Duty to Report Agreements between
Patentee and Generic Drug Competitor Implemented

Taiwan’s new Patent Act 2018 introduced patent linkage to the Pharmaceutical Act, systematically connecting the enforceability of a new drug’s associated patents and the market approval from a competing generic copy. The policy goal is to encourage generic copy manufacturers to engage in development of more affordable drugs having biological equivalence, so that, ultimately, patients will be able to enjoy the benefits of using lower-priced medicinal alternatives. To create a financial incentive, the first generic challenger who prevails in an infringement suit will be granted exclusive sales privilege for as long as 12 months.

According to various research, once a generic copy debuts on the market, the originally patented counterpart will surrender significant market share, as well as the accompanying profits. But if the patentee persuades competitors to step out the market in exchange for a reward, the patentee can continue to enjoy an exclusive status and thereby earn more than what the patentee could if such competition were to exist. In such a win-win scenario, which is referred to as a reverse payment deal, there is only one loser– the patients, who are barred from access to cheaper medicines.

The new patent linkage system imposes the relevant parties in opposition of commercial or legal interests a specific duty to report any agreements to the supervising agencies. As read, any parties of new drug patentee, generic drug applicant, or generic drug’s marketing approval holder who engaged in a settlement or otherwise an agreement with respect to the drug’s manufacture, sales, or term of marketing exclusivity shall report to the Taiwan Food and Drug Administration (“TFDA”) within 20 days. One shall further make a report to the Fair Trade Commission if the agreement is a reverse payment in essence. Also, the TFDA holds discretion in forwarding a received agreement to the Fair Trade Commission for further investigation should there be any likelihood of unfair competition concerns. (Article 48-19)

Recently, the TFDA issued an administrative order to implement the duty of report. As regulated, a lawful report shall be made within 20 days to include at least the following information about an agreement:

(1) Agreed parties’ business names, nationalities, residences, domiciles or locations of establishment, and their representatives’ names, residences and domiciles;

(2) Purpose;

(3) Effective date;

(4) Serial numbers of associated market approvals and/or applications;

(5) Date, term, and other relevant facts associated with an exclusive sales or manufacture privilege, if any;

(6 Serial number of associated patent certificates; and

(7) Facts of payments, if any, and a note whether reporting to the Fair Trade Committee in the event of a reverse payment deal (Article 2). 

Reviewing such a report, the TFDA may invite relevant parties to further explain the agreement in writing. The TFDA may demand that the relevant parties timely supplement any details about a reverse payment deal that are missing from the report (Article 3). Lastly, it is stressed that the TFDA has the authority to forward any information received from the agreed parties to the Fair Trade Committee in any potential case of barring generic competition, affecting use of affordable drugs by patients, and compromising the market order of pharmaceuticals as well as public health (Article 4).

for any questions relating to this topic, please contact us at cjchen@tsailee.com.tw