The era of generic drugs is coming, will patent protection be weakened in China?

 

 

　　On May 8, 2015, the State Council officially issued "Made in China 2025", adhering to the basic policy of "innovation-driven, quality first, green development, structural optimization, and talent-oriented" and the basic principle of "market-led, government-guided, based on the current situation, looking to the long term, overall promotion, key breakthroughs, independent development, and open cooperation". Biomedicine and high-end medical devices have become one of the ten key areas for development.

 

　　On July 22, 2015, clinical self-inspection began as China entered a reform zone in the pharmaceutical field. The introduction of a unified evaluation policy marked a deepening reform in drug research and development and production.

 

　　On April 3, 2018, the General Office of the State Council issued the "Opinions on Reforming and Improving Policies for Ensuring Supply and Use of Generic Drugs" (hereinafter referred to as "Opinions"). The release of this document signifies China's intention to transform from a major country in generic drugs to a strong country in generic drugs. The "Opinions" mainly focus on three major breakthroughs: promoting generic drug research and development, improving the quality and efficacy of generic drugs, and perfecting support policies. I will interpret them one by one:

 

　　Article 1

 

　　Clarifying the catalog of generic drugs marks the arrival of an era guided by 'patient-centered' principles. This is a significant benefit for pharmaceutical research and production enterprises in major infectious diseases fields, especially orphan drugs. It is also good news for many patients with rare diseases.

 

　　However, this raises higher requirements for medical personnel's diagnostic levels. Due to being rare diseases, it is expected that many doctors will be unable to make diagnoses. For example, the diagnosis rate for pulmonary hypertension is only 0.01%. Is this true? It's even higher than that.

 

　　Article 2

 

　　The state addresses technical issues within the industry through major special projects. This is very helpful for improving the overall level of the industry by forming an 'industry-university-research' chain that reduces enterprise burdens while adding various incentive measures to achieve a double stimulus effect.

 

　　Article 3

 

　　Since the state aims to vigorously promote generic drugs, it will inevitably strengthen antitrust enforcement in intellectual property rights to prevent abuse of intellectual property rights.

 

　　Due to patents being territorial in nature, patent protection from foreign original manufacturers will inevitably be weakened within China.

 

　　Article 4

 

　　Strengthening consistency evaluation work is not just a slogan from the state.

 

　　Currently, there are mandatory regulations regarding consistency evaluations for 289 drugs; however, capable enterprises are also selecting clinically valuable products from their thousands of product numbers to implement consistency evaluations independently.

 

　　This reflects enterprises' considerations regarding their own industrial layout while providing assurance that many patients can access safe and effective medications.

 

　　Articles 5 and 6

 

　　'Promoting consistency evaluation for generic drugs' is not merely a task within one discipline; it requires upgrades across all aspects of the pharmaceutical industry chain including raw materials packaging and formulation equipment.

 

　　'Articles 7 and 8'

 

　　'These two articles represent the state's determination regarding drug quality and regulation. Optimizing review processes is just one aspect of reform; its core purpose remains ensuring medication safety for people throughout drug life cycles while strengthening regulatory efforts.'

 

　　'Article9'

 

　　This promotes research & development , production ,and market entry from procurement perspectives.

 

　　According to earlier documents released by the State Council titled 'Opinions on Conducting Consistency Evaluation on Quality & Efficacy of Generic Drugs (Guo Ban Fa [2016] No.8)', 'If there are more than three manufacturers passing consistency evaluations for same variety medicines , those not passing will no longer be selected during centralized procurement', varieties failing consistency evaluations will gradually exit market as competitors complete theirs.

 

　　This indicates that state aims not only through R&D or production but also through market solutions addressing current scattered small market situation.

 

　　Article10

 

　　This promotes mutual substitution between generic drugs & original research medicines from patient applicability perspective.

 

　　I believe there needs publicity towards doctors (especially those at county or city level) rather than emphasizing within pharmaceutical industry itself . Current pharmaceutical industry recognizes national guidance striving towards having generics pass consistency evaluations . Mutual substitution between generics & original medicines still relies heavily upon prescriptions written by doctors.

