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Generic drugs and patent protection a comparison between Japan, the USA and Korea

2009/4/14
HARAKENZO WORLD PATENT & TRADEMARK
Toshiro KURODA, Patent & Trademark Attorney

1. Background
Generic drugs, also called generics, are drugs comprising the same active elements than a patented innovator drug for which the related patent right has expired, and manufactured and sold by a drug maker (called a generic drug maker) different from the owner of the patent related to the innovator drug. Generics are approved for manufacture and sale as therapeutically identical to the innovator drug ; in general, due to reduced development costs, they are sold at a lower price than the innovator drug. The Ministry of Health, Labour and Welfare of Japan is actively promoting their use as a means to reduce the financial burden of patients and as part of the reform of the health care financing system. However, with generics representing only 16.9% of the total number of drugs in 2006, Japan is still lagging behind in this field compared to Western countries.
Two different sets of laws, namely the Pharmaceutical Affairs Law and the Patent Law, apply with regards to the manufacture and sale of generics in Japan, thus making the legislation in this domain more complex than for most products. Further, Japan’s system and situation differ from that of foreign countries. Accordingly, we would like to briefly introduce here the situation of generics with regards to patent protection in Japan and Korea in light of the situation in the USA, the most advanced country in this field.


2. Generic drugs in the USA
In the USA, the Hatch-Waxman Act of 1984 opened the way to the sale of products “bioequivalent” to already approved drugs, without the necessity to proceed to expensive clinical tests. In order to sell these “bioequivalent products”, generic drug makers must submit to the Food and Drug Administration (FDA), along with documents proving the bioequivalence between the product and the innovator drug, an Abbreviated New Drug Application (ANDA). The acquirement by a generic drug maker of the relevant data during the term of the patent is not considered a patent infringement in the USA (Title 35 of the United States Code [USC], Article 271(e)(1); “Bolar provision”).
It is also possible to legally manufacture and sell a generic drug in the USA even before the expiration of the patent right through the procedure known as “Paragraph IV certification”, which involves the submission of documents proving either the invalidity of the patent right related to the innovator drug or the fact that the manufacture, use and sale of the generic drug do not constitute an infringement if the patent right. The Hatch-Waxman Act provides that the first entity to submit an ANDA is granted a 180-day period of market monopoly. However, the owner of the patent related to the innovator drug can bring a lawsuit for infringement in a Federal Court against the entity who submitted the ANDA (Title 35 of the USC, Article 271(e)(2)). In the case that the owner of the related patent does file a lawsuit for infringement, the FDA automatically suspends the ANDA for either a thirty-month period or until the Court of Appeal of the Federal Circuit (CAFC) issues a ruling in favor of or against the infringement.
As described above, in addition to the possibility to obtain a monopoly for a fixed period, the risk for the generic drug maker that submitted the ANDA is limited even if it loses in an ensuing patent infringement litigation, due to the fact that it did not carry out clinical tests and the like. The risk for the maker of the innovator drug, on the other hand, is high ; a victory in court brings only limited benefits, while losing the suit endangers the company’s market share for the drug.
Litigation cases involving Japanese innovator drug makers include the following:

・ Takeda Pharmaceutical Co., Ltd vs. Alphapharm et al.: patent litigation case in connection with a generic used for the treatment of type 2 diabetes
・ Takeda Pharmaceutical Co., Ltd vs. Teva: patent litigation case in connection with a generic for a Proton Pump Inhibitor (PPI)
・ a patent lawsuit filed by Shionogi & Co., Ltd. against seven generic drug makers including Cobalt Pharmaceuticals, which submitted the ANDA for a drug used for the treatment of hypercholesterolemia
・ Otsuka Pharmaceutical Co., Ltd vs. Teva: patent litigation case in connection with a generic for antipsychotics
・ Astellas vs. Impax Laboratories: patent litigation case in connection with a generic used in the treatment of benign prostatic hyperplasia
・ Eisai Co., Ltd vs. Teva : patent litigation case in connection with a generic for an acetylcholinesterase inhibitor


