With the implementation of the 2023 Detailed Rules for the Implementation of the Patent Law (the "Rules") and the Guidelines for Patent Examination (the "Guidelines") in line with new Chinese Patent Law on January 20, 2024, several substantive amendments to the patent law will take effect. One notable advancement is the introduction of the pharmaceutical patent term compensation system, marking a substantial stride in the evolution of Chinese patent system. This change holds significant and widespread implications, particularly for stakeholders in the pharmaceutical sector.

Historically, the patent term extension (PTE) was originated from the Hatch-Waxman Act of the United States in 1984. It aimed to compensate for the time spent in clinical trials and marketing approval of drugs.

Major economies such as Europe and Japan also ushered in the patent term compensation system for drug patents.

At the beginning of 2020, the PTE was mentioned in the China-US Economic Trade, and included in Chinese new patent law included in Article 42 in 2022.

Article 42.3 of the new patent law stipulates compensation for new drugs' review and approval process. The specific provisions are as follows:

"In order to compensate for the time taken for the review and approval process before the marketing of a new drug, the China National Intellectual Property Administration (CNIPA), at the request of the patentee, may extend the patent term of the new drug-related invention patent which has been approved for marketing in China. The compensation term may not be more than five years, and the total effective patent term after marketing approval may not exceed fourteen years."

In the recently implemented 2023 Rules and Guidelines, specific details regarding the PTE have been stipulated. These details encompass the applicable scope, calculation methods, protection scope, compensation conditions, and examination procedures.

Ⅰ. Applicable scope for the PTE

According to the Rules, the term "new drug-related invention patent," as referred to in Article 42.3 of the Patent Law, includes the following types of patents that meet the requirements: patents for new drug products, patents for methods of preparing drugs, and patents for medical use.

It implies that the scope of compensation for patent term extends beyond the invention patents solely related to the drug product. Patents relating to drug use and preparation methods can also be eligible for compensation, thereby providing broader protection for the rights of innovative medicine manufacturers.

It is worth noting that the invention patents or utility model patents relating to veterinary drugs, pesticides, and medical devices are not applicable for the PTE.

The Guidelines clearly state that the term "new drugs" refers to innovative drugs approved for marketing by the National Medical Products Administration (NMPA) and improved new drugs that meet the stipulated requirements.

The Guidelines further specify that "improved new drugs that meet the stipulated requirements" are limited to those improved new drugs whose registration certificate issued by the NMPA recognized them in the following categories:

  • Chemical drugs in category 2.1 that esterified known active ingredients or salified known active ingredients;
  • Chemical drugs in category 2.4 that contain known active ingredients for new indications;
  • Vaccines falling under the Prevention Biologics Category 2.2 with enhanced strains
  • Biological products falling under the Therapeutic Biological Products Category 2.2 with expanded indications;
  • Traditional Chinese Medicines (TCM) in Category 2.3 with broader therapeutic functions.

The explanation indicates that the Guidelines precisely define the scope of PTE from the perspective of active substances.

Additionally, it's worth noting that the Rules and Guidelines have specifically included PTE for invention patents related to TCM. This embodies Chinese characteristics and contributes to the innovative development of TCM.

Ⅱ. Calculation of Compensation Period

According to the new Patent Law and its implementation rules, the pharmaceutical patent term compensation calculation method involves subtracting 5 years from the interval between the patent application date and when the new drug obtains market approval in China. The compensation period is at most 5 years, and the total valid patent term after the drug is approved for the market is at most 14 years.

It implies that if the time elapsed from the filing date to the time to market exceeds 6 years, applicant may request for PTE. However, no compensation can be made if the limited patent term exceeds 14 years when the drug is approved for the market. The calculation of pharmaceutical patent term compensation is crucial for various stakeholders.

For the patentees of the new drug patents, a longer compensated patent term means higher profits obtained through market monopoly, promoting innovation in the pharmaceutical industry. On the other hand, for generic drug manufacturers, an extended compensation period significantly delays the launch of generic drugs, directly harming their economic interests.

The calculation method for the compensation period in Chinese Patent Law and its Rules balances the interests of innovative drug inventors, generic drug manufacturers, and the public.

Ⅲ. Protection Scope of Compensation Period

The Rules stipulate that during the patent term compensation period for new drug-related invention patents, the protection scope is limited to the technical solutions related to the approved indications of the new drug.

The Guidelines further specify that new drug-related technical solutions should be based on the structure, composition, and content of the new drug approved by the NMPA, and the approved production processes and indications.

If the claims do not include the technical solutions of the new drug which already obtained market approval, no compensation will be granted.

During the pharmaceutical patent term compensation period, the protection scope is limited to new drugs approved by the NMPA and their approved indication-related technical solutions.

The protection scope of product claims is limited to the approved new drugs for the approved indications, and the protection scope of medical use claims is limited to the approved indications of the approved new drugs. The protection scope of preparation method claims is limited to production processes filed with the NMPA for the approved new drugs for the approved indications.

Thus, the protection scope during the pharmaceutical patent term compensation period does not directly extend for the original patent rights. The main feature is that the patent protection scope during the compensation period is not based on the claims of the original patent but is further restricted to the approved uses of the marketed drug.

Ⅳ. Compensation Conditions

The Rules specify the conditions for requesting PTE for new drug-related invention patents. The applicant must CNIPA within 3 months from the date the new drug obtains market approval in China, and meet the following requirements:

  • When there are multiple patents for the same drug, the patentee can only request the PTE for one patent.
  • When a patent covers multiple new drugs, the patentee can only request the PTE for one drug for that patent.
  • The patent must be within its validity period and has not been granted for any other PTE.

In summary, one patent, one drug, one PTE. Therefore, innovative pharmaceutical companies should strategically plan their patents in China, considering scenarios where one patent corresponds to multiple drugs or one drug corresponds to multiple patents. Additionally, patentees must actively monitor deadlines and promptly request the PTE.

Ⅴ. Examination Procedure

According to the new Patent Law and the Rules, after examining the request for PTE, if it meets the requirements, the CNIPA will decide to grant compensation, register, and announce it.

If it does not meet the requirements, the applicant should be given at least one opportunity to express opinions and/or correct documents. If it still does not meet the requirements, a decision will be made to deny compensation, and the patentee will be notified.

Subsequent remedies for compensation decisions can include administrative reconsideration or litigation. Therefore, in the future, determining the protection period of an invention patent is more complex than saying it is twenty years from the application date. Instead, checking the patent register carefully is necessary to verify whether PTE has been applied.

In addition, the Guidelines provide clear rules on whether a patentee can simultaneously enjoy Patent Term Adjustment (PTA) under Article 42(2) and PTE under Article 42(3) of the Patent Law:

  • If it is deemed necessary to grant the PTE, the examiner should wait for the decision on PTA and then determines the time for the PTE, if the PTA is requested;
  • If the patentee has not requested the PTA and the three-month period from the patent grant announcement has not expired, the examiner should wait until the expiration of the time limit and then determines the time for PTE, and the exception is that the patentee expressly waives the request for the PTA.

After examination, if it is deemed that the PTE request meets the requirements, the CNIPA should decide to grant PTE and inform the number of compensation days.

In other words, if the specified requirements are met, the patentee can request and benefit from the PTA and PTE. The examination on PTA will be made first, followed by the PTE, with the durations of the two compensations being directly cumulative.

In summary, the PTE is a significant development and reform in China's pharmaceutical patent system. Through effective implementation, it can promote innovation and development in the pharmaceutical industry while balancing the interests of pharmaceutical patentees and the public.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.