 

　　Many county-level doctors even chief physicians remain stuck at perception that domestic medicines have lower purity compared with imported ones , lacking any concept about generics’ consistency evaluation . It’s quite concerning seeing doctors prescribe imported medications for patients with severe conditions or better economic situations while prescribing domestic ones for lighter cases or economically disadvantaged patients.

 

　　Article11

 

　　Reports indicate many provinces face pension crises , suggesting national health insurance burden must also be heavy . China will transition into aging society over next decade(s) leading medication characteristics becoming more concentrated with significant increase expected in usage quantity ; thus state encourages use equivalently effective generics aiming reduce health insurance burdens by timely incorporating approved generics into insurance catalogs.

 

　　Essentially speaking this creates win-win scenario both nation & enterprises where nation ensures public health levels while alleviating healthcare costs enabling companies secure stable profits.

 

　　Article12

 

　　This article requires little explanation ; although specific policies haven’t been implemented yet during public health emergencies or serious threats posed public health won’t be led solely by enterprises regarding intellectual property rights.

 

　　Of course state may also provide tax compensations.

 

　　Article13

 

　　This tax relief policy has minimal impact existing R&D firms whether they’re high-tech companies or subject standard tax rates ; they continue paying taxes as usual without changes . However after considering drug costs thoroughly establishing scientific reasonable procurement prices it’s anticipated era where buying single box medicine costs few yuan should end soon ; although prices won’t match originals they should see some increases.

 

　　但是在充分考虑药品成本，制定科学合理的采购价格后，预计买一盒药在几元钱的时代要结束了，药品价格虽比不上原研，但是价格应有所提升。

 

　　原料药价格垄断行为层出不穷，这也是信用社会所不允许的，是国家的重点监测对象。

 

　　第14条

 

　　现有很多制药企业正在做制剂国际化，并且国家推进仿制药国际化是大利好。

 

　　Currently, there are not many pharmaceutical companies that can truly achieve internationalization of formulations, which is influenced by various factors. The domestic promotion of consistency evaluation and the return of some formulation experts from abroad to advocate for medical reform are significant. It is believed that in the future, China's generic drug technology will improve rapidly, and technical issues will not hinder the internationalization of Chinese generic drugs.

 

　　What hinders the internationalization of Chinese generic drugs are market sales and other factors. If a company only has one or two varieties with ANDA approval, it faces huge R&D cost investments while achieving little in the U.S. market, as U.S. agents will not engage with companies that only have one or two varieties. In this case, obtaining an ANDA in the U.S. becomes just a gimmick, which is a concerning issue.

 

　　Article 15

 

　　This item is for effective publicity and guidance. Although the 'Opinions' clearly state that publicity should be directed at the public, I believe that the most important aspect is educating healthcare workers since many ordinary people have no concept of which medications to use.

 

 

　　>>>> Related Reading

 

　　The State Council General Office's Opinions on Reforming and Improving Policies for Ensuring Supply and Use of Generic Drugs (Document No. 20 [2018]) (Full Text)

 

　　People's governments of provinces, autonomous regions, and municipalities directly under the central government; ministries and commissions of the State Council; institutions directly under the State Council:

 

　　In order to implement the spirit of the 19th National Congress of the Communist Party and the work deployment by the Central Committee and State Council on promoting health in China and deepening medical reform, to promote R&D for generic drugs, enhance their quality and efficacy, improve drug supply assurance capabilities, better meet clinical medication needs and public health safety requirements, accelerate China's transition from a major pharmaceutical country to a strong pharmaceutical country, with approval from the State Council, we now propose the following opinions.

 

　　1. Promote R&D for generic drugs

 

　　(1)Develop a catalog of drugs encouraged for replication. Establish an inter-departmental information sharing mechanism for drug production and use to strengthen monitoring of drug supply assurance and usage information; timely grasp and publish drug supply-demand situations to guide enterprises in R&D, registration, and production. Demand-oriented encouragement should be given for replicating clinically essential drugs with proven efficacy that are in short supply; encourage replication of drugs needed for major infectious disease prevention/treatment as well as rare disease treatment; drugs required for handling public health emergencies; pediatric medications; as well as those whose patents expire within one year without registration applications being submitted yet. The catalog of encouraged replicated drugs will be developed by relevant departments including National Health Commission and National Medical Products Administration (NMPA), published regularly on platforms such as National Drug Supply Assurance Comprehensive Management Information Platform with dynamic adjustments implemented. Newly approved or those passing consistency evaluation regarding quality and efficacy will be included in China's listed drug catalog which will be updated dynamically in real-time.

