Protection of Pharmaceuticals in China

Published in National Law Journal, September 1999 by Laura W. Young

For many years China's authorities considered the best means to protect the health of its citizens was to encourage the dissemination of medicines, and therefore prohibit any monopolies on pharmaceutical products. Thus the Patent Law of China specifically excluded pharmaceuticals. However, as part of a massive reform of its entire intellectual property regime in order to enter the World Trade Organization, China revised its patent law and created other laws and systems to protect pharmaceuticals and chemical products. These protections are intended to encourage foreign companies to enter the Chinese market and transfer foreign pharmaceutical technology.

Therefore, under the current regime in China, pharmaceutical makers can protect their products with a varied arsenal of laws and regulations, including intellectual property laws, and pharmaceutical protection laws and regulations. Among these are the 1995 Trade Secrets Law, the 1992 Patent Law, and the 1993 Pharmaceutical Protection Act. The Act specifically targets foreign pharmaceuticals and related technology. In addition to taking advantage of protective measures, pharmaceutical companies must abide by specific pharmaceutical industry regulations. Foreign drugs to be imported into China must qualify under the Rules on Imported Medicines, which list the specific documents needed for obtaining a permit to import medicines. All medicines distributed in China must obtain a distribution permit from the State Pharmaceutical Administration.

While a review of the laws and regulations may create the impression that China's medicine market is very restrictive, that is somewhat belied by the comparatively lax traditional attitude towards dispensing medicines in China. Traditionally, a visit to the doctor concludes with the nurse handing the patient a bag of packets of customized daily doses of medicine. The packets are generally not labeled, and patients are not encouraged to inquire about the dosage. Each day's dose may contain as many from three to seven different pills that the patient should take daily. Unfortunately, there is little attention paid to drug allergies or drug interactions. These habits have carried down from China's traditional medical practices in which various herbs are blended together, and given to the patient to boil into a brew. Even today's modern hospitals in China derive most of their income from dispensing medicines. In this context, foreign pharmaceutical companies want a predictable set of rules protecting their products while they try to enter this very foreign market.

I. Patent Law

China's current Patent Law, promulgated in 1992, treats pharmaceuticals like any other patentable item. Nevertheless, the categories "methods of treatment of diseases" and "scientific discoveries" are still prohibited from patent protection. (Patent Law, Article 25.) These exceptions have not been invoked against pharmaceutical product patents, and they are interpreted as prohibiting a monopoly on techniques of surgery or other patient treatment, or scientific experiments, not on the manufacture of pharmaceuticals that result from scientific discovery or that may be used as part of a patient treatment protocol.

The Patent Law has been revised so that it is generally in conformity with TRIPs, granting a twenty year term for patent of inventions, allowing review of patent rejections, and other administrative provisions (Patent Law, Articles 45, and 43). In addition, the law allows priority applications on a reciprocal basis with other nations, invalidations by any person, and recognizes works-for-hire as belonging to the employing entity (Patent Law Articles 29, 48 and 6). However, contrary to the requirements of TRIPs there is no judicial level of review for Patent appellate decisions. The final level of appeal is the Patent Reexamination Board. (Patent Law, Article 43.)