The Patent Linkage System in Chile
By Moeller IP Advisors
Research and Development of pharmaceutical products is an extremely capital intensive activity. It takes an average 10 of years for a new drug to be developed, tested and commercialized; only one out of five thousand drugs are approved for human testing and among these, only one out of five makes it to the market.
For this reasons, pharmaceutical companies try to maximize their profit by leveraging patents strategically: one of these strategies is patent linkage.
Through patent linkage, generic drug manufacturers are denied marketing approval for a generic drug until the expiration of the relevant patent pending on the proprietary drug.
The US-Chile Free Trade Agreement and the Patent Linkage Bill
The principle of patent linkage is acknowledged by the US system: generics are not granted marketing approval by the FDA unless the original patents have expired.
Chile has signed a Free Trade Agreement with the United States that entered into force in 2004. According to article 17.10, each signatory agreed not “to grant marketing approval to any third party prior to the expiration of the patent term, unless by consent or acquiescence of the patent owner”.
In Chile, the Institute of Public Health (ISP), is responsible for granting marketing approvals to newly patented drugs or generics; the ISP, however, does not verify if a patent is still pending when granting a marketing authorization to a generic. This is clearly not in compliance with the requirements of the FTA.
Moreover, given the lengthy judicial process required for companies to demonstrate a patent infringement in Chile, legitimate patent holders have difficulties reaching an efficient protection.
The Congress has been discussing amendments to the Chilean Industrial Property Law since 2012. In the bill, a patent linkage system has been formally created: the ISP becomes responsible not only for maintaining a registry of patented active principles, but for denying marketing approval to drugs that contain one or more of these principles. The combination of these two new functions – maintaining a public patent registry and suspending the registration process when necessary – is what is known as “linkage”.
The bill also introduces a fast procedure in case of patent infringements: the judge can grant a preliminary injunction without a thorough examination of the merit, and it is enough for the patent holders to certify that their patent covers the same active principles of the infringing drug.
Since 2012, Chilean pharmaceutical companies have been strongly opposing the bill, claiming that it would raise the price of pharmaceuticals for the consumers.
A group of senators belonging to the Senate Health Commission also filed a complaint with the Constitutional Court of Chile alleging that the bill was unconstitutional as it would introduce a non-merit based preliminary injunction only eligible for pharmaceutical patent holders.
In 2013, however, the Constitutional Court ruled that the bill does not raise any constitutional concerns.
Since then no progress has been made, and in 2018, Chile once again appeared on the Priority Watch List of the USTR 301 Special Report.
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