IPTA’s complaints have been fully supported by a submission [PDF] made on behalf of the Australian Federation of Intellectual Property Attorneys (FICPI Australia).
I have written about this latest review of the patent system on two previous occasions – firstly when it was initially announced, and then again when the ‘Background and Suggested Issues Paper’ was released. I expressed similar concerns to those of IPTA regarding the limited two-month period for public submissions, particularly considering that this spanned Christmas and the New Year, when many Australians take annual holidays and some companies – and all Australian universities – have official ‘close-down’ periods.
I was also concerned about the impact of yet another review, when it seems that the Australian patent system has been under incessant review and reform for a number of years, and particularly considering that the broad Terms of Reference for the Pharmaceutical Patents Review overlap with other recent and ongoing enquiries relating to patentable subject matter, the use of innovation patents, gene patenting, and compulsory licensing. One might form the impression that somebody is determined to keep reviewing the system from different angles until they eventually get the answers they want, whatever those might be!
Terms of ReferenceAs IPTA has pointed out in its submission, the main purpose of the Review is to ‘evaluate whether the system for pharmaceutical patents is effectively balancing the objectives of securing timely access to competitively priced pharmaceuticals, fostering innovation and supporting employment in research and industry.’
A particular focus of the review is the pharmaceutical patent term extension provisions which were introduced into the Patents Act 1990 in 1999. The purpose of the term extension is to compensate an original drug developer for the time required to complete trials and obtain regulatory approval to market a new drug for use by humans. A patent term can be extended for up to five years (i.e. a maximum life of 25 years from filing), but cannot exceed time actually lost from the patent term while obtaining approval.
A specific objective of the extension of term provisions was to ensure that, in most typical cases, a pharmaceutical patent holder would be able to obtain the benefit of at least 15 years of effective patent protection for a new drug.
One of IPTA’s main objections is that although the Terms of Reference refer to an evaluation of ‘balance’ in Australia's pharmaceutical patent system, their wording suggests a bias towards the generic pharmaceutical industry.
In this regard, IPTA has pointed out that one of the main tasks for the Panel is to consider ‘whether there is evidence that the patent system is being used to extend pharmaceutical monopolies at the expense of new market entrants’, but that there is no corresponding directive to consider whether the patent system is providing sufficient patent term to meet the needs of the research based pharmaceutical sector.
In IPTA’s submission, we should expect a balanced review of the pharmaceutical patent term extension provisions to assess whether or not the objective of providing a minimum 15 year effective patent term has been achieved. In fact, IPTA contends that its own analysis of IP Australia data suggests that only 53% of extended patents provide the patentee with 15 years of effective patent protection following marketing approval.
IPTA considers it ‘apparent from the Terms of Reference that the clear aim of the review is to consider ways in which generic pharmaceuticals can be introduced into the market sooner than currently possible.’
The PanelThe three-member Panel of the Pharmaceutical Patents Review comprises:
- Mr Tony Harris, former NSW Auditor-General and Parliamentary Budget Officer, as Chair;
- Professor Dianne Nicol, Associate Dean, Research, of the University of Tasmania; and
- Dr Nicholas Gruen, CEO of Lateral Economics.
IPTA states in its submission that:
What is notable about the make up of the Panel is that it does not contain any member with a background in the research-based pharmaceutical industry. In contrast, it would appear that the generics industry is well represented on the Panel.
While each of the members of the Panel is highly qualified and experienced, and well able to make a substantial contribution to the review, IPTA believes that in the interest of achieving a balanced outcome from the review the Government should have appointed someone on the Panel with experience in the research-based pharmaceutical industry.
TimeframeMy concerns about the accelerated timeframe for the review are shared by IPTA. Its submission points out that:
- the overall timeframe is insufficient to enable the Panel to carry out detailed consultations to identify all important issues for consideration;
- the period for making submissions covered December and the first three weeks of January, which included the busy lead-up to Christmas, the summer holiday period and the University holiday period;
- providing a period for submissions covering this holiday period does not portray a genuine interest in obtaining detailed and considered feedback; and
- no explanation was provided for the short time period for conducting the review.
Public hearings have already taken place during February, and a draft report is due next month, with the final report scheduled to be delivered in April.
Negative MessageIPTA also laments the negative message sent to the research-based pharmaceutical industry by the entire manner in which the review has been instigated.
As IPTA says:
This is unfortunate because the review could have been instigated in a manner which emphasised the importance of the research-based pharmaceutical industry to Australia, and reaffirmed Australia's commitment to strong and robust intellectual property protection, and support for research and development in the biomedical field.
IPTA also notes that ‘the research-based pharmaceutical industry was also recently blamed, without evidence, for abusing the innovation patent system to an extent that there was a "pressing need" to amend innovation patent system.’ I wrote about this apparently unprovoked attack by IP Australia on the innovation patent system back in September 2012, and agree completely with IPTA that no evidence has been presented to suggest that any abuses of the system are being perpetrated by the pharmaceutical industry. On the contrary, the top user of certified innovation patents in offensive litigation is Apple, while I recently uncovered evidence that uncertified innovation patents are being abused by Chinese companies in order to enhance their foreign patenting figures. Meanwhile, the bulk of innovation patents (65% in 2011) are granted to Australian companies and individuals (compared with only 10-15% of standard patents).
In its submission, IPTA goes on to point out the importance of investment by research-based pharmaceutical companies to Australian universities and research institutes, as well as local pharmaceutical companies and biotech companies. Australia has been perceived as a safe place for investment, in view of the strong intellectual property protections available, and the positive messages given out by past governments. IPTA has pointed out that in countries where such protections and support do not exist, such as New Zealand, the research–based pharmaceutical companies are likely to withdraw their money.
ConclusionI agree with the general tenor of IPTA’s objections to the conduct of the review. It is difficult to avoid arriving at the conclusion that somebody, somewhere, is pushing an agenda with the objective of improving the conditions in Australia for entry of generic drugs to the market. Of course, this is pure speculation, but some logical inferences may be drawn all the same.
It is well-known that the Australian budget has been under pressure, and that the cost of providing healthcare to all Australians is on the rise, particularly as the population ages. An antipathy to patents which may affect the cost of providing healthcare appears to exist within the Department of Health. There was evidence of this in the submissions to the Senate Inquiry into the Patent Amendment (Human Genes and Biological Materials) Bill 2010, where the Department of Health and Aging notably supported the intent of the Bill (i.e. to bar patents on genetic technologies) even though other government bodies, including the National Health and Medical Research Council (NHMRC), the Department of Innovation, Industry, Science and Research and IP Australia were all opposed.
Clearly it is desirable to minimise the cost of healthcare, if this can be done without compromising the quality of care, and without excessive collateral damage to other areas of Australian industry and the economy. And that is where the danger lies – if Australia wishes to be a net generator of knowledge and innovation, so that our future economy can rest on the back of something more sustainable than primary production, then we need policies in place that support research and development, and encourage innovation.
If we cannot become a producer of high-value-added products and services, including research and development services, then saving a few dollars on medicines will not save our economy or sustain our lifestyle. On the other hand, if Australia can place itself to innovate, grow and prosper, then we will have no difficulty affording to maintain our population’s health and lifestyle.
Image Copyright (c) 123RF Stock Photos