The trade agreement between the USA and China provides for the extension of the patent term of innovative medical devices to avoid undue delays. This is to the benefit of pharmaceutical companies in both countries.
The contractual clause not only supports pharmaceutical manufacturers from the USA, it also benefits innovative Chinese pharmaceutical companies. These companies must step up their research and development for patented drugs if they want to compete successfully with foreign manufacturers. The extension of the patent term ensures that R&D investments of Chinese pharmaceutical companies are better rewarded. This will increase their innovation intensity and encourage them to produce more patentable drugs. This will reduce China’s dependence on imported drugs.
The debate about extending the patent term is not new in China. As early as 2019, it was proposed that “in order to make up for the time needed to review and approve an innovative drug, the State Council may decide to extend the term of the patent”. However, this extension of the patent term is only possible for medical patents.
According to Article 1.12 of the Agreement, the extension of the patent term should not be limited to pharmaceutical patents only. We assume that the extension of the term of patents will also be extended to other products. This will further fuel Chinese innovation.
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