Taiwan Patent Linkage May Be Available
for More Drugs

Taiwan’s patent-pharmaceutical linkage system used to be limited to drugs of new compositions, new therapeutic compounds and new methods of administration (hereinafter referred to collectively as “category 1”). In the wake of a recent judgment[1], pharmaceutical preparations of new dosage forms, new administered doses and new unit strengths (collectively hereinafter referred to “category 2”)—and perhaps others—may also have a chance of becoming eligible for the system.

In September and October of 2019, Novartis Taiwan Co., Ltd. (“Novartis”) uploaded a series of patent details relating to 12 marketing approvals (including Glivec, Jadenu and Jakavi, among others) onto the Patent Linkage Registration Platform (“the Platform”) maintained by the Taiwan Food and Drug Administration (“TFDA”). The TFDA subsequently found that each of the 12 approvals referred to one of the category 2 drug products—the new dosage forms, new administered dosages and new unit strengths. Determining them not to relate to a so-called new drug as per the Pharmaceutical Affairs Act (“PAA”), the TFDA removed Novartis’s listings from the Platform. Following a failed administrative appeal, Novartis filed a lawsuit to the Taipei High Administrative Court.

Novartis’s main complaint was that the removal by TFDA was wrong since it narrowly interpreted a new drug eligible for patent linkage as being only a category 1 drug and thus excluded the category 2 drugs. Besides, the PAA only authorized the TDFA to maintain a listing platform and to publish the patent information thereon. The TFDA does not have the discretionary authority to spontaneously review, modify or even delete the patent listings uploaded by a pharmaceutical patentee wishing to make use of the patent linkage system. As the defendant, the TFDA argued that a “new drug” was defined in Article 7 of the PAA as a medical preparation of new compositions, new therapeutic compounds or new methods of administration—that is, the category 1 drugs. The TFDA countered that, the question of whether a candidate drug is eligible for the system depends on whether the drug falls within the definition as per Article 7. Since Article 7 of the PAA precedes Articles 48-3 to 48-22 that governs patent linkage, the definition of a new drug in Article 7 should have applied in the patent linkage. Seeing a patent listing of a medical product failing to meet the definition in Article 7, the TFDA insisted that they were right to remove such a listing.

After a review of the legislative background of the linkage system, the court found the TFDA’s interpretation to be wrong. The 2018 amendment to the PAA inserted a chapter of patent-pharmaceutical linkage connecting the marketing approval of a new drug with the disclosure of related patent details. It also connects the marketing approval of a generic copy to its potential risks of patent infringement. When a pre-sale patent infringement dispute involving a generic copy has concluded, the TFDA then makes its decision of whether to grant approval to the generic copy so its market debut would be cleared of infringement risks.

The legislation of a new chapter for patent linkage came much later than Article 7 of the PAA in time. In particular, Article 48-3 of the PAA in the patent linkage chapter stated that the patents which can be listed are those directing to the invention of any of “matters, compositions or formula, and pharmaceutical uses.” The court analyzed that, if they are of identical meaning, the patent linkage chapter would only need to prescribe somewhat literally that: a new drug therein referred to is one as per the definition contained in Article 7. It would not bother instituting Article 48-3 additionally. In other words, different from Article 7, a new drug in the linkage system merely refers to one which has been newly granted marketing approval and whose related patent information is required to be registered if the patentee wishes to make use of the system. The patent linkage chapter is not intended to add any drug type-based requirements. The TFDA’s narrow interpretation restricting the availability of patent linkage to only category 1 drugs was wrong accordingly.

The court reinforced its reasoning with an additional illustration of the equity mechanism of the linkage system. The development of a new drug involves a huge amount of financial investment in comparison to that of a generic copy. A generic copy may later enter the market at a lower cost provided that the new drug’s experimental data are cited and the credentials of bioequivalence and safety are demonstrated. In order to compensate the new drug developer, a legal barrier has been placed in front of the generic maker, whereby they must remove any risk of infringement before the generic copy before entering the market. To impose this barrier, however, the new drug developer is required to publically declare the patents associating with the new drug beforehand. Given the interaction between the two competing parties, transparency of patent information becomes essential to the robust operation of the linkage system in order to create an equitable mechanism. Placing an undue limitation on the availability of the linkage system on the basis of different types of drugs could undermine the transparency of patent information and—in the worst cases—lead to more infringement actions taking place in the future, since the risks of patent disputes were not fully clarified earlier. Therefore, as the court stressed, any new drug is subject to the generic maker’s challenge as long as it has an associated patent for “matter, composition or formula, or pharmaceutical use.” If the new drug developer lists such a patent on the Platform, it will be able to enjoy the benefits of equity as afforded by the linkage system.

The court further analyzed the TFDA’s decision to remove the listings, finding it to be a violation of the law. In Articles 48-3 to 48-20 of the PAA, the statutes provide a number of measures for a holder of new drug approval to update, modify or delete the listed patent(s). The statutes also provide measures for a third party to report a questionable listing, which would be forwarded to the holder of new drug approval so the holder may modify or delete the same accordingly. That is, none of the measures in the PAA empowered the TFDA to remove a listing by itself. The spontaneous removal of patent listings by the TFDA constituted a premature intervention in a dispute between the new drug developer and the generic maker which did little to encourage an equitable mechanism intended to enhance transparency of patent information.

To briefly conclude, the TFDA’s discretionary decision to remove Novartis’s patent listings was wrong. The court ruled in favor of Novartis to restore its listings. This trial judgment remained appealable.

Despite this being merely a trial judgment and the case not being finalized, it is nevertheless of significance since it is the first time in which the court has delivered an opinion on admissible types of drugs. Before the judgment, the TFDA’s interpretation had been long criticized by some new drug owners for being unduly narrow to the extent that it hampered the accessibility of the system. Now, the trial court has opened the door to another large group of candidate drugs. We shall wait patiently to see how the case ultimately develops.

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