China Issues Rules On Breaking Pharmaceutical Patents

China’s State Intellectual Property Office has issued guidelines clarifying when and how China may compel a patent to be licensed. Although the move is not specifically aimed at pharmaceutical patents, compulsory licensing is typically used to facilitate access to lifesaving drugs.

Coming a few months after India allowed a local company to break Bayer’s patent on Nexavar, a liver and kidney cancer treatment (C&EN, May 7, page 18), China’s move highlights the risks associated with marketing pharmaceuticals in two of the world’s most buoyant emerging markets.

The World Trade Organization condones compulsory licensing of pharmaceutical patents when member countries face a health emergency and the patent holder is unable to supply enough drugs to satisfy patient needs. Under WTO rules, a company applying for a compulsory license must first try to negotiate a voluntary license with the patent holder. In the Nexavar case, the Indian firm, Natco Pharma, is paying Bayer a 6% royalty on sales.

“Considering what recently happened in India, I imagine that the new rules will make large pharmaceutical companies nervous,” says Tommy Lin, director of intellectual property at HEC Pharm, a drugmaker based in Dongguan, in southern China. “But China has had broad rules on this since 1993. This is just providing details on how the rules can be implemented.”

China will resort to compulsory licensing only if it faces a health emergency, Lin believes. “I don’t think China has any immediate intention to force-license a patented drug,” he says. If China did proceed with compulsory licensing, Lin adds, drugs that treat cancer, HIV, and hepatitis would be the most likely targets.

The grounds on which a compulsory license may be deemed acceptable are broad. The new guidelines consider national emergencies, extraordinary circumstances, and China’s national interest to be valid reasons for presenting a request for compulsory license.