International trade law does not yet have a consistent approach to govern the supply of the latest form of drugs, known as biologics, according to Bryan Mercurio, professor and Outstanding Fellow of CUHK’s Faculty of Law. He fears that the patent protection granted for biologics by the latest round of free-trade agreements is vaguely worded and could hold back development of generic forms of the drugs for years.
Hong Kong is currently changing its system of simply re-registering patents that have been granted in the UK, China or the European Union into one where it will examine patent applications on their merits. In so doing, Hong Kong is following the lead of Singapore, which made that move several years ago. Professor Mercurio doubts such a move is necessary, however, and says he hasn’t heard a convincing reason for making the change.
With the decision made, though, he has consulted extensively with the Hong Kong government on how they should adapt the city’s drug policy. That is currently severely lacking, he suggests, resulting in Hong Kong losing out on methods to attract more drug makers.
Professor Mercurio feels Hong Kong’s laws do not have proper definitions of the terms involved in granting patents. Internationally, they are granted if there is a novel, inventive step in drug development. But there is wide scope to draft and interpret the law in a way that suits local needs. Hong Kong has yet to take that step, something Professor Mercurio has advised the government to correct.
‘The current law is essentially the UK law in 1997,’ Professor Mercurio notes. ‘The UK has amended its law but Hong Kong has not. Our law is an ‘off-the-shelf’ copy. With Hong Kong moving towards self-examination, the time is right to ensure the law meets the policy objectives of Hong Kong.’
Hong Kong positions itself as a technological leader, but in the pharmaceutical sector it fails to attract multinational manufacturing or research & development facilities. Professor Mercurio believes there is a lack of clear government guidance.
‘I have asked “What’s the policy?” And there isn’t any. Some Legislative Councilors want to turn Hong Kong into a pharmaceutical centre, but there’s never any follow-up action.’
At the moment, the city is not positioned to develop high-value drugs, he feels. It has around 30 local manufacturers making low-value generics such as cough syrup and drugs similar to Panadol, for basic treatments. But it should focus on research and development of drugs as well, he has advised.
The Chief Executive each year advocates the development of a drug industry in Hong Kong in the policy address. But the legislature makes little if any progress on that front.
In such a climate, Professor Mercurio is skeptical that Hong Kong will ever become a pharmaceutical hub. He has pointed out to the government that it conducts no consultation and no studies on developing the industry, which means it is expressing an idea without any evidence as to its potential for success.
The professor has spoken to both the Intellectual Property Department and the Health Department of the Hong Kong government about how they should address drug laws, only to find that the two departments hardly communicate. The city also offers little in the way of incentives to drug companies, unlike its rivals, something he suggests must change.
‘When I talked to the government it was pretty clear,’ Professor Mercurio says. ‘When a drug company is looking to expand, it generally looks at Singapore, China, Malaysia, Thailand and Hong Kong, and says “What can you give me?”
‘Hong Kong essentially offers reduced rent in the Science Park. Singapore, on the other hand, designed a comprehensive 20-year plan to attract industry leaders, and then followed it.’
He has insisted that the government, if it is going to introduce its examination system for drugs, must do so by late 2017 or early 2018 to avoid losing ground against nations such as Singapore and to avoid complications and litigation in Hong Kong.
‘They would be well advised to revamp the patent system in advance – otherwise it’s just going to be a disaster,’ he says. ‘There will be a massive increase in patent litigation without clear rules. It is better to fix these things beforehand rather than after.’
Professor Mercurio first got involved in drug law while advising the Australian government on a free-trade agreement with the US, in part making sure the wording was consistent with Australia’s World Trade Organization obligations.
He helped regulators insert ‘good faith’ clauses in the Australian policy intended to prevent a branded drug maker from unfairly keeping generics off the market. He also ensured that penalties were put in place to refund the national-health service if a drug maker abused its patent.
Professor Mercurio has recently completed a book on the topic of Hong Kong’s pharmaceutical patent law. Tentatively called Winning the War on Drugs: The Integration of Law and Policy in Hong Kong, the book is due for release in the end of 2017.
By Alex Frew McMillan
This article was originally published on CUHK Homepage in Mar 2017.