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[IP in Korea] 'Excessive regulations act as disincentive in pharma patent sector'

Pharma patent expert notes need to streamline regulations for Korean market

The Korea Herald is publishing a series of interviews on experts in the intellectual property sector. This is the 13th installment. -- Ed.


Due to its active trade relations with leading Western nations, South Korea has long been a frontrunner in introducing patent protection measures in various sectors, including the pharmaceuticals industry.

While such early adoption had the positive effect of stimulating the country’s intellectual property environment, it has also involved a number of excessive regulations, weighing down competent domestic drugmakers, according to a pharmaceuticals patent expert.

“In the process of negotiating and signing key trade deals over the past decades, Korea has adopted a number of Western systems that seek stronger protection for patent holders,” Kim Yoon-ho, patent department leader at Hanmi Pharm and chairman of the Korea Pharmaceutical Patent Institution, told The Korea Herald in an interview.

Kim Yoon-ho, patent department leader at Hanmi Pharm and chairman of the Korea Pharmaceutical Patent Institution (Park Hyun-koo/ The Korea Herald)
Kim Yoon-ho, patent department leader at Hanmi Pharm and chairman of the Korea Pharmaceutical Patent Institution (Park Hyun-koo/ The Korea Herald)

Among them is the patent-approval linkage system which, despite its purported role of facilitating early-stage resolution in pharmaceutical patent disputes, has mostly resulted in heightening the entry barrier for generic companies and consolidating the market monopoly by global companies, according to Kim.

The comprehensive system, which took full effect in March 2015 as the result of the Korea-US Free Trade Agreement, grants nine-month marketing exclusivity to the first generic that challenges a listed patent.

The system was originally designed as a win-win strategy, keeping original companies notified of all ongoing generic approval applications and offering generic companies incentives to make patent challenges and consequently lower medicine prices.

The dilemma, according to Kim, is that it is better suited for the American drug market than that of Korea.

“In the US market, the survival of original companies often depends on the pre-emptive deterrence of generics,” Kim said.

Due to the country‘s private health insurance system, it typically takes less than six months for a new generic drug to attain 90 percent in market share, as private insurers naturally pick the cheaper alternative to the original medicine, according to the pharmaceuticals expert.

“Original companies could, of course, file a lawsuit in complaint, but the problem is that the average period spent at the lower court lingers around 30 months, which is more than enough time for generic competitors to outrun their original rivals,” he said.

“This is why the US pharmaceuticals industry came up with the patent-approval linkage, seeking to put on the brakes (of generic competition) at the product approval stage.”

Kim Yoon-ho, patent department leader at Hanmi Pharm and chairman of the Korea Pharmaceutical Patent Institution (Park Hyun-koo/The Korea Herald)
Kim Yoon-ho, patent department leader at Hanmi Pharm and chairman of the Korea Pharmaceutical Patent Institution (Park Hyun-koo/The Korea Herald)

The patent-approval linkage approach, however, is an excessive regulation, as regulatory approval should clearly be differentiated from patent issues, Kim said.

“Also, South Korea had little need for such a measure, as its patent trials are much faster, taking around nine months in average,” he added.

“While acknowledging the need for regulations to a certain extent, I believe that there should be more room for free market competition.”

Another problem, according to Kim, is that affiliated rules require generic companies to file a challenge within 14 days from the first-filed action, a deadline that tends to drive an excessive number of companies to legal actions.

“Quite often, small drugmakers would hastily join in the lawsuit amid the pressing schedule, without even considering the plausibility or profitability of the corresponding generic medicine. Many of them end up dropping the charges midway, creating unnecessary market confusion,” he said.

As a result of such overcrowded litigation, the defending original company would be burdened by high litigation costs, while aspiring generic companies would have little to gain from the victory, as they are to share the market exclusivity with other litigants.

“In a recent case, UK-based global pharmaceuticals company AstraZeneca faced 35 generic counterparts over a hyperlipidemia medicine and simply gave up its appeal (to the Patent Court) due to excessive costs,” Kim explained.

“This was noted as a rare case, as global patent holders tend to take their cases all the way to the Supreme Court to firm up their patent rights.”

It is also one of the core goals of the KPPI to address these growing market disputes and achieve the balanced growth of original patent holders and challenging generics, the chairman added.

In April last year, the KPPI celebrated its 30th anniversary as the nation’s only civic organization specializing in pharmaceutical patent issues.

“Now that the focus of the patent sector is shifting from information technology to pharmaceuticals, we will keep a closer watch on incumbent patent disputes, seeking to provide the industry with fresh momentum through IP.”

By Bae Hyun-jung(tellme@heraldcorp.com)



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