3. Generic drugs in Japan
Article 69(1) of the Japan Patent Act provides that the effect of the patent right does not extend to the working of the patented invention during the term of the patent right so as to gather and submit to the authority in charge of pharmaceuticals affairs the information necessary to obtain an official approval of the drug, in the objective to sell the generic after the expiration of the patent related to the innovator drug: “a patent right shall not be effective against the working of the patented invention for experimental or research purposes” (1999/4/16 ruling of the second Petty Bench of the Supreme Court, in a case involving a drug used in the treatment of pancreatic diseases).
There is no explicit regulation in Japan comparable to the “Paragraph 4 certification” existing in the USA with regards to the “legal” sale of generics during the term of the patent right related to the innovator drug. However, the sale of a generic drug through purchase and subsequent fragmentation, refining or recrystallization of the innovator drug may be considered legal, provided that the active components have not been altered (11/29/2001 ruling of the Tokyo High Court – Aciclovir case).
In order to extend the monopoly period of the drug, innovator drug makers sometimes resort to altering a part of an innovator drug (for example its form, its composition or its structure) and going through the process of registering the altered drug as a new patent. This strategy, called “evergreening”, is used by drug makers all around the world. It has been linked to a number of patent lawsuits between generic drug makers and innovator drug makers in Japan as well.

・ Famotidine case (“Richter Gedeon vs. sixteen generic drug makers”) – ruling No. 15-3034 of the High court of Tokyo, 2004/4/28
・ Nicardipine case (“Yamanouchi Pharmaceutical Co., Ltd vs. Taisho Pharmaceutical Co., Ltd”) – ruling No. 14-1567 of the Osaka High Court, 2003/2/18
・ Cefdinir case (“Astellas vs. Taiyo Pharmaceutical Industry Co., Ltd”) – ruling No. 19-10034 of the Intellectual Property High Court, 2007/9/10 ; subsequent appeal dismissed on 2007/12/27
・ Selbex capsule case (“Eisai vs. Taiyo Pharmaceutical Industry Co., Ltd”) – injunction request for unfair competition No. 2006-10009
・ Cravit case (“Daiichi Sankyo Company, Ltd vs. thirteen generic drug makers including Sawai Pharmaceutical Co., Ltd”) – appeal to the Intellectual Property High Court for the cancellation of the trial decision to invalidate the patent, 2008/12/24 ; currently pending


4. Generic drugs in Korea
In a similar fashion to Japan and the USA, South Korean generic drug makers can request to the Korea Food and Drug Administration (KFDA) an authorization to manufacture the generic of an innovator drug during the term of the related patent. In response, the maker of the innovator drug usually files against the generic drug maker a lawsuit for infringement or a trial for active verification of the scope of the right. The generic drug maker, in turn, usually counterstrikes by filing a trial for invalidation of the patent or a trial for active verification of the scope of the right.
According to the Korean Intellectual Property Office, South Korea has seen in recent years a sharp increase in the number of patent lawsuits related to generics – from 18 cases in 2005 (4.2% of the total number of patent lawsuits) to 25 cases in 2006 (2.8%), 57 cases in 2007 (5.3%) and 51 cases in 2008 (5.4%). Particularly deserving of attention is the fact that generic drug makers have obtained, in this regard, a series of victories in court.
Below is a selection of litigation cases between innovator drug makers and generic drug makers involving blockbuster drugs, which saw the subsequent victory of the generic drug makers:

・ Eloxatin case: appeal against the decision to invalidate a patent related to a drug used in the treatment of colorectal cancer and of stomach cancer dismissed by the Supreme Court of Korea, thus resulting in the final victory of the generic drug maker
・ Plavix case: appeal filed by the innovator drug maker against a decision to invalidate a patent related to an antiplatelet drug – currently pending before the Supreme Court
・ Lipitor case: appeal filed by the innovator drug maker against a decision to invalidate a patent related to a drug used in the treatment of dyslipidemia– currently pending before the Supreme Court
・ Livial case: appeal filed by the innovator drug maker against a decision to invalidate a patent related to a drug used in the treatment of osteoporosis – currently pending before the Supreme Court

Korea and the USA are currently in discussion regarding the signing of a Free Trade Agreement (FTA). If an “approval-patent linkage” system is introduced following the signing of the Agreement, the number of patent disputes between the two countries is expected to further increase.


5. Other countries
In China, the Commission of the National People's Congress, which took place on December 27, 2008, adopted the Third Revision of the Patent Act of the People’s Republic of China. The revised Patent Act will enter into force on October 1, 2009. Article 69, which is part of the present revision, includes a Bolar-like provision: “The manufacture of patented drugs or patented medical equipment in order to gather the data necessary to obtain official approval from the Authority does not constitute an infringement of patent rights”.



Reference material
(1) Adam P. Samansky and Jun Umemuro, “ANDA litigation following the KSR ruling”, Chizai Kanri (Intellectual Property Management), Vol. 58 No.6, pp703-710 (2008)
(2) “Sharp increase in patent disputes between multinational and national pharmaceutical companies”, JETRO Seoul, Chizai team news (2008/11/14)



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