China agrees to tweaks on drug patents as part of trade deal

China agreed to set up a system to resolve conflicts over drug patents, a move that may help U.S. pharmaceutical companies seeking greater protections for their branded medicine in developing nations.

The changes, which take key provisions from an American law on the books for more than three decades, were included in the text of what U.S. and Chinese officials billed as the first phase of a broader trade pact. President Donald Trump held a signing ceremony for the deal at the White House Wednesday.

Under terms of the deal, patent disputes over potential generic drugs could be resolved before a copycat medicine enters the market in China, and brand companies would be able to seek an order to block any sales until the conflicts are resolved. That’s similar to American law, though the U.S. provides for an automatic 30-month block of regulatory approval once a lawsuit is filed.

Drugmakers would be able to seek extensions of their patents to compensate for “unreasonable” delays in the patent office or while waiting for Chinese health regulators to approve a drug for sale. Patent terms in both countries are for 20 years from the date of application, though clinical tests and regulatory filings often eat up a large portion of that time.

‘Longer Period’

“For innovative drugs, patent extension means a longer period of market exclusivity, which brings China on par with the U.S. and Europe,” said Tao Xin, a Washington D.C.-based lawyer at Hogan Lovells US LLP. “This would also be an incentive for pharmaceutical companies to do research.”

The trade deal doesn’t include an agreement on what’s known as “data exclusivity,” which temporarily stops rival firms from using data from the original maker of a product to develop their own versions.

“Robust protection of intellectual property is critical to incentivizing the development of new and innovative treatments and cures,” the Trump administration said in a statement.

Drugmakers have been seeking greater protection for their branded medicines in emerging markets for years. It was a key part of the Trans-Pacific Partnership, the 12-nation deal that excluded China and was canceled when Trump took office.

Pharmaceutical companies have expressed concern about the wording of any legislation to implement the commitments expressed in the trade deal. The Washington-based lobby group for the industry expressed cautious optimism.

‘Good News’

“The agreement represents important steps forward in pursuing policies that will usher in a more fair and open market in China” for U.S.-developed drugs, said Brian Toohey, the head of international advocacy at the Pharmaceutical Research and Manufacturers of America.

While the latest changes are “good news” for innovation, makers of off-patent drugs would face bigger challenges and need to adjust to the new rules of the game, Tao said.

China also pledged to step up enforcement efforts against counterfeit medicines, including bulk chemicals or active pharmaceutical ingredients, and publicize data on seizures, revocations of licenses and any fines imposed.

It also agreed to share information on inspection of sites that make the raw materials for drugs. A Bloomberg investigation last year found that factories in China and India destroyed or hid testing data that showed quality failures, and a popular heart drug made in a China was recalled it was found to be tainted with a potential carcinogen.