During her visit to Taipei at the end of January, U.S. Deputy Assistant Secretary of Commerce Diane Farrell lauded the decision by the Taiwan government to establish a Patent Linkage system to help ensure that generic drugs cannot reach the market while the original product is still covered by a valid Taiwan patent. Farrell described this move to protect intellectual property rights on pharmaceutical products as an “enormous milestone” worthy of celebration.

AmCham Taipei shares that view. It has been nearly 12 years since the concept of Patent Linkage was first mentioned in the Chamber’s annual Taiwan White Paper. In that 2006 edition, the Pharmaceutical Committee called on the Department of Health (the precursor to today’s Ministry of Health and Welfare) to “recognize its vital role in patent protection in the drug-approval process.”

That appeal was deemed necessary because the procedure for licensing new drugs was totally separated from the system for patent approval. Over the years, scores of generic drugs received licenses and reimbursement prices while patents on the original version were still in effect, leaving the originator with no recourse but to file a lawsuit. Besides the cost involved, those cases often took many months to resolve, during which time the market value of the original product was seriously eroded.  At the same time, the makers of generic drugs faced the risk that they would ultimately be found to be patent-infringing.

In the ensuing years, the issue was not only a perennial White Paper item, but was regularly on the agenda of formal trade talks between the U.S. and Taiwan governments. Although it took 11-plus years to resolve, the Patent Linkage case confirms the value of perseverence. Over the past few years the Ministry of Health and Welfare and other relevant government agencies (notably the National Development Council and the Taiwan Intellectual Property Office) worked together to draft legislation to create a Patient Linkage mechanism similar to that used in the United States, and at the end of last year the Legislative Yuan passed the necessary amendments to the Pharmaceutical Affairs Act.

For Taiwan, the ramifications of taking this step extend far beyond the pharmaceutical sector. The recognition of Patent Linkage represents further demonstration of Taiwan’s commitment to the protection of intellectual property in general. It will be applauded by Taiwan’s trading partners and give greater confidence to prospective multinational investors, increasing the opportunities to attract foreign investment into the biomedical field that is one of the pillars of the government’s “5+2 Innovative Industries” development plan.

Now that the enabling legislation is in place, AmCham Taipei and other stakeholders hope that the new Patent Linkage system can be built up and put into operation without undue delay – ideally within the coming six to 12 months.