China has a short, but very rapidly evolving history of protecting IP rights for pharmaceutical products. Practical patent
protection for pharmaceuticals was simply not available in China until 1993 when China's patent law legalized drug patent
protection. Since 1998 China's State Drug Administration (SDA) Protection Office has authorized administrative protections
for 155 drugs from 12 different countries as of July 2005.2 Table 1 lists these drugs.
Table 1. Imported drugs with administrative protection in China
Following China's entry into the World Trade Organization (WTO) in 2001, more aggressive measures were taken by the government
to address IP shortcomings. These included, in 2002, the definition of 'new drug' to harmonize with the Trade-Related Aspects
of Intellectual Property Rights (TRIPS). China issued new Drug Registration Regulations in 2002 to improve its patent protection
system. China's patent law was amended again in 2002, pursuant to the TRIPS to harmonized China's patent system with other
WTO member countries.
Over the past several years, China's IP protection for pharmaceuticals has conformed with international standards. In June
2006, Pfizer won its patent protection lawsuit for Viagra in China, ending dozens of Chinese companies. The fact that the
Chinese companies appealed this decision suggests a significant shift in recognition for the rule of law. Table 2 lists expired
or expiring proprietary biopharmaceuticals in China.
Table 2. Expired or expiring proprietary biopharmaceuticals
HEALTHCARE IN CHINA
With over 1.3 billion people, China has the world's largest population, and arguably the greatest need for biogenerics. Although
China's gross domestic product (GDP) reached $2.28 trillion in 2005, the per capita GDP was only $1,700. Similarly, China's
per capita drug spending is among the lowest in the world—less than $20.00 annually. Furthermore, for the majority (80%) of
Chinese who live in rural areas, yearly drug spending is only $5.00 per capita. By contrast, Americans spend more than $700.00
on medicines each year.2 Clearly, generic drugs make up a vital component of the domestic Chinese healthcare situation.
LIMITED INSURANCE COVERAGE
According to China's Social Science Institute, 65.7% of Chinese citizens are not covered by any kind of medical insurance.
In 2005, only 133 million urban employees were covered by the "National Basic Medical Insurance." Inexpensive Chinese generic
drugs and traditional Chinese medicines (TCMs) account for about 90% of the basic medical insurance drug catalogues. Expensive
imported medicines are prohibited or severely restricted from China's social medical insurance (See Table 3). As a result
of the high cost of medicines, China's National Development and Reform Commission (NDRC) drafted plans to cut the price of
a number of commonly dispensed drugs.
Table 3. Comparison of maximum retail price of interferons (IFN) controlled by National Development and Reform Commission