The implementation of a free trade deal concluded with Korea – the EU’s tenth-largest trading partner – is well on the way, notes the European Commission. In 2009, Korea became the first Asian country to sign a free trade agreement (FTA) with the EU eliminating tariffs and non-tariff barriers in almost all products, including pharmaceuticals. The FTA has been in force since July 2011.
The EU is a net exporter of pharmaceuticals to Korea. The European Commission’s trade statistics show that in 2012 the EU’s pharma exports to Korea reached € 1,530 million whereas imports from Korea totaled € 124 million. In 2009, prior to conclusion of the FTA, the EU’s pharma exports to Korea totaled € 1,007 million and imports from Korea € 71 million. A Korean source observes that in the first 15 months after the FTA came into force, the EU’s top medical export to Korea was ‘drugs for retail sale’ while its most imported medical product from Korea was ‘ultrasound diagnostic devices’. (Source: KHIDI Brief Vol. 49 as published on November 19, 2012.)
In addition to tariffs, the EU-Korea FTA addresses a number of non-tariff issues impacting pharmaceuticals, notably intellectual property (IP) protection. The FTA includes a comprehensive chapter on this subject with important provisions on patent protection, as discussed below. Some of these provisions in fact reflect existing laws, while others represent new developments.
Patent term extension for a maximum of 5 years
Relevant to pharmaceuticals, the EU-Korea FTA obliges both sides to provide for the “extension of the duration of the rights conferred by the patent protection to compensate the patent owner for the reduction in the effective patent life as a result of the [marketing] authorisation” for a period not exceeding 5 years at the request of the patent owner.
In EU member countries, supplementary protection certificates (SPCs) are available for this purpose. Similarly, patent term extensions (PTEs) are available in Korea for medicinal or agrochemical inventions which are subject to safety and efficacy tests. A patentee can file a PTE application with the Korean Intellectual Property Office (KIPO) and, upon review by KIPO, the patent term can be extended by up to 5 years from the expiry of the basic term.
Data exclusivity for at least 5 years
The EU-Korea FTA ensures that safety and efficacy data submitted for the first marketing approval of a new drug are protected against unauthorized use by others for at least 5 years from the first marketing authorization obtained in the respective territory.
EU rules are in keeping with this approach: the so-called ‘8+2 (+1)’ formula for post-November 2005 reference products offers 8 years of data exclusivity + 2 years of marketing protection (+ 1 additional year if a new indication that brings significant clinical benefit is approved during the first 8 years of data exclusivity). Other types of exclusivity, e.g., for orphan drugs or drugs for pediatric use, are also available.
The approach in Korea is similarly in sync with the FTA. In an FTA negotiation briefing, the Korean government explained that the data exclusivity provision has been implemented in national law by requiring ‘post-marketing surveillance (PMS)’ for certain periods. The main purpose of PMS is to monitor any adverse events not identified during the previous clinical trial processes. While interpretations may differ, this requirement effectively gives data exclusivity for the duration of PMS as it appears unlikely that the regulator would grant another marketing authorization to a generic version of a drug for which the PMS is pending. Currently, the Korean Pharmaceutical Affairs Act requires:
|6 years of PMS for||4 years of PMS for|
(By comparison, the free trade agreement between Korea and the United States (“KORUS”) provides a minimum of 3 years of exclusivity for a known chemical entity, in addition to the minimum 5-year data exclusivity for a new drug.)
Drug patent-approval linkage: not in the EU-Korea free trade package but…
Korea is implementing ‘drug patent-approval linkage,’ as contained in KORUS. The drug patent-approval linkage connects a generic marketing authorization to the expiration of patents for the original drug. In other words, a generic drug cannot be sold in the market while the patent for the original drug is still valid. It should be noted that this provision does not exist in the EU-Korea FTA nor does EU law currently permit such linkage.
How is Korea adopting the patent-approval linkage system? Under the new system, a marketing authorization holder should submit related patent information to the MFDS so that the patent information can be included in the ‘Green List’ (an equivalent of the ‘Orange Book’ of the FDA in the United States). A generic applicant must notify the patentee and marketing authorization holder of its filing with the MFDS. If the patentee initiates legal proceedings against the generic applicant, the MFDS will suspend review of the generic application until the conclusion of the legal proceedings. (These preventive measures will be available after March 2015.)
As of May 2013, the Green List contains over 1,000 original drugs together with related patent information (http://medipatent.kfda.go.kr). It is currently available only in Korean, but the European Patent Office’s guidance on searching Korean IP databases can assist navigating patent information in the Green List.
*The author thanks colleagues Morag Peberdy, Sarah Cowlishaw, and Nancy B. Rohn for helpful comments. Any mistakes and omissions are solely the author’s.