Intellectual Property Protection

While Hungary enacted a modern patent law with pharmaceutical product and pipeline protection in July, 1994, Art. 20 of the new law limits the benefit of product protection, even when a Hungarian patent application with product claims was pending before July 1994. No pipeline protection can be obtained for those products where the corresponding foreign counterpart patent issues after July 1, 1996.

The Hungarian pipeline provisions also entail the uncertainty that a Hungarian company, after seeing a publication on an invention, may have started preparations to develop the corresponding product before the date of the pipeline application. This circumstance will not be known to the applicant for pipeline protection until he attempts to enforce the pipeline patent. Therefore, the possibility of obtaining product claims for pending patent applications is important.

Art. 20 of the new law, however, prescribes that the retention of a pharmaceutical product claim in a regular patent application filed before July 1, 1994, is only possible by modifying the priority for such a claim to July 1, 1994, or thereafter. Such a postponement of the priority date will be useless in most cases, because foreign counterpart patent applications or scientific papers will have been published before July 1, 1994. The new law applies the "modification-of-priority" concept incorrectly as it should only apply to cases where an applicant introduces new subject matter not contained in the original application.

Such incorrect application of the principle violates Art. 27, Paragraph 1, of TRIPs and various sections of Art. 4 of the Paris Convention. Other countries, such as Mexico, have successfully avoided this misdirected "modification-of-priority" concept, by allowing applicants to retain pharmaceutical product claims without loss of priority.

Finally, the generally slow pace of the Hungarian legal system is exacerbated in the case of patent infringements in that they are dealt with by administrative courts which lack expert knowledge in this area and which lack the power to take injunctive measures. As a consequence, it often takes three years, or more, to reach a verdict, generally with low, non-dissuasive fines.


Data Exclusivity - Confidentiality

As it takes 10 to 12 years to bring a new medicine to the market, the benefits of the 1994 patent act will not be felt before 2004-2006. Until then, data exclusivity is the only type of protection which may prevent early copying.

However, current Hungarian law does not include any provisions meeting the requirements of Art. 39.3 of WTO-TRIPs on the use of a previous applicant's documents, and, in particular, does not provide that, in order to refer to documents submitted by a previous applicant, the second applicant has to obtain the consent of the said previous applicant.

Given the export orientation of local copiers, the absence of data exclusivity not only affects market conditions in Hungary, but also in other countries of the region and beyond.


Market Issues

There is a general lack of objective and verifiable criteria by which medicinal products are admitted to reimbursement lists. This is especially blatant in the case of the positive list for indigent patients (Közgyogy) affecting approximately six percent of the population but nearly 20 percent of total pharmaceutical demand. Indigent patients receive all medical care, including pharmaceuticals, free of charge. The list contains all categories on the general positive list, as well as additional categories, not reimbursed through the general list.

The vast majority of the products on the Közgyogy list are locally produced products. Even when an imported product is available at equal or lower price, preference is given to the local one. Additional products - not reimbursed through the general list - are exclusively locally produced. Companies are not informed about the reasons for non-inclusion of their products and no appeal procedure is available.


Potential Exports/Foreign Sales

PhRMA is not able at this time to provide any reliable estimates of the increase in our industry's sales that would accompany the removal of the aforementioned trade barriers.

For all the aforementioned reasons, PhRMA believes that Hungary should be listed as a Watch Country under Special 301 in 1999.