The application of Bolar exceptions and the definition of “offer to sell” have long been contentious issues in the pharmaceutical industry in China.
Article 11 of the Chinese Patent Law prohibits any entity or individual from making, using, offering to sell, selling, or importing a patented product for production or business purposes.
This means that actions aimed at commercial exploitation of a patented invention can be considered as “offer to sell” and constitute patent infringement. Determining whether a particular action constitutes “offer to sell” is always a central focus when it comes to enforcing pharmaceutical patents.
How “offer to sell” is defined in China
In ruling on disputes involving Boehringer Ingelheim Pharma GmbH & Co. KG and HEC (Guang Dong)[1] in 2022, the China National Intellectual Property Administration (CNIPA) clarified that displaying a drug online for sale does not constitute Bolar exception and meets the definition of “offer to sale” under Article 11 of the Chinese Patent Law.
Recently, a further case involving HEC (Guang Dong), a generic drug company, and Merck Sharp & Dohme (MSD), an innovative pharmaceutical company, provided additional guidance on the nuances of “offer to sell” in China. The central issue of the case is whether applying to include a drug in the Medical Insurance Drug Catalogue (Catalogue) would be considered an “offer to sell” during the pendency of the patent term.
The Catalogue is a significant development in China’s healthcare system. To date, over 3900 medicines are included in the Catalogues which account for over 90% of the total expenditure on medicine purchases in public hospitals[2]. Being listed in the Catalogue can increase a drug’s prescription and utilization, as it becomes more accessible to patients through medical insurance coverage.
Overview of the HEC (Guang Dong) & Merck Sharp & Dohme (MSD) dispute
The case focuses on the drug Sitagliptin, a selective DPP-IV enzyme inhibitor developed and patented by MSD for the treatment of type 2 diabetes.
HEC (Guang Dong) obtained production approvals for generic Sitagliptin phosphate tablets and Sitagliptin Metformin tablets (III) in 2020. Subsequently, HEC (Guang Dong) applied to have the Sitagliptin Metformin tablets (III) included in the Catalogue, which was approved by the National Healthcare Security Administration on August 17, 2020[3]. It is worth noting that HEC (Guang Dong) withdrew the application in November 2020, and the drugs were not present in the Catalogue published on December 25, 2020.
As the patents holder, MSD believed that application for the inclusion of Sitagliptin Metformin Tablets (III) in the Catalogue constituted “offer to sell”, thereby infringing on MSD’s two patents (CN02813558.X and CN200480017544.3). The first instance Court ruled that HEC (Guang Dong)’s action did not constitute “offer to sell” and rejected MSD’s request, and the Supreme Court upheld this decision[4].
The Supreme Court’s reasoning was that the stipulation and adjustment of the Catalogue does not involve drug purchases, and the National Healthcare Security Administration is not a market entity for drug transactions. Further, the Supreme Court declared that the Medical Insurance Drug Catalogue is a list of common drug names and the applying enterprises are anonymous which will prevent the public from knowing which company(s) sell a particular drug or the company from promoting the drug. Therefore, applying a drug to be included in the Catalogue shall not be regarded as “offer to sell” and does not infringe on MSD’s patent rights.
Why this decision is important
This ruling highlights the delicate balance between protecting intellectual property rights and ensuring the timely availability of affordable medicines for patients. It underscores the importance of carefully navigating the complexities of the Catalogue in China, where it is believed that the application for inclusion of a drug does not necessarily constitute “offer to sell”, but is rather a step towards enhancing access to essential medications.
How we can assist
Our teams on the ground in Hong Kong and Beijing are highly experienced in Chinese intellectual property law and take a proactive approach when communicating with Examiners.
Please reach out to the team for a confidential discussion of your circumstances.
[1] 【2021】Guo Zhi Bao Cai Zi No. 1, 【2021】Guo Zhi Bao Cai Zi No. 2
[2] https://www.gov.cn/lianbo/bumen/202404/content_6944662.htm
[3] (2020) Yue 73 Zhi Min Chu No. 1837
[4] (2022) Supreme Court, Rulings NO.1062 and NO. 1194