[Contribution] The intersection of approval and patent with a focus on the pharmaceutical approval and patent linking system

Pharmaceutical product approval is governed by the Pharmaceutical Affairs Act and patents are separate concepts governed by the Patent Act, but in practice, the two are closely linked. Below, we will provide an overview of the patent system and the pharmaceutical product approval process and explain how they are linked.

1. What is a patent?

A patent is an intellectual property right system that legally protects inventors so that they can exclusively practice their inventions for a certain period of time. Korea's patent law stipulates inventions with 'industrial applicability', 'novelty', and 'inventive step' as patent requirements, and gives registered patents strong exclusive effect to prevent unauthorized use by third parties.

According to various studies, drug prices plummet by more than 70-80% after patent expiration. Therefore, in the pharmaceutical industry, patent rights are a key means of recovering enormous development costs. Patents, which cost hundreds of billions of won to develop a new drug, can be said to be a factor directly related to the survival of a company.

2. What is the drug approval and patent linkage system?

This system connects patents and drug product approvals to protect the patent rights of original drugs and at the same time promotes the legal entry of generics. Korea’s licensed patent linkage system consists of the following three axes:

① Patent registration: When the original company applies for product approval, the relevant patent can be registered with the Ministry of Food and Drug Safety. These patents are taken into consideration when generic companies apply for product approval.

② Notification system and sales ban: Generic developers are obligated to notify the original company when applying for permission, and if it is determined that there is a risk of patent infringement, the original company can apply for a sales ban.

③ Priority sales product approval: The first generic company to successfully evade a patent can sell it exclusively for 9 months. This acts as a device to encourage generic development.

3. From patent application to registration, duration and extension

The general flow of patent registration is as follows:

① Filing: Submit the details of the invention along with the specification to the Korean Intellectual Property Office.

② Examination and registration decision: After filing the application, the application enters the examination stage. At this time, the patent office examiner determines whether the patent requirements are met, and if it is determined to be a valid patent, it is registered.

③ Duration of existence: It lasts for 20 years from the date of application, and in the case of pharmaceutical patents, the duration can be extended for up to 5 years by reflecting the ‘permission delay period’.

Pharmaceutical patents are usually filed early in development, before or after preclinical or phase 1 clinical trials. As explained earlier, strong exclusive effect is recognized in registered patents.

4. Drug item approval: Clinical trials from phase 1 to phase 3

General industrial products can be manufactured and sold freely. However, in the pharmaceutical industry, only drugs that have received ‘item approval’ after passing phase 1 to 3 clinical trials can be sold. In other words, there is a strong hurdle called ‘approval’ in the pharmaceutical market.

5. How patents and permits are linked

In the drug development process, a patent for the 'target material' is generally applied first, and then approval is obtained through clinical trials. These two processes are linked in the following way.

Patents are a means of protection, and licensing is a means of entering the market. No matter how great a patent you have, you cannot sell it without permission, and conversely, even if you have permission, if you do not apply for a patent and there is no exclusive right or the patent has expired, you cannot make a profit.

Even when a generic company launches a generic drug after the original company launches a product, approval and patent are linked. It is common for generic companies to analyze the original company's patents and establish an avoidance strategy (claim invalidity or non-infringement). Afterwards, if avoidance is deemed possible, the generic company will apply for drug product approval, and according to the patent system (license-patent linking system), the generic company must notify the patent holder of the approval application. At this time, if the original company applies for a sales ban, the Ministry of Food and Drug Safety may delay the entry of generics for a certain period of time.

Conversely, there is also a system in which generic companies attack original companies. The priority sales product licensing system is an incentive to encourage patent avoidance. If a generic company successfully evades a patent, it will benefit from exclusive sales rights for a certain period of time.

6. Conclusion

It is no exaggeration to say that the success or failure of new drug development or generic drug development depends on ‘how to devise a patent strategy to recover the costs of new drug development,’ ‘whether a valid patent exists at the time of approval,’ and ‘whether that patent can be avoided.’ Therefore, I conclude by emphasizing that pharmaceutical companies must not only consider the simple approval process but also have a complex response strategy that includes patent strategy.


|Contribution| Lee Il-hyeong, attorney at Daeryun Pharmaceutical Bio Healthcare Center

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[Contribution] The intersection of approval and patent with a focus on the pharmaceutical approval and patent linkage system