Yet Another Patent System Review – Pharmaceutical Patents

On Monday this week (15 October 2012), the Parliamentary Secretary for Industry and Innovation, Mark Dreyfus QC, announced a new review of pharmaceutical patents in Australia.

Our initial reaction?  A great sigh… because surely what the Australian patent system needs right now is yet another review, enquiry or proposal for reform!  Frankly, stakeholders in the system – including innovators (small and large) and their professional advisors – are already reeling from the pace of evaluation and change being imposed upon the patent system in Australia.

In the first decade of the 21^st century, a number of reviews of the patent system were initiated under the Howard conservative government – including the Australian Law Reform Commission (ALRC) enquiry into Gene Patenting and Human Health, and the Advisory Council on Intellectual Property (ACIP) review of Patentable Subject Matter (see ACIP Reports on ‘Patentable Subject Matter’) – without any action being taken to implement any of the resulting recommendations.

That inaction was wrong.  It was wrong firstly because it failed to address the real concerns of the Australian public, and users of the patent system, that were identified in the enquiries.  Secondly, it was wrong because for a government to commission a review, receive a report, and then take no real action on the recommendations made, is nothing more than a waste of valuable resources and taxpayers’ money.

However, in the past few years there appears to have been an over-correction, as our elected representatives and taxpayer-funded bureaucrats have engaged in a seemingly continuous series of new enquiries and real reforms. 

REFORM STORM

Recent and ongoing enquiries, consultations and reforms include:

1. the Raising the Bar reforms, which were passed by the Australian Parliament and signed into law in April this year (see Bar Raised, as IP Law Reforms Signed Into Law), with the associated draft Regulations now published for comment (see Timeframes Slashed in Second Stage of Proposed Regulations);
2. IP Australia’s practice changes in relation to inventive step and patentability of software and business methods (see Australian Patent Office Embraces "Obvious to Try" and IP Australia’s Escalating War on ‘Business Methods’);
3. the proposal, currently open for public comment, to eliminate the ‘innovative step’ standard in relation to the second-tier innovation patent (see IP Australia Gazumps ACIP, and Revives the Petty Patent!), notwithstanding that there is already an ongoing review of the innovation patent system being conducted by ACIP (which IP Australia is purportedly supporting by conducting a survey of users of the innovation patent system);
4. the current Productivity Committee enquiry into the compulsory licensing of patents in Australia (see Compulsory Licensing Inquiry – Issues Paper Released);
5. one recent effort to ban the patenting of genetic technologies (see Divided Senate Committee Urges Rejection of Gene Patents Bill), with another potentially waiting in the wings (see Gene Patent Opponents Take the Fight Back to Australian Parliament); and
6. proposed legislation to implement new compulsory licensing provisions associated with Australia’s obligations under the TRIPS protocol (see Pharmaceutical Compulsory Licences to Assist Developing Nations).

Add to all of these (have we missed anything?) this new review into pharmaceutical patents, and the Australian patent system starts to look like a patchwork of amendments, pending amendments, potential amendments and uncertainty.  Why would anybody rely upon a system in such a state of constant flux?  And how can interested stakeholders – including users of the patent system and their professional advisors – possibly be expected to keep on top of all these changes, proposals and consultations, and provide meaningful input into the process?

We do not suggest that any of these enquiries and reforms are lacking in merit.  Clearly many of them relate to policy issues of substantial importance and public interest.  However, the rapid succession in which the processes are taking place – not to mention the overlapping subject matter, and pre-emption of some enquiries by fast-tracked reform proposals, such as those relating to innovation patents – means that important issues are unlikely to receive the dedicated attention they deserve.  Stakeholders involved in the conduct of their own businesses simply do not have the time and resources to monitor, consider and respond to all of these enquiries.

It is also notable that, despite all of the time, effort and money that has been devoted to consultation and review processes, there remain significant public concerns that are effectively being dismissed or ignored by the administrators of the patent system (see Why IP Professionals Must Take ‘Gene Patent’ Opponents Seriously).

REVIEW OF PHARMACEUTICAL PATENTS

Returning to this week’s announcement by Mark Dreyfus, the corresponding news release on IP Australia’s website explains:

The Australian Government is taking practical steps to ensure access to affordable medicines, while fostering innovation and research, with the appointment of an expert panel to review the appropriateness of the extension of term arrangements for pharmaceutical patents.
…
The review will evaluate whether the system for pharmaceutical patents is effectively balancing the objectives of securing timely access to competitively priced pharmaceuticals, while fostering innovation and supporting research. In particular, the extension of term provisions will be reviewed.

The review will not be conducted by any of the existing bodies commonly charged with such enquiries.  Instead, the government has appointed a dedicated panel, comprising:

1. Mr Tony Harris, former NSW Auditor-General and Parliamentary Budget Officer, as Chair;
2. Professor Dianne Nicol, Associate Dean, Research, of the University of Tasmania; and
3. Dr Nicholas Gruen, CEO of Lateral Economics.

Central to the review will be an analysis of the pharmaceutical extension of term provisions of the Patents Act 1990 (section 70).  These provisions enable the term of a patent relating to a pharmaceutical product to be extended by up to five years beyond its normal 20 year lifespan, to compensate the patentee for delays in obtaining regulatory approval to market the product for human use.  Generally speaking, an extension of term is only available when a product has been withheld from the market, pending regulatory approval, for a period of at least as long as the requested extension.

Inevitably, it will be the case that cheaper generic products will become available sooner if patent terms are not extended.  However, term extensions are designed to ensure that a patentee is able to secure a reasonable return on its investment in research and development of a product (including relevant trials and other approval processes) despite the fact that obtaining regulatory approval can take many years.

According to the terms of reference, in conducting the review and making recommendations the panel will be requested to consider:

1. the availability of competitively priced pharmaceuticals in the Australian market;
2. the role of Australia's patent system in fostering innovation and hence to bringing new pharmaceuticals and medical technologies to the market;
3. the role of the patent system in providing employment and investment in research and industry;
4. the range of international approaches to extensions of term and arrangements for pharmaceutical inventions;
5. Australia's obligations under international agreements (including free trade agreements and the World Trade Organisation agreements); and
6. Australia's position as a net importer of patents and medicines.

Furthermore:

The review will also consider whether there is evidence that the patent system is being used to extend pharmaceutical monopolies at the expense of new market entrants. In doing this, the review will consider how patents for new formulations are granted, consider the treatment of new methods of manufacturing and new uses of known products, the impact of contributory infringement provisions and the impacts of extending patent monopolies on entry of generic pharmaceuticals into the market.

The panel will conduct a public consultation process, with the goal of providing a final report to the Government in early 2013 (which seems, to us, a trifle ambitious).

CONCLUSION

There are undoubtedly issues with the way in which the Australian extension of term provisions are constructed – we have written about this before (see Australia Slips Further Out-of-Step on Pharmaceutical Extensions).  However, the terms of reference for the panel’s review are directed to broader issues of policy, not to fine details of implementation, so we hold out little hope that the review will fix any existing problems at this level.

To add to the general confusion, the terms of reference for the pharmaceutical patents review clearly overlap with other recent and ongoing enquiries relating to patentable subject matter, the use of innovation patents, gene patenting, and compulsory licensing.

We will keep readers updated on the review process, once further details and deadlines for public submissions become available.

Tags: Australia, Extension of patent term, Law reform, Pharmaceuticals