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| IP Newsletter | Spring 2014 |
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PATENT |
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Draft Legislation of Pharmaceutical Affairs Act for Korean Patent-Regulatory Approval Linkage System |
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As part of the Korea-US Free Trade Agreement ("KORUS FTA"), the patent-regulatory approval linkage system has been introduced in Korea. The implementation of the system has been divided into two stages. The first stage, implemented since March 15, 2012, provides that brand companies may apply for patent listing related to their products and generic companies must notify brand companies of generic approval applications if challenging the listed patent. In the second stage, effective March 15, 2015, a stay mechanism is implemented preventing generic product sales for a certain time period. Moreover, one generic company will be given exclusivity rights that prevent the sales of generic products by other generic companies for a certain period of time. Needless to say, the linkage system will have a large effect on the Korean pharmaceutical industry, especially from a patent perspective. One possible outcome is that more generic companies will tend to file legal actions before filing generic approval applications in order to obtain first generic exclusivity. |
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On March 21, 2014, the Ministry of Food and Drug Safety ("MFDS") announced draft legislation of the Pharmaceutical Affairs Act to fully implement the linkage system. The draft legislation includes revised provisions on the current patent listing and generic notice systems, new provisions on the stay mechanism and generic exclusivity. The major details are summarized below and a comparison with the US Hatch-Waxman Act upon which the Korean linkage system is based is also presented. |
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Patent Listing |
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Patent Eligibility |
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| Who can list patents? |
A marketing approval holder, who must be the patentee or licensee. |
| Which patents can be listed? |
Patents directed to a substance, formulation, composition and medicinal use. |
| When does the listing need to be filed? |
30 days from the product approval date or patent registration date. |
| What are the listing requirements? |
Patents "directly relevant" to the approved product and patents filed before the "regulatory approval," which is an additional requirement stipulated in the draft legislation. |
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Comparison with the US linkage system |
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| Korean Linkage System |
US Hatch-Waxman System |
| The MFDS reviews the substance of the Patent Listing Applications ("PLA") and selectively lists patents on the Green List. |
The Food and Drug Administration ("FDA") simply lists patents on the Orange Book and has ministerial role. |
| The MFDS requires a more detailed explanation of the relationship between the patent claims and approved product for the patent listing. |
No such requirement except for methods of use patents. |
| The MFDS has the authority to change and delist the listed patent information for failing to meet the listing requirements. |
The FDA does not conduct a substantive review and has no authority like the MFDS. |
| The MFDS edits granted patent claims to narrow the scope to match the approved product and list what is called the "listed claims," which is the edited version of the granted patent claims.* |
No such practice. |
| The Korean linkage system covers biological products as well as chemical products. |
The US Hatch-Waxman system covers only the chemical products and biological products are regulated with a separate system. |
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(* The MFDS has recently changed its practice from March 28, 2014, to publish the "Patent Claims Requested for Listing" and their "Direct Relationship Basis" with the approved product, rather than the "listed claims.") |
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Publication of the PLAs and Third Party Opinions |
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The draft legislation proposes a new system to publish the information on the PLAs and to make any third party provide the MFDS with an opinion on the eligibility of the PLA. |
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Generic Notice |
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Notice Requirement |
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| When must notice be provided? |
A generic company must notify the patentee and marketing approval holder of its generic approval application within 7 days. |
| When is notice not required? |
When the application is filed under the condition that generic sales will begin after the listed patents expire or when there is consent from the patentee and marketing approval holder that notice is not required. |
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Penalties for Violation of the Notice Requirement |
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The draft legislation stipulates penalty provisions. However, they have not yet been finalized in the current law. |
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| What if a generic company fails to meet the notice requirement? |
The MFDS may order the generic company to send a notice. |
| What if a generic company still fails to meet the notice requirement? |
The MFDS may send the notice directly. |
| What if the generic notice is sent after the 7-day deadline? |
The actual notice date will be deemed as the generic application date for the purpose of granting the first generic exclusivity. |
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Generic Stay Mechanism |
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Request for Generic Stay |
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| When can the marketing approval holder request a stay against generic sales? |
Within 45 days of the generic notice date if the patentee files patent action. |
| How many stay requests are allowed? |
Only once against the same generic company.
In addition, the marketing approval holder may not selectively request the stay only against certain generics without a justifiable reason.
Generic sales shall be stayed until the generic stay request period expires (45 days from the generic notice date) and the MFDS generic stay decision date.
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| What types of actions must the patentee file to request stay against generic sales? |
| Patent infringement action; |
| Scope confirmation trial against the generic company; or |
| Responding to a scope confirmation trial filed by the generic company (relating to any listed patent). |
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MFDS Decision on Generic Stay |
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| What is the requirement to grant generic stay? |
Where there exists a "need to prevent significant damage" to the marketing approval holder or patentee due to the generic sales.* |
| How long is the stay? |
The generic stay period is 12 months from the generic notice receipt date. |
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(* The above "significant damage" requirement is very important to the linkage system but the draft legislation does not yet provide any detailed explanation.) |
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Comparison with the US linkage system |
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| Korean Linkage System |
US Hatch-Waxman System |
| Not automatic stay – A request for stay is filed by the marketing approval holder and the MFDS reviews its merit. |
Automatic stay |
| "Generic sales" will be stayed. |
"Generic approvals" are stayed. |
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Generic Exclusivity |
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Requirements of Generic Exclusivity |
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According to the draft legislation, the Korean system provides first generic exclusivity to the appropriate generic to prevent sales by other generic companies. |
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| How can a generic obtain first generic exclusivity? |
| The generic company must have filed the first generic approval application; |
| The generic company must have filed a scope confirmation trial or invalidation action before filing its generic approval application; and |
| The generic company must have received a favorable decision in the trial or action as a direct party. |
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| What are the additional requirements? |
Since a generic company can file an invalidation action or scope confirmation trial any time after a patent is granted under the Korean Patent Act, the generic exclusivity is given to the first generic company that files a trial or action "before" filing its generic approval application (this is different from the US system). |
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Period and Scope of Generic Exclusivity |
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| How long is the generic exclusivity period? |
12 months from the date when generic sales can begin. |
| What types of generic products sales are prevented by generic exclusivity? |
Generic products having the same type and amount of active ingredient, dosage form, usage and dosage, and indication(s). |
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Duty to Submit Settlement Information |
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The draft legislation requires settlements involving the termination of trials and litigations which are related to notified generic products, or generic exclusivity, be provided to the MFDS and the Korea Fair Trade Commission within 15 days of the settlement. |
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Patent-Regulatory Approval Examination Committee ("PRAEC") |
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The draft legislation proposes the PRAEC which will be established under the MFDS to review the following: |
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- appeals of MFDS decisions such as decisions on patent listing, generic stay and generic exclusivity;
- patent listing cancellation trials; and
- generic exclusivity cancellation trials. |
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Prospects for the Draft Legislation and Korean Linkage System |
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Although the US Hatch-Waxman System was the basis for the Korean system, the draft legislation proposes a very different linkage system from the US system. Some of the major key differences are as follows: |
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| Korean Linkage System |
US Hatch-Waxman System |
| Publication of the PLAs |
No such practice |
| Stay for generic sales |
Stay of generic approvals |
| 12-month generic stay period |
30-month generic stay period |
| 12-month generic exclusivity period |
6-month generic exclusivity period |
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In particular, the "significant damage" requirement for the generic stay in the draft legislation will largely affect the entire linkage system depending on the MFDS' position on how it interprets the above requirement. Thus, we may need to monitor how the requirement will be finally stipulated in the Pharmaceutical Affairs Act and practiced by the MFDS. |
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