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IP Newsletter | Fall 2018
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PATENT
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The MFDS Reviews the First Three Years of the Patent-Approval Linkage System in Korea
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It has now been over 3 years since Korea implemented its pharmaceutical patent-regulatory approval linkage system (similar to the Hatch-Waxman system in the U.S.) in March 2015, pursuant to the Korea-U.S. Free Trade Agreement ("KORUS FTA"). The Ministry of Food and Drug Safety (MFDS), the agency in charge of administering the system, recently decided to begin reviewing the current Korean linkage system to identify problems and to set up plans to improve the reliability and efficiency of the system. To this end, the MFDS has appointed the Seoul National University R&DB Foundation to conduct this research and review, and to propose ideas for improvement.
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From the perspective of originator pharmaceutical companies, there have been a number of issues raised regarding the sufficiency of sales stays under the current system to protect the rights of patentees. For example, at present, a listed patentee can respond to a generic's notice of filing for approval by filing a patent infringement suit against the generic and requesting a temporary stay of generic sales. However, the stay period under the current system is only 9 months, which is usually far less time than is necessary to resolve the patent issues relating to the generic.
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Another issue raised regarding sales stays relates to the MFDS's requirement that if multiple generics seek approval of generic versions of the same original drug, the originator must seek a sales stay against all such generics, or else forfeit the right to seek a sales stay against any of them. Under the Korean Pharmaceutical Affairs Act, different crystalline forms or different hydrates of an active ingredient compound are considered to be the "same" active ingredient, but different salts would be considered different active ingredients. A problem therefore arises if there are two generic drugs that constitute the "same" drug for approval purposes as defined in the Korean Pharmaceutical Affairs Act (i.e., have the same type and amount of active ingredient, same dosage form, same usage and dosage, and same indications), yet only one is covered by the relevant listed patent (e.g., the patent claims a specific crystalline form). Since the patentee must sue a generic for infringement in order to request a sales stay, the current system forces a listed patentee either to forfeit any sales stay against any generic (even infringing generics), or risk antitrust enforcement by filing suit against a clearly non-infringing generic product.
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From the generic side, there have been complaints regarding whether the first generic marketing exclusivity granted under the current system to early generic patent challengers actually provide meaningful benefits to generic companies. For one thing, because the definition of "first generic" is quite broad (in theory, any generic filing within 14 days of the first generic challenge to a listed patent may qualify as "first"), in practice generic "exclusivity" has not been very exclusive at all.
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Yet another issue has been that the system includes scope confirmation actions as well as invalidation actions as generic patent actions that can lead to a grant of generic exclusivity. However, since a scope confirmation action merely confirms whether a potential generic product is within the scope of a listed patent but does not invalidate the patent, and moreover does not require the existence of an actual generic product but only a description of an intended product, this further incentivizes the filing of numerous individual actions by generics even before they have fully developed their generic products, thus creating additional litigation burdens on patentees and the patent office.
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While the timeframe for the MFDS' review of the patent linkage system is not yet clear, it is expected that the MFDS will seek input from the relevant parties in the Korean pharmaceutical market and also look to linkage systems in other countries in order to propose measures for improving the effectiveness of the system for the pharmaceutical industry as a whole.
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