 

　　(2)Strengthen technological breakthroughs in generic drugs. Key chemical medicines within encouraged replicated drug catalogs should be included in national science technology plans focusing on common key technology research for biological medicines. Improve collaborative innovation mechanisms among industry-university-research-medical sectors; establish alliances focused on technological breakthroughs in generic medicines leveraging enterprises' leading roles along with foundational support from hospitals, research institutions, universities; strengthen collaboration on research & development between medicinal raw materials/excipients/packaging materials/formulations to promote organic connections between drug R&D chains and industrial chains. Actively introduce advanced international technologies to digest them before further enhancement.

 

　　(3)Improve intellectual property protection for pharmaceuticals. Following principles balancing encouragements between new drug creation and generic drug R&D equally while researching improvements suited to our economic development level & industrial stages regarding pharmaceutical intellectual property protection systems ensuring adequate balance between patent holders' rights & public interests is crucial. Implement patent quality enhancement projects cultivating more core pharmaceuticals intellectual properties/original intellectual properties/high-value intellectual properties while strengthening anti-monopoly enforcement within IP fields preventing abuse while promoting market entry for generics through establishing comprehensive patent early warning mechanisms reducing infringement risks faced by generic manufacturers.

 

　　2. Enhance quality efficacy of generics

 

　　(4)Accelerate consistency evaluation work regarding quality & efficacy among generics. Departments like NMPA/National Health Commission/Ministry of Science & Technology/Ministry of Industry & Information Technology/National Healthcare Security Administration must detail policies encouraging enterprises conducting evaluations swiftly advancing this work further releasing resources supporting qualified medical institutions/universities/research institutes/social testing organizations participating actively enhancing clinical trial enthusiasm among healthcare institutions/personnel especially focusing efforts on high-volume/high-cost varieties speeding up processes while taking targeted measures supporting essential low-cost varieties through improved procurement policies etc.

 

　　(5)Improve quality standards concerning medicinal raw materials/excipients/packaging materials organizing revisions/developments accordingly pushing enterprises enhancing their R&D utilizing new materials/new processes/new technologies improving overall standards through self-innovation capabilities actively introducing foreign advanced technologies driving upgrades breaking through key techniques like purification/quality control phasing out outdated technologies/capacities altering reliance upon imports meeting formulation quality demands while strengthening regulatory oversight publishing inspection/testing results periodically.

 

　　(6)'Enhance manufacturing process levels significantly improving pharmaceutical equipment/intelligent manufacturing levels boosting key equipment's research/manufacturing capabilities/performance promoting new technologies optimizing/improving process management reinforcing comprehensive quality control elevating critical process control levels addressing bottlenecks restricting product qualities advancing information-based construction over production quality controls achieving real-time online monitoring over production processes refining change management systems within enterprises.'

 

　　(7)'Strictly enforce review/approval standards deepening reforms surrounding these systems ensuring strict adherence towards reviewing approvals based upon principles aligning generics' qualities/effects consistently matching original products enhancing overall safety levels optimizing review processes increasing efficiency surrounding generics’ market entries prioritizing registrations linked towards compulsory licensing/supportive projects etc., NMPA must refine technical standards/guidelines surrounding applications.'

 

　　(8)'Strengthen regulatory oversight over pharmaceutical qualities accelerating establishment covering entire lifecycle management/tracing systems reinforcing supervision checks across development/manufacturing/distribution/use phases intensifying adverse reaction monitoring/quality sampling strictly investigating data falsification/cutting corners/mixing substandard products enforcing accountability publicly disclosing inspection/punishment outcomes.'

 

　　3. Improve supportive policies

 

　　(9)Timely inclusion in the procurement catalog. Drug centralized procurement agencies should compile procurement catalogs according to the generic names of drugs, promoting equal competition between generic drugs that are consistent in quality and efficacy with original research drugs. For newly approved generic drugs, relevant departments should promptly prepare drug procurement codes for public medical institutions. If the corresponding generic name drug is already in the drug procurement catalog, the drug centralized procurement agency should promptly initiate the procurement process; if the corresponding generic name drug is not in the drug procurement catalog, from the date of approval for marketing, the drug centralized procurement agency should promptly evaluate and actively include it in the drug procurement catalog. Drugs subject to compulsory licensing by the state shall be unconditionally included in local drug procurement catalogs.

 

　　(10)Promote the substitution of generic drugs. Include generic drugs that are consistent in quality and efficacy with original research drugs in a directory of interchangeable drugs with original research drugs, clearly indicating this on labels and instructions, and timely publish relevant information to facilitate choices for medical personnel and patients. Health departments should strengthen pharmaceutical management, formulate policies and incentives to encourage the use of generic drugs, and increase supervision over clinical medication. Strictly implement requirements for prescriptions to be issued by generic names; except for special circumstances, brand names must not appear on prescriptions as specified by health departments. Implement a prescription review system to strengthen assessments of reasonable medication use in medical institutions, publicly disclose prescribers of unreasonable medications, and establish a consultation system. Strengthen pharmacists' roles in prescription review and medication dispensing. When providing medications to patients with AIDS or tuberculosis as required, prioritize purchasing and using generic drugs.

 

　　(11)Leverage basic medical insurance's incentive role. Accelerate the formulation of payment standards for insured medications so that both original research drugs and their equivalent generics are paid at the same standard. Establish a dynamic adjustment mechanism for basic medical insurance drug catalogs to timely include eligible medications. For medications listed in basic medical insurance catalogs, restrictions based on brand names or manufacturers are not allowed; update insurance information systems promptly to ensure that approved generics are equally included within insurance payment scopes. Encourage medical institutions to use generics through an incentive constraint mechanism linked to insurance payments.

 

　　(12)Clarify pathways for implementing compulsory licensing of pharmaceutical patents. Classify implementation of compulsory licensing according to law to improve accessibility of medicines. Encourage patent holders to implement voluntary licenses. Units or individuals meeting conditions for compulsory licensing may legally submit requests to the National Intellectual Property Administration (NIPA). In cases of major infectious disease outbreaks or other public health emergencies causing severe threats to public health due to shortages of essential medicines, evaluations will be conducted by relevant departments including NIPA upon recommendations from National Health Commission along with Ministry of Industry and Information Technology (MIIT) and National Medical Products Administration (NMPA), leading NIPA to make decisions regarding granting or rejecting compulsory licenses.

 

　　(13)Formulate budgetary incentives and pricing policies. Gradually improve preferential policies where R&D expenses incurred by generic companies developing new technologies, products, or processes can be deducted from taxable income according to regulations if they meet certain criteria. Generic companies recognized as emerging enterprises will be taxed at a reduced rate of 15%. The National Development and Reform Commission (NDRC), MIIT, among other departments should increase support efforts for process upgrades at generic companies while encouraging local governments to implement supportive policies aimed at transforming and upgrading the generic industry further enhancing support measures.

 

　　(14)Promote internationalization of the generic pharmaceutical industry. In conjunction with significant breakthroughs under 'Belt and Road' initiatives, enhance exchanges with relevant international organizations and countries while accelerating internationalization steps related to pharmaceutical R&D, registration, market launch sales processes. Support enterprises engaging in international capacity cooperation while establishing cross-border R&D collaboration platforms; actively introduce advanced management experiences along with key technological processes while encouraging foreign enterprises gradually establish R&D centers as well as production bases.

 

　　(15)Conduct effective publicity guidance. Departments such as health care regulation must effectively communicate policy interpretations while disseminating knowledge about pharmaceuticals alongside related information aimed at boosting public confidence towards domestically produced generics; enhance educational outreach targeting healthcare professionals aimed at changing unreasonable medication habits while improving rational medication levels thereby promoting substitution usage among generics.

 

　　Reformulating comprehensive supply assurance policies alongside usage strategies concerning generics directly impacts public safety regarding medication alongside healthy development within pharmaceutical industries; all regions along with respective departments must strengthen organizational leadership while tailoring practical work plans alongside supporting details ensuring accountability mechanisms are solidified requiring tangible results through assessments thereby advancing reforms steadily ensuring effective implementation.

 

　　General Office of The State Council

　　March 21st, 2018