Patent disputes frequently arise in drug centralized procurement: How can the "Beijing Plan" prevent infringement by generic drugs?

On the 27th, the “Several Measures of Beijing to Strengthen the Protection of Intellectual Property Rights for Innovative Medicines and Drugs” (hereinafter referred to as the “Several Measures”), jointly formulated by multiple departments including the Beijing Municipal Medical Insurance Bureau, the Beijing Municipal Intellectual Property Office, and the Beijing Municipal Drug Administration, was released to the public during the “Forum on Regulatory Science and High-Quality Development of Biopharmaceuticals” at the 2026 Zhongguancun Forum annual conference.

In recent years, as centralized drug procurement has expanded in coverage and competition in the pharmaceutical industry has intensified, the number of patent dispute cases between original research drug companies and generic drug companies has increased significantly. Incidents involving large-scale takedowns from procurement networks or cancellation of centralized procurement qualifications due to patent infringement have also occurred from time to time.

To strengthen the precision and timeliness of intellectual property protection for pharmaceuticals, it is necessary to further break down departmental barriers and increase the cost of infringement.

Beijing moves first. According to the Several Measures, Beijing will focus on key and difficult issues in intellectual property protection across such stages as the review and approval of pharmaceutical products, listing on procurement platforms, and procurement. It will establish an inter-departmental consultation mechanism for the protection of intellectual property rights for innovative medicines and drugs, implement joint credit punishments, and at the same time open a green channel for eligible innovative drugs to promote their rapid listing on procurement platforms.

Why does “takedown after the fact” keep happening?

From 2022, when a company in eastern Guangdong had a ligliptin tablet determined by the National Intellectual Property Administration to constitute patent infringement—becoming the first typical case of large-scale takedown due to patent disputes—to last year, when the related products involving indobufen were successively taken down in Shanghai, Henan, and other places based on administrative rulings on intellectual property in Hangzhou and court judgments, and even had centralized procurement qualifications paused, patent infringement cases in the pharmaceutical sector have continued unabated.

Frequent occurrences of “takedown after the fact” and “temporary suspension of centralized procurement,” are related to insufficient timeliness and precision in inter-departmental coordination. On the one hand, when generic drug companies apply for generic drugs, if they make three types of declarations (commitment not to launch during the patent term), the medical insurance listing system may be unable to automatically identify them. On the other hand, the results of patent dispute rulings by the judicial authorities may also fail to be linked in real time with centralized procurement.

The Patent Law, implemented in China on June 1, 2021, formally incorporated into law the drug patent linkage system and introduced an early dispute resolution mechanism for drug patents. Under this system, original research drug companies must register relevant exclusive patents, such as patents related to the active pharmaceutical ingredient (API), for the new drug obtained on the drug patent information registration platform for listed drugs in China. Generic drug companies, according to the needs of pre-listing review and approval, should issue patent declarations to the corresponding original research patents registered on that platform and are responsible for the truth and accuracy of those declarations.

In theory, the drug patent linkage system can resolve generic drug patent infringement issues before listing. However, if a generic drug company applicant makes “three types of declarations” during the drug review and approval process—namely, committing that the generic drug applied for will not be marketed prior to the expiration of the corresponding patent right’s validity period—the drug regulatory system is only responsible for approval and does not automatically block listing on procurement platforms. This leaves hidden risks of intellectual property infringement in the drug circulation stage.

At the same time, the core and peripheral patents of original research drug companies may also face “patent challenges” brought by multiple generic drug companies. Because patent litigation cycles are long, the process of proving patent validity is complex, and the window period for centralized procurement is short, original research drug companies may also face the predicament of “winning the case but losing the market.”

Against this backdrop, the “Opinions on Strengthening Intellectual Property Protection in the Field of Centralized Drug Procurement” (hereinafter referred to as the “Opinions”), issued by the National Intellectual Property Administration and the National Healthcare Security Administration in 2023, has clearly stated that in the process of centralized volume-based procurement or procurement through listing, if a patent infringement dispute arises, the healthcare security department should guide the centralized drug procurement institution to not list the involved products that are being submitted for listing on the application platform, based on the administrative rulings recognizing infringement by the intellectual property management department or on effective judgments of the people’s courts. For products that have already been listed on the platform or selected in centralized volume-based procurement, it should assist in implementing the rulings and judgments promptly and take measures such as takedown from the network and cancellation of the selected qualification to stop infringement.

However, in the view of industry insiders, because infringement costs are low and inter-departmental coordination is insufficient, some generic drug companies still see room for opportunism—using the time gap between listing, platform listing, and rulings to obtain phased market benefits. This in turn impacts fair competition in the market and the companies’ incentives to invest in R&D. When the clinical supply rhythm of a drug is disrupted, it will ultimately also affect patient benefits.

“The core driving force of generic drug companies lies in the game between commercial benefits and institutional risks.” Zhou Wei, deputy professor at the School of Law of Wuhan University and deputy director of the Research Center for Big Health Law Governance, explained to First Financial that generic drug companies generally hope to seize policy windows for the national centralized drug procurement program. Once they miss the time for platform listing or the submission for centralized procurement, even after a patent expires, it is difficult for them to obtain the same market share. This “head-start” motive leads some companies to be willing to bear infringement risk.

In Zhou Wei’s view, from the perspective of legal characterization, the act of drug platform listing has already been clearly determined as “promised sales,” because when companies publicly disclose product information and quotations on open procurement platforms, in essence they have already made an explicit sales intent to non-specified medical institutions, which meets the definition of “promised sales” under the Patent Law. Existing judicial rulings show that as long as such disclosure behavior exists during the patent validity period, even if actual sales occur after the patent term expires, the act of platform listing itself still constitutes infringement.

“Beijing’s solution”: Establish an inter-departmental information sharing mechanism and strengthen joint credit sanctions

Under ideal circumstances, as long as original research drug companies can prove that their R&D products have patents registered on the drug regulatory filing platform and that, on the intellectual property side, those patents have not been proven invalid, the medical insurance side should promptly “intercept” the relevant generic drugs. This would prevent some generics with patent disputes from entering the procurement market, and even the centralized procurement market.

To prevent infringement from the source, the aforementioned Opinions issued in 2023 proposed that “the National Intellectual Property Administration and the National Healthcare Security Administration establish an inter-ministerial coordination and consultation mechanism for the protection of intellectual property rights in the pharmaceutical field. According to work needs, meetings will be organized to propose relevant countermeasures and measures regarding key and hot issues in intellectual property protection in the pharmaceutical field.” However, that Opinions did not impose strong requirements on a regular cross-departmental communication mechanism at the local level, and encouraged to “actively broaden.”

According to the Several Measures, Beijing will establish an inter-departmental consultation mechanism for the protection of intellectual property rights for innovative medicines and drugs.

At the same time, the localized optimization direction for Beijing also explicitly proposes cross-departmental information sharing and the responsibility of the medical insurance bureau for risk early warning: it will establish an information sharing mechanism to share key information such as the results of intellectual property case handling, administrative ruling documents, effective court documents, the three types of declarations for drugs, drug prices, and招采信用 evaluation results. The healthcare security department will establish and improve screening and early warning mechanisms for intellectual property infringement risks in the field of centralized drug procurement.

In the future, the focus of Beijing’s joint analysis and policy consultations across departments will be “around key and difficult issues in intellectual property protection at such stages as the review and approval of pharmaceutical products, platform listing, and procurement—especially key products with larger procurement scale and higher attention, involving intellectual property risk.”

What is meant by “key products with a larger procurement scale and higher attention involving intellectual property risk,” according to Zhou Wei, mainly refers to drugs included in centralized procurement. As the main channel for public hospital drug procurement, centralized procurement has the characteristic of “trading volume for price.” Once a certain drug is included in centralized procurement, its market exclusivity will be directly affected. If generic drugs with infringement disputes during the patent term are allowed to participate in centralized procurement competition, it will not only weaken the patent protection that original research companies are entitled to under law, but may also cause centralized procurement to deviate from “full competition” into “infringement competition,” impacting the rule-of-law market order.

Commitments by enterprises and credit management will also be strengthened through departmental collaboration, to increase companies’ infringement costs and realize “infringement at one place, restrictions everywhere.”

According to the Several Measures, on the one hand, it will improve the enterprise-led platform listing self-commitment system. For those found to have violated commitments or made false commitments, they will be handled according to the drug pricing and centralized procurement credit evaluation system. On the other hand, cross-departmental joint disciplinary measures will be strengthened. For generic drug holders where patent infringement is recognized by administrative rulings of the intellectual property management department or by effective judgments of the people’s courts, and where—during drug platform listing and centralized volume-based procurement work—they are handled by the healthcare security department according to the drug pricing and centralized procurement credit evaluation system, the drug regulatory authority will include their relevant negative conduct in drug safety credit management and implement differentiated regulation.

Maintain fair market competition

The drug patent linkage system, in essence, balances the relationship between innovative drug companies and generic drug companies through a series of competition rules. In a fair competition environment, it is conducive to prompting pharmaceutical companies to compete compliantly and to guide social resources toward enterprises with stronger innovation capabilities.

Relevant officials from Beijing’s Medical Insurance Bureau also mentioned, during the Zhongguancun Forum, the background for the issuance of the Several Measures: strengthening intellectual property protection in the field of centralized drug procurement, preventing patent infringement risks, and protecting the lawful rights and interests of innovative pharmaceutical enterprises can optimize the business environment and stimulate industry vitality.

To promote original research and innovation by enterprises, according to the Several Measures, support will be provided for innovative drug platform listing transactions. For eligible innovative drugs, green channels will be opened to promote rapid platform listing of drugs and accelerate clinical application. Enterprises will be guided to proactively submit proof materials related to intellectual property during the platform listing process, clarify patent protection periods, and promote efficient transformation and application of innovative achievements.

To reduce companies’ costs of safeguarding rights, Beijing will also establish a coordinated mechanism for innovative medicines’ cross-regional patent preliminary examination services, so as to provide “one-stop” services including patent preliminary examination, rapid confirmation of rights, and rapid safeguarding of rights. At the same time, it will establish a fast-track for administrative rulings on patent infringement disputes in the field of centralized drug procurement.

In addition to judicial rights protection measures, relevant academic research shows that in China, the settlement rate for drug patent infringement cases is relatively high, reaching 46.3%.

The Several Measures also specifically mention “improving the mediation mechanism for intellectual property disputes.” Parties are encouraged to resolve patent disputes in a timely manner through self-settlement, administrative mediation, people’s mediation, and other methods, and to依法 protect the lawful rights and interests of patent right holders.

Zhou Wei’s analysis suggests that the reason the settlement rate of drug patent infringement cases is significantly higher than that of general patent cases mainly lies in the commercial structure and legal risk characteristics unique to the pharmaceutical sector:

First, original research drug companies and generic drug companies often reach “reverse payment settlement agreements,” that is, original research drug companies provide generic drug companies with certain benefits in exchange for delaying generic drug launch, in order to maintain the effectiveness of the patent and the market exclusivity position; generic drug companies, in turn, use this to avoid the uncertainty of invalidation declarations and obtain a definite上市 time for launch.

Second, the stability of drug patents—especially improvement-type patents such as those involving crystal forms and use—tends to be generally weaker. Once they enter the invalidation declaration procedure, there is a risk that the patents may be invalidated wholly or in part. For original research drug companies, out of consideration to preserve patents, they are also more inclined to settle.

Third, with increasingly strict antitrust enforcement, both sides, to avoid triggering antitrust investigations due to overly restricting competition, are also inclined to reach a settlement quickly within the legal framework.

(This article comes from First Financial)

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