16 February 2014

Pharmaceutical Patents Review Buried by Successive Governments

GraveIt appears that a review of pharmaceutical patents in Australia – which had a particular focus on extensions of patent term – is dead. 

On 11 February 2014, the Minister for Industry, Ian Macfarlane, responded to a ‘Question in Writing’ from Western Australian MP Melissa Parke.  Ms Parke had asked (back in December) when we might expect the final report of the Pharmaceutical Patents Review to be released.  The Minister’s response: ‘The Government has no plans to release the final report at this stage.’

I have followed the saga of the Pharmaceutical Patents Review on this blog since its inception:
  1. it was announced on 15 October 2012, by what was then a Labor government under Julia Gillard;
  2. on 21 November 2012 the review panel released a ‘background and suggested issues paper’, providing a somewhat miserly two month period (over the Christmas and New Year break) for public submissions;
  3. as I reported in February 2013, the terms of the review, the composition of the panel, and the compressed time frame drew criticism from some quarters;
  4. a draft report issued on 2 April 2013 included a number of proposed recommendations, including two options for reducing the duration of extensions of patent term granted to pharmaceutical patents as compensation for delays in obtaining regulatory marketing approval; and
  5. in June 2013 I wrote about continuing efforts by the generic pharmaceutical industry in Australia to press the case for reduced patent terms in the final report.
Over this period, there were two changes in leadership in Australia.  In June 2013, Prime Minister Julia Gillard was deposed by Kevin Rudd, while in September there was a Federal election which resulted in a switch to the current Liberal-National Party (LNP) government under Tony Abbott. 

In my first article of 2014, I speculated about whether there would be some progress on this review, or whether it would simply be set aside by the new government.  It seems we now have an answer to that question.

The Review – A Brief Recap

The primary stated objective of the Pharmaceutical Patents Review when it was established in 2012 was to asses ‘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 was conducted by an independent panel set up specifically for the purpose, comprising: Mr Tony Harris, former NSW Auditor-General and Parliamentary Budget Officer; Professor Dianne Nicol, Associate Dean, Research, of the University of Tasmania; and Dr Nicholas Gruen, CEO of Lateral Economics.  This panel came in for some criticism (at least in the submissions made by the Institute of Patent and Trade Mark Attorneys of Australia), as being over-representative of the interests of generic manufacturers.

It was therefore perhaps unsurprising that the panel’s draft report favoured a reduction in the extension of term available on pharmaceutical patents by way of compensation for lost time while obtaining marketing approval.

I was critical of the panel’s reasoning and methodology when the draft report was released.  For one thing, I noted that it was trite to observe that reducing patent terms would result in cost savings on patented medications.  I considered that the report failed to make a convincing case for the proposed alternative scheme of sinking these savings into direct subsidies of pharmaceutical R&D, which I still think would result in Australian taxpayers ‘investing’ in a succession of failed projects.

Additionally, the report’s use of data on term extensions was highly dubious.  In particular, it focussed on the fact that the median effective patent term was close to 15 years, when the data showed that it had been effectively capped at 15 years, consistently with the intended effect of the extension provisions.  The figures could equally be read as showing that nearly half of all pharmaceutical patents received less than the target effective term, or that the average effective term was just 13.5 years, while 11% of pharmaceutical patents enjoyed less than 10 years of effective term.

Fate Sealed

The final report of the Pharmaceutical Patents Review was delivered to the Gillard government in May 2013, and has not been seen or heard of since.

The Labor member for Fremantle, Melissa Parke – who asked the question of current Industry Minister Ian Macfarlane – has featured in the pages of this blog in the past, most notably as one of the parliamentarians behind the most recent attempt to introduce an express statutory exclusion from patentability for genetic materials.  Clearly Ms Parke has a continuing interest in the cost and availability of health care in Australia.  She is therefore unlikely to be very happy with Mr Macfarlane’s answer, which was, in full:

The Government has no plans to release the final report at this stage.
The Government is not considering the recommendations made by the panel in the draft report.
The Pharmaceutical Patents Review panel delivered its final report to the previous government in May 2013, which did not release the report.
As the Pharmaceutical Patents Review was commissioned by the previous government and conducted by an independent panel, the government is not obliged to release the report.

Conclusion – Term Extensions Here to Stay?

It is unlikely that the recommendations in the panel’s final report would deviate greatly from those in the draft report, and proposals more favourable to generic manufacturers than to drug originators were really expected from the outset.

The current government might be expected to be more sympathetic towards the originating pharmaceutical companies than its predecessor, although it appears that even a Labor government under Kevin Rudd was in no great hurry to release the report.  It is worth noting that the extension of term provisions were themselves enacted by the previous (Howard) coalition government, having not been included in the Patents Act 1990 by the earlier Labor (Hawke/Keating) government.  So both major parties have a track record on this issue.

It certainly seems that the existing pharmaceutical patent extension provisions are here to stay, at least for the foreseeable future.

Image Copyright (c) 123RF Stock Photos

3 comments:

Mark Summerfield said...

There is another possible issue with enforcement against consumers. If content is available for download form whatever source on the internet, how would consumers even know whether the content providers are legal or not? If an illegal provider starts charging for it, or provides intrusive adware with it, it does't make it legal, but

Mark Summerfield said...

I agree that it would be concerning if, in the circumstances you describe, a copyright owner were to go after the consumers.


However, this does not seem to me to be a very likely scenario. If somebody is operating a service that is deceiving or confusing consumers as to the legality of the content, the copyright owners are going to go after the operator, not the consumers who have been duped.


There is not much difference between this and the existing scourge of counterfeiting of physical products (including CDs and DVDs). When the price is low and/or the quality of the copies obviously poor, consumers know what they are doing when they purchase a counterfeit. Greater problems arise when the prices are comparable to the genuine product, and consumers do not know they are getting a counterfeit. Commonly this does not involve only copyright infringement (in the case of video or music), but also trade mark infringement, passing off and trade practices violations.


This kind of fraudulent and criminal activity is not where I see the challenges lying. Most online piracy occurs via peer-to-peer file sharing, by people who know exactly what they are doing, to the extent that this may become the dominant distribution mechanism. Did the content owners never hear of "if you can't beat 'em, join 'em"?

Mark Summerfield said...

Sharing file is not a big deal. They are copyright materials and can be
downloaded for some good use. As copyright prevent the content from just being
misused, it allows access. Consumer are not guilty for just using the contents
available in some good way, the copyright content available online, are
intended for this only. Some major application may be denied to us and it
should be. Software patent are something which need to be focused on because it
is hard to prove the paper document as worthy and the unique.

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