Pirated drugs blamed for lack of investment

PUBLISHED : Monday, 21 June, 2004, 12:00am
UPDATED : Monday, 21 June, 2004, 12:00am

Pharmaceutical firms say that unless patent laws change, HK may lose out forever


Foreign pharmaceutical firms are urging the Hong Kong government to bring drug patent protection in line with international standards, alleging that its poor track record has essentially eliminated foreign investment in the sector.


The Hong Kong Association of the Pharmaceutical Industry (HKAPI), which comprises large multinational drug firms, is lobbying the government to require companies to prove patent or licensing rights at the time of product registration to nip intellectual property infringement in the bud.


'Drug firms which are setting up research centres and factories in Asia stay clear of Hong Kong because of insufficient patent protection,' said Robert Siu Shu-yok, an HKAPI adviser.


'The government should do something, or Hong Kong will lose the chance to be a magnet of foreign investment in healthcare forever.'


Under the association's proposal, companies would be required to demonstrate possession of intellectual property rights at the time of registration with the Department of Health, which regulates drug distribution in Hong Kong.


Generic drug companies would also be expected to notify patent holders of their intent to register the drugs for local distribution.


The HKAPI says the process will make it easier for legitimate rights holders to seek an injunction preventing infringers from producing and selling pirated goods.


At present, the Department of Health requires registrants to show only that the drugs meet safety, efficacy and quality standards, which automatically qualifies them for local distribution rights.


Registrants are issued guidance only on intellectual property protection, but are not required to prove that their products do not infringe patents.


Last year, about 5 per cent of the collective $2.9 billion sales by HKAPI's members were affected by pirated drugs, which sell at between 10 per cent and 70 per cent of the retail price of the original products.


'Without an adequate system to prevent patent infringement, patent owners discover pirated goods only when they are already circulating in the market,' said Mr Siu.


'It is very hard to trace the pirates to bring them to justice, because they sell to shops secretly. Even the invoices do not list the items sold.'


The culprits usually change their addresses, so those appearing in the business registry are useless.


The association suggested the government take guidance from the United States, where the Food and Drug Administration maintains a master record of pharmaceutical patents - the so-called 'Orange Book' - in which drugmakers register their products and check for outstanding patent rights.


Mr Siu said the European Union also had stringent rules to prevent drug patent infringement.


Hong Kong's primary competitor in the region, Singapore, has absorbed S$2 billion (HK$8.9 billion) in foreign pharmaceutical investment, according to Mr Siu, while Hong Kong has attracted virtually nothing. 'We are lagging far behind because of the government's off-hand attitude towards drug patent protection.'


Patent policy and law in Hong Kong is administered by the Commerce, Industry and Technology Bureau (CITB), which the HKAPI has been lobbying for stricter drug patent enforcement.


The CITB said Hong Kong's official healthcare policy body, the Health, Welfare and Food Bureau, would continue discussions with the pharmaceutical industry.


The HKAPI has already succeeded in convincing the Health Bureau to propose a Legco amendment that would remove the automatic authorisation to sell drugs newly registered with the Department of Health.


The amendment is slated for consideration before Legco adjourns for the summer.