Patent-Drug Approval Linkage in Korea under Korea-U.S. FTA - Based on Comparative Study on U.S. Hatch-Waxman Act and Canadian Patented Medicines (Notice of Compliance) Regulation

As the Korea-U.S. FTA went into effect on March 15, 2012, the “Patent-Drug Approval linkage” system has been introduced to Korea. The Patent-Drug approval linkage refers to the system or process by which a country links drug marketing approval to the status of patent(s) of an original drug product. Apparently, the objectives of these two areas of regulation are completely different from each other – the patent system aims to reward people for discovery or development of new inventions whereas the drug approval regulation pursues to ensure the efficacy and safety of drugs for public health. Under this linkage mechanism, through the communication between the Patent Office and the Drug Approval Authorization, a generic marketing approval relying on the safety and efficacy data of the original drug product is not allowed until the patent covering the original drug expires. Before the introduction of this linkage system in Korea, regardless of the existence of a patent right covering the original drug product, generic companies were freely allowed to apply and obtain a marketing approval from the Korea Food and Drug Administration, since the Korean drug approval authority did not take into account the patent status in the marketing approval process. Upon the market approval, the typical procedure was that the original drug company and/or the patentee sue the generic company for patent infringement, which is then followed by a separate invalidation action against the original drug patent by the generic company, whereby the two procedures are separately carried out according to the so-called bifurcation system. Only when a court or a tribunal board confirmed that the drug covered by the marketing approval infringes a patent, the marketing approval for the generic drug could be ex post facto cancelled. Now, upon the introduction of the Patent-Drug approval linkage system, a generic company cannot market its product without obtaining consent of a patent owner before the expiration of relevant patent rights listed by the Korea Food and Drug Administration. Specifically, under Article 18.9.5 of the Korea-U.S. FTA, the Korean government is obligated to notify the patent owner of the identity of any other person requesting the marketing approval based on the safety or efficacy data submitted by the patent owner, i.e., original drug maker, before the marketing approval of the generic drug. Further, this Article obligates the Korean government to implement measures in the marketing approval process, to prevent the other person, i.e., generic drug maker, from marketing a drug without the consent or acquiescence of the patent owner whose patent(s) covering the drug is valid and in force. The Patent-Drug approval linkage system was firstly introduced in the U.S. as a part of the Drug Price Competition and Patent Term Restoration Act of 1984, which is popularly known as the “Hatch-Waxman Act,” immediately following the 1984 Federal Circuit opinion in Roche v. Bolar case. In 1993, Canada also adopted this system under the North American Free Trade Agreement and implemented the Canadian Patented Medicines (Notice of Compliance) Regulations. However, both countries have amended their systems a couple of times after having experienced unexpected results such as listing of improper patents, misuse of automatic stays, multiple filings of generic application, settlement for delay of generics entry, and so on. Therefore, it appears necessary to discuss any potential problems which might occur after the introduction of the Patent-Drug approval linkage system in Korea, as well as solutions therefor, in light of the experiences of the U.S. and Canada. Hence, this paper aims, in the light of the lessons obtained from the experiences of the U.S. and Canada with regard to the Patent-Drug approval linkage system, to discuss and propose adequate measures and legislations, by which original drug companies as well as generic companies can be benefited in a balanced way under the newly introduced Patent-Drug approval linkage system.

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