PhRMA ：Intellectual Property Rights- the Foundation for Sustained Investment in Biopharmaceutical Innovation

PhRMA Enterprise Report submitted for China Development Forum March 2023

Executive Summary

Robust protection and enforcement of intellectual property (IP) rights, including patents, regulatory test data and trade secrets, are critical to incentivizing investments in innovative industries such as the biopharmaceutical sector. Effective IP protection and enforcement provide the predictability and certainty necessary to support research and development (R&D) as well as delivery of new treatments and cures for patients around the world. Strong IP rights improve the business case for a company to conduct R&D and launch its innovative medicine in a particular market. For example, a recent statistical evaluation of over 50 markets indicates that those with regulatory data protection (RDP) have on average around three times as many innovative medicines available to patients compared to those without RDP and that more clinical trials are conducted in markets with RDP.

China’s leadership is highly committed to strengthening biopharmaceutical innovation and ensuring Chinese patients have greater access to innovative medicines. These objectives are an integral part of China’s 14th Five-year Plan, Healthy China 2030 and a wide range of healthcare-related legislative and regulatory reforms. Throughout these reforms, China has made several improvements to IP protections for medicines and in developing a system that more closely aligns with international practices. It has established an early patent dispute resolution system, committed to establish patent term extension and adjustment and issued proposals on RDP. However, these reforms are not yet complete, and innovators still have much less certainty about the protection of their IP in China than they have in other markets that have fostered strong innovative biopharmaceutical industries.

We respectfully offer the following recommendations for China to strengthen its IP system to further encourage investment in biopharmaceutical innovation and enable greater patient access to lifesaving treatments and cures:

Patent Protection and Enforcement

Patentability—Unlike other major markets, China does not consistently accept data generated during the R&D process after a patent is filed, i.e., data supplementation, resulting in denials of patents on new medicines in China that received patents in other jurisdictions. We recommend clear, consistent and coherent standards regarding acceptance of post-filing data for biopharmaceutical patents in China.

Patent Term Extension (PTE) and Patent Term Adjustment (PTA)—An effective pharmaceutical patent system includes mechanisms to adjust the term of a patent to compensate for patent office delays, i.e., patent term adjustment or PTA, and to restore the patent term to compensate for a portion of the lengthy time required to develop and secure regulatory approval for pharmaceutical products, i.e., patent term extension or PTE. We recommend that PTE and PTA be expeditiously effectuated in China.

Patent Enforcement—In order to foster a strong market for innovative and follow-on medicines in China, there should be an opportunity for patent disputes to be resolved prior to the marketing of any generic or biosimilar product. China has established an early dispute resolution mechanism in Article 76 of its Revised Patent Law and has issued several implementing rules and judicial interpretations. However, certain features of the system, such as the short approval stay for follow-on approval and unclear applicability to biologics, could make it difficult for China to achieve its intended goal of resolving patent disputes early to save resources and ensure continued patient access to medicines.

Regulatory Data Protection (RDP)

RDP provides protection for the comprehensive package of data that innovators must submit to regulatory authorities to demonstrate the safety and efficacy of a medicine for marketing approval. We recommend China adopt the highest international RDP standards, including 12 years for biologics and 10 years for small molecules, consistent with those in other countries that have robust innovative medicine markets.

Protection of Trade Secrets

Companies must have the ability to protect their confidential know-how (e.g., manufacturing information) from disclosure and theft through trade secret protection. This includes not only the ability to pursue remedies from private parties, but also through support from government agencies, to ensure that such information is only submitted when absolutely necessary and in a secure manner.

IP Sharing and Clinical Trials

China has globally unique requirements under the Human Genetic Resources (HGR) Regulations for IP sharing of discoveries during clinical research conducted in China and has proposed to link patentability with HGR requirements. We recommend reevaluation of these policies, which undercut a predictable IP environment for innovators, especially those considering simultaneous development in China.

In addition, we note that certain proposals for PTE and RDP would limit the availability or duration of such protections for drugs previously marketed outside of China, which is inconsistent with practices of major markets globally. Such an approach would also be contrary to China’s innovation goals, making it more difficult for both foreign and domestic innovative manufacturers to benefit from the incentives that these protections offer for innovation, which may in turn impact decisions to develop and/or launch products in China at all. We recommend clarification that these biopharmaceutical IP protections would apply equally to all innovative products launched in China.

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PhRMA ：Intellectual Property Rights- the Foundation for Sustained Investment in Biopharmaceutical Innovation