waxman Act in the United States by manufacturers seeking to file an Abbreviated New Drug Application (ANDA) on an Imitation Drug. The Hatch-Waxman Act requires Innovator Drug applicants filing a New Drug Application (NDA) to list patents it believes would be infringed if an Imitation Drug were marketed before the expiration of the patents, though US courts have not explicitly addressed whether a claim for infringement can lie where a patent is not listed or is late listed. ANDA applicants must state, with respect to each patent listed by the holder of an approved NDA in the Approved Drug Products with Therapeutic Equivalence Evaluations (the Orange Book) published by the Food and Drug Administration (FDA), either:
In Canada, the Patented Medicine (Notice of Compliance) Regulations (PM(NOC) Regulations) establish a patent linkage system similar to that existing under the US Hatch-Waxman Act. Under the PM(NOC) Regulations, the Innovator Drug patentee establishes a "link" between a patent and a drug by causing the patent to be listed on the Patent Register maintained by the Minister of Health by satisfying both a timing requirement and a listing requirement for listing the patent. The timing for adding a patent to the Patent Register depends on when a new drug submission (NDS) was submitted relative to when a patent issues. If a patent has already issued, the Innovator Drug patentee must provide a patent list identifying all issued patents it wishes to have added to the Patent Register as part of its NDS. If a patent issues after NDS submission, patents can be added to the Patent Register by submitting a patent list to the Minister of Health within 30 days of issuance of the patent. For the listing requirement, a patent must be relevant to the drug product the Innovator Drug patentee is approved to sell. Specifically, a patent on the patent list of an NDS is eligible to be added to the Patent Register if the patent contains a claim for the medicinal ingredient in the drug, a formulation that contains the medicinal ingredient, a dosage form, or a use of the medicinal ingredient and the medicinal ingredient, formulation, dosage form, or use has been approved in respect of the submission.
An Imitation Drug applicant wishing to market a similar version of an Innovator Drug in Canada can file a submission in which the manufacturer directly or indirectly references the Innovator Drug. The submission is by way of an abbreviated new drug submission (ANDS) in the case of a conventional Imitation Drug or a NDS in the case of an Imitation Biologic. Similar to procedures in the US, if there are patents listed on the Patent Register for the Innovator Drug, the Imitation Drug applicant must address the patents by either: (i) agreeing to wait for the expiry of the patents before receiving a Notice of Compliance (NOC); or (ii) challenging the patents by delivering a Notice of Allegation to the Innovator Drug patentee.
In China and the US, an Imitation Drug certified under the fourth type of declaration constitutes a somewhat "artificial" act of patent infringement that permits the filing of a suit by the Innovator Drug patentee against the Imitation Drug applicant. In China, Innovator Drug patentees have 45 days from the publication of the Imitation Drug's marketing approval application to challenge the purported market entry of the Imitation Drug. A stay period of nine months is applicable to administrative approval procedures in the case of an Imitation Drug whose manufacturer filed a Type 4 declaration, but technical evaluation of the Imitation Drug will not be halted during the stay period. However, if a decision from the court or patent administrative department is not made available during the stay period, the administrative approval procedure commences as soon as the Imitation Drug passes technical assessment.
In the United States, Imitation Drug applicants must notify Innovator Drug patentees that are the subject of a Paragraph IV certification. If the Innovator Drug patentees bring suit within 45 days of being put on notice by the Imitation Drug applicant, the FDA must suspend approval of the Imitation Drug's marketing approval application. The stay of regulatory approval procedures is maintained until the date the court decides that the patent is either invalid or not infringed; the date the patent expires, if the court finds that the Innovator Drug patent is infringed; or 30 months, subject to modification by the court, from the date the date the Innovator Drug patentee was put on notice, intended to give the parties time to resolve the dispute before market entry of the Imitation Drug.
Likewise, in Canada, if an Imitation Drug applicant delivers a Notice of Allegation to the Innovator Drug patentee, the Innovator Drug patentee has 45 days under the PM(NOC) Regulations to bring an action against the Imitation Drug applicant for a declaration that the making, construction, using, or selling of a drug in accordance with the Imitation Drug applicant's submission would infringe any patent listed on the Patent Register. Commencing such an action triggers up to a 24-month statutory stay that prevents the Minister of Health from issuing a NOC to the Imitation Drug applicant until the stay expires or the action is resolved. While only listed patents require the Imitation Drug applicant to give notice and trigger the 24-month stay, unlisted patents may also be litigated at this time under certain circumstances.
Unlike for Imitation Drugs, the stay period in China after the filing of a Type 4 declaration is not applicable to Imitation Biologics and traditional Chinese medicines with identical names and formulations. The marketing approval application of these drugs proceeds as normal unless a decision that the drug will infringe the Innovator Biologic patent is handed down before completion of the marketing approval process. In such a case, the launch of the drug is delayed until the patent expires.
As in China, patent dispute resolution procedures in the US with respect to Imitation Biologics differ from those for chemical Imitation Drugs. Innovator Biologics in the US are regulated, or licensed for marketing by the FDA via a biologics license application (BLA), under the Public Health Service Act (PHSA). The PHSA, as amended by the Biologics Price Competition and Innovation Act of 2009 (BPCIA), does not require Innovator Biologics manufacturers to list patent information as part of a BLA but establishes an elaborate process for resolution of patent disputes with Imitation Biologics applicants.
Not later than 20 days after the FDA accepts a BLA for an Imitation Biologic, the Imitation Biologic applicant should provide the BLA to the Innovator Biologic patentee, along with information on how the Imitation Biologic is manufactured, to enable the Innovator Biologic patentee to evaluate possible infringement. The Innovator Biologic patentee and the Imitation Biologic applicant then participate in a series of informational exchanges and negotiations regarding patent validity and infringement. Though Imitation Biologic applicants cannot be compelled to engage in this process, if the Imitation Biologic applicant refuses to participate, the BPCIA authorizes the Innovator Biologic patentee to bring an immediate declaratory-judgment action for artificial patent infringement. Litigation of the patents at issue is available to both parties at the conclusion of the negotiations process or if the Imitation Biologic applicant gives the Innovator Biologic patentee a notice of its intent to commercially market the Imitation Biologic no later than 180 days before the date the Imitation Biologic will be marketed. However, ultimate approval of an Imitation Biologic under the BPCIA is not contingent upon resolution of patent disputes. The FDA may grant a BLA for an Imitation Biologic despite unresolved patent issues, in contrast to the approval of Imitation Drugs under the Hatch-Waxman Act.
In contrast, in Canada, all drug submissions seeking a NOC, including those submitted to the Biologics and Genetic Therapies Directorate, Natural and Non-Prescription Health Products Directorate, and Veterinary Drugs Directorate, are assessed to determine if they fall within the scope of the PM(NOC) Regulations. Biologics are specifically listed in Schedule D to the Canadian Food And Drugs Act and are regulated by Divisions 3, 4, and 8 of Part C of the Canadian Food And Drugs Regulations, which do not distinguish between new chemical entities and biological products. Imitation Biologics are not an "innovative drug" and will not benefit from data protection provisions of the Food and Drugs Regulation (see "Exclusivity" section below). When the United States-Mexico-Canada Agreement (USMCA) is ratified and adopted into domestic legislation by Canada, under Article 20.49, Canada will be required to provide new biologics with a minimum of ten years' data protection from the date of first marketing authorization. However, the proposed data protection for biologics under Article 20.49 of the USMCA does not apply to biosimilars.
Marketing exclusivity of 12 months in China and 180 days in the US is given to the first Imitation Drug applicant to successfully challenge the Innovator Drug's patent and obtain marketing approval. In the US, marketing exclusivity of up to 42 months is also granted to the first Imitation Biosimilar approved by the FDA as interchangeable with the Innovator Biosimilar.
In Canada, the data protection provisions of the Food And Drugs Regulations are available only for Innovator Drugs, which must contain a medicinal ingredient that has not previously been approved. As a result, the exclusivity period is not available for drugs that are issued a NOC for a new indication, dosage form, or other change. There are two categories of exclusivity period provided by the data protection provisions:
Six-year no-file period. An Imitation Drug applicant seeking a NOC on the basis of a direct or indirect comparison between the Imitation Drug and the Innovator Drug may not file a drug submission before the end of a period of six years after the day on which the first NOC issued for the Innovator Drug, unless consent is obtained from the Innovator Drug patentee.
Eight-year exclusivity period. An NOC may not be issued to a second or subsequent entry Imitation Drug applicant seeking a NOC on the basis of a direct or indirect comparison between the second or subsequent entry Imitation Drug and the Innovator Drug before the end of an eight-year period after the day on which the first NOC was issued to the innovator, unless consent is obtained from the innovator.
To compensate for the time required to obtain marketing approval, patent term extension (PTE) is available for pharmaceutical patents covering new drugs launched in China, the US and Canada.
In China, patents for small molecule drugs, biologic drugs, and traditional Chinese medicines are all eligible for PTE. PTE is not available, however, for Chinese patents that will expire in less than 6 months. The period of extension to which the patent holder is entitled to have restored to the patent term is the time taken from application of the pharmaceutical patent in China to the date market approval is granted minus five years.
Similarly, in the US, the Hatch-Waxman Act provides that the term of pharmaceutical and biologic product patents may be extended for a portion of the time lost during clinical testing. The patent holder is entitled to have restored to the patent term one-half of the time between an Investigational New Drug Application and the submission of an NDA, plus the entire period spent by the FDA approving the NDA.
In both China and the US, the entire patent term extended may not exceed five years, and the remaining term of the restored patent following approval of the pharmaceutical patent application in China or the NDA in the US cannot exceed 14 years.
To obtain PTE in China, patentees must apply to the CNIPA for PTE within three months of obtaining marketing approval. In the US, patentees must exercise due diligence to seek PTE from the US Patent and Trademark Office (USPTO), or the period of lack of diligence is offset from the restored patent term.
If the new drug is protected by multiple patents in either China or the US, PTE is granted for only one of the patents in the patent family covering the drug.
PTE in Canada is achieved through issuance of a Certificate of Supplementary Protection (CSP). Canada's CSP regime was introduced on September 21, 2017 as part of Canada's commitments under the Comprehensive Economic and Trade Agreement (CETA) with the European Union in order to partially compensate pharmaceutical innovators for time spent on research and obtaining marketing authorization. The term of a CSP is calculated by subtracting five years from the period beginning on the filing date of the application for the patent and ending on the day on which the authorization for sale set out in the certificate is issued, but in any event is for a maximum of two years. However, there are both eligibility and timing requirements that must be met for a patent to receive a CSP; hence, detailed review of the patent claims as well as the timing of the NDS submission date and the NOC issuance date should be conducted prior to applying for a CSP. In addition, to obtain a CSP, the NOC must be the first NOC issued with respect to the medicinal ingredient or combination of medicinal ingredients. Only new drugs issued a NOC after the CETA came into force are CSP-eligible.
In addition to PTE, both Chinese and US patents are eligible for patent term adjustment (PTA), which refers to unreasonable delays caused by the CNIPA or the USPTO during the prosecution of a patent application. The total PTA is an addition to the 20 year lifespan of the issued patent.
In contrast to China and the US, Canada does not currently have a PTA mechanism to compensate patentees for delays in patent prosecution. Although the USMCA requires Canada to adopt a PTA system, the agreement allows for four and a half years after the USMCA comes into force for Canada to implement a PTA mechanism.
The changes to China's Patent Law provide for a patent linkage system that, though novel in China, echoes the patent linkage systems of other powerful jurisdictions of significance to pharmaceutical patent holders, including the United States and Canada. Similarly, new mechanisms for patent term extension and adjustment in China largely align with the framework implemented by the US.
Of the changes wrought by the Patent Law amendments, these two provisions in particular have the potential to drastically impact the design and implementation of patent filing and regulatory approval strategies of pharmaceutical clients in China, the US, and Canada. Considering the similarities between the systems and procedures to be implemented in China and the current mechanisms in place in the US, we would recommend that pharmaceutical clients consider co-developing patent filing and regulatory approval strategies for US and China. Corresponding filings in Canada will continue to require separate and careful attention, however, given the unique nature of Canada's patent laws and regulations.
The new procedures afforded by China's amended Patent Law for enforcing and extending patent rights in China may save time, effort, and money and provide a better return on investment in Chinese filings. We will continue to monitor and provide updates regarding the interpretation and implementation of the PRC Patent Law.
On May 19, 2022, the Alternative Reference Rates Committee unanimously endorsed using the CME 12-month Term SOFR.
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