China changes patent laws to get cheap drugs
China has overhauled parts of its intellectual property law to allow its domestic pharmaceutical industry to make low-cost versions of medicines under patent protection.
In a step that is likely to unnerve global drugmakers, China has overhauled parts of its intellectual property law to allow its domestic pharmaceutical industry to make low-cost versions of medicines under patent protection, Reuters reports. The amended Chinese patent law allows Beijing to issue compulsory licenses to eligible companies to produce generic versions of patented drugs during state emergencies, unusual circumstances or in the public interest.
“The revised version of Measures for the Compulsory Licensing for Patent Implementation came into effect from May 1, 2012,” China’s State Intellectual Property Office said in a statement faxed to the news service. To protect public health, drugmakers can also ask to export these medicines to other countries. Under World Trade Organization rules, compulsory licenses can be issued in certain instances where life-saving treatments are deemed unaffordable.
The move, Reuters writes, was apparently first disclosed at a seminar last month, according to Bob Verbruggen, a senior advisor to the UNAIDS Asia Pacific Office, who was in attendance. “China is considering further strengthening its legal framework, so as to make use of legal space to produce generic drugs,” he tells Reuters. “China’s action plan at the workshop seemed to confirm that it intends to become a generic producer for the domestic and international market.”
The action by China comes three months after a similar step was taken by India, where the Patent Office for the first time granted a generic drugmaker a compulsory license to make a copycat version of a patented medicine. The license was awarded to Natco, which can now make a generic of a Bayer kidney and liver cancer medication called Nexavar, although only for domestic distribution. Bayer is challenging the ruling (read here and here).
The timing, though, reflects long-standing Chinese government interest in how other countries have handled intellectual property dispute with global drugmakers and, specifically, the ramifications of issuing compulsory licenses. Thailand, for instance, has issued several such licenses, occassionally sparking rows with drugmakers – notably, Abbott Laboratories – but has forged ahead with few apparent consequences, although the US Trade Rep did place the country on its Priority Watch list of intellectual property concerns (here is some background and the US Trade Rep list).
Meanwhile, the Chinese government has belatedly acknowledged a growing AIDS problem and, consequently, has been eager to acquire HIV meds, particularly the Viread pill made by Gilead Sciences, according to Reuters, which notes that the drug is recommended by the WHO as part of a first-line cocktail treatment. The drugmaker agreed to share patent rights in a patent pool with generic drugmakers from several countries last July in return for a small royalty (read this), but China was not part of the agreement and, Reuters points out, had to continue paying high prices for Viread.
Since the recent change in the patent law, Gilead has offered China certain concessions, such as offering what was described as a substantial donation of Viread if the government continues to buy an equivalent amount, Paul Cawthorne, coordinator for Medecins Sans Frontieres’ Access Campaign in Asia, tells Reuters. “This is all a negotiation game; this offer from Gilead came about once the news that the Chinese was considering issuing a CL came out,” he tells the news service. “The end game is okay, you get a better deal or you use the CL, it’s a strategy that many countries use.”
China, of course, is well-positioned to make lower-cost generics, since there are numerous companies that already produce active pharmaceutical ingredients for domestic and global drugmakers. This is one more reason that global drugmakers are likely to be alarmed by the change in patent laws – there is a formidable supply of needed parts that is always on standby. Meanwhile, we have asked Gilead for a comment and will update you accordingly.
By Ed Silverman