The linkage between patent status and drug approval process consists of two elements: notification and prohibition. The notification element refers to a mechanism in which a patentee is notified of the application of marketing approval of a generic product. The prohibition element refers to a mechanism in which a marketing approval of a generic product is banned during the lifetime of a listed patent unless the patentee consents or acquiesces the generic entrance.
Of these two elements, the main one to achieve the purposes of patent linkage system is the prohibition element. The generic prohibition may be implemented by judicial procedures (the current Australian system and Canadian prior-to-2017 system) or by administrative procedures (Korean and the U.S. models). How the prohibition mechanism has been working in Korea is described in the 2019 Annual Report on Impact Assessment of Patent Approval Linkage System, which was published at the end of 2019. However, it only contains the statistics by December 2018. So I formally requested the Ministry of Food and Drug Safety (MFDS) to disclose information on statistical data of 2019. My obtained data is shown in <Table 1>.
From March 15, 2015 (when the patent linkage obligation under KORUS was fully implemented in Korea) to December 31, 2019, in total 137 applications for generic prohibition have been filed, a small increase from 124 by the end of 2018. Specifically, 12 applications in the first quarter of 2019 and only one application in the third quarter of 2019 (see <Table 2>).
Of the 137 applications for generic prohibition, only 29 applications (21.2%) were approved by MFDS. In majority cases, MFDS dismissed the prohibition application (96 cases, 70.1%). Why most of the applications by originators were rejected? The MFDS’ Annual Report does not provide any answer. But the statistical data I obtained from MFDS through the information disclosure request provides some clue.
For 38 generic products which were subject to the marketing prevention applications, the applications were dismissed because listed patents were found invalid or generic products were found non-infringing (PAA §50-6(1)(vii)). For 28 generic products, the marketing prevention applications were dismissed because the applications were not made against all of the notified generic (PAA §50-6(1)(v)). This is one of the complaints of PhRMA in its Special 301 Submission (“The sales stay system under Korean law is problematic in that the patentee cannot request a sales stay against an infringing generic product unless a sales stay is also sought against non-infringing generic products”).
|Article 50-6 (Marketing Prevention, Etc.)
(1) Where the Minister of Food and Drug Safety in receipt of an application for marketing prevention under Article 50-5 (1) grants marketing approval or revised approval for the drug for which the application for marketing prevention was filed, he/she shall prevent the marketing of such drug for nine months from the date when the patentee, etc. of a listed drug is notified pursuant to Article 50-4 (hereinafter referred to as “date of receipt of notice”), except in any of the following cases:
(1) A patentee, etc. of a listed drug may file an application for the prevention of marketing of the notified drug with the Minister of Food and Drug Safety by attaching the statement including the following, within 45 days from the date of receipt of notice pursuant to Article 50-4:
(4) The Minister of Food and Drug Safety shall not grant marketing approval or revised approval of the notified drug until the period for filing an application for marketing prevention under paragraph (1) expires: Provided, That this shall not apply in any of the following cases:
1. Where there is a trial ruling pursuant to Article 162 of the Patent Act or a ruling pursuant to Article 189 of the same Act that the drug for which marketing prevention was applied does not fall within the scope of registered patent rights;
2. Where there is a trial ruling pursuant to Article 162 of the Patent Act or a ruling pursuant to Article 189 of the same Act that the registered patent is invalid;
The prohibition application can only be made when a generic applicant notifies an originator of the fact that a generic application for marketing approval has been filed. From 2015 to 2019, the notified generic products were 1,715 and the prohibition applications were filed against only 137 products (7.99%) as shown in <Table 1>. So far, orginators’ application for preventing a marketing approval of generic products have never gone beyond 10%. In the 2019 Annual Report of MFDS, it was 9.1% (p. 46), while 8.4% in the 2018 Annual Report (p. 23), 9.8% in the 2017 Annual Report (p. 41), and 10.0% in the 2016 Annual Report (p. 65). Based on the statistical data I obtained from MFDS, around a half of the prohibition applications (46.7%) was made during the first year when the patent linkage was fully implemented on March 15, 2015. This means that originators have not make use of the prohibition mechanism. In addition, most of the prohibition applications were dismissed as explained above.
Then, it is fair to say that the purposes of the patent linkage system, i.e., providing an additional patent protection and promoting innovation of new drugs have not been achieved. The reasons are two. First, the 9-month period that MFDS may prevent a marketing approval of generic product is too short. PhRMA also complains that “Korean law only provides for a nine-month sales stay. It is unclear whether this will be an adequate period of time to resolve a patent dispute (consistent with Article 18.9(5)(b) of KORUS) before an infringing product is allowed to enter a market.” (PhRMA Special 301 Submission, p. 67). Second and more importantly, a patent trial system which enables an early resolution of a patent dispute. A generic applicant can initiate a patent invalidation trail or a patent scope confirmation trail against listed patent without waiting for originator’s action against the notified products. Both the sudden decline of prohibition applications in one year after the patent linkage was fully implemented and the small number of prohibition applications are because most of the patent disputes were resolved early.
If this is the case, it is questionable why we should maintain a prohibition mechanism implemented in an administrative procedures. In other words, if we already have a judiciary system that makes possible an early resolution of a pharmaceutical patent, an additional measure by a drug approval authority such as MFDS is not necessary.