20 July 2012

Pharmaceutical Extensions of Term: Is It Time for a Fix?

Extension ladderIn light of news from Europe today, via the IPKat, it is becoming ever more clear that the law in Australia regarding the grant of extensions of term for pharmaceutical patents is flawed, and out-of-step with all of our major trading partners.

We have covered this topic before, most recently in the article Australia Slips Further Out-of-Step on Pharmaceutical Extensions, in which we highlighted the disparity between the Australian law and its Japanese counterpart.  We had previously discussed the difference in approaches between Australia and the US.  A new