Draft rules for pharmaceuticals cause concern

24-11-2016

Phoebe Yeh

On August 4, 2016, Taiwan’s Executive Yuan (the executive branch of central government) passed a draft amendment to the Pharmaceutical Affairs Act (Amendment), which was proposed by the Ministry of Health and Welfare. This amendment was drafted in response to Taiwan’s negotiations on joining the Trade and Investment Framework Agreement (TIFA) and the Trans-Pacific Partnership (TPP) deal.

In order to comply with chapter 18 (on intellectual property) of the TPP, the amendment may affect the domestic pharmaceutical industry and therefore some scepticism that it may have a negative effect on the Taiwanese pharmaceutical sector has arisen.

Data exclusivity

The amendment clarifies that the Taiwan Food and Drug Administration (TFDA) will not accept or process any applications for market approval of drugs that cite data for the same (existing) new ingredient drug within three years of that product’s approval. In addition, rival market approval will only be granted after five years from the approval of a drug with a new ingredient, meaning the owner of an approved new drug essentially enjoys a five-year duration of market exclusivity.

On the other hand, the duration of data exclusivity for a new therapeutic indication will be three years from approval, or five years if the clinical trials are performed in Taiwan. For new drugs or new indications granted with market approval from a foreign authority, the aforementioned exclusivity will be applicable only when the application for Taiwanese marketing approval is submitted within a specified time period from the foreign approval, namely three years for new drugs, or two years for new indications.

Patent linkage

The amendment includes a new chapter, 4-1, which specifically provides patent linkage to connect a drug’s IP protection and regulatory approval for marketing. According to the new provisions of the patent linkage system, a new drug owner, usually a patentee, should list the patents and submit required information within 45 days of receiving marketing approval or patent issuance, whichever is later.

Eligible subject matter for patent-listing includes pharmaceutical substances, compositions or formulations, and medicinal use. In some circumstances of changes to patent status, the updated patent information should be reported within 45 days of the occurrence.

"If patents are chiefly owned by leading international enterprises, the proposed system does not create more opportunities for Taiwan’s own pharmaceutical industry."

To file an Abbreviated New Drug Application, a generic competitor must indicate that the drug has no patents, that each listed patent has expired, that a new approval may be granted to the competitor until all corresponding patents expire, or that each listed patent is invalid or not infringed.

By challenging patents that are either invalid or not infringed, the generic competitor must notify the patentee and TFDA accordingly. As a response, the patentee may initiate an infringement action within 45 days of the competitor’s notification, and then the TFDA must wait 15 months before granting any approval.

Furthermore, to encourage competition in the pharmaceutical market, the first challenger to successfully invalidate patents or secure non-infringement will enjoy a 12-month exclusivity sales period, which will start within six months of approval.

Last, a provision has been installed to prevent anti-competitive activities such as pay-for-delay. Any agreements between patentees and generic competitors should be reported to the TFDA. In response to any foul play compromising the interests of public health and trading order, the Fair Trade Commission will become involved.

Doubts

The amendment was drafted for Taiwan’s negotiation to enter the TIFA and TPP. In fact, it has caused some critics to say that a negative impact on the domestic pharmaceutical industry may be foreseeable by applying foreign rules to Taiwan’s patent system. If patents are chiefly owned by leading international enterprises, the proposed system does not create more opportunities for Taiwan’s own pharmaceutical industry, which consists mostly of small and medium-sized generic makers.

For the system to be more economically justifiable, the administration is advised to propose a comprehensive analysis on drug prices, public insurance, industrial development, etc, before submitting the draft for legislative enactment.

Phoebe Yeh is the deputy manager at the international division of Tsai, Lee & Chen. She can be contacted at: info@tsailee.com.tw  

Kevin Feng also contributed to this article.

Phoebe Yeh, Tsai, Lee & Chen, patent, TIFA, Pharmaceutical Affairs Act, TPP, TFDA, pharmaceutical, drugs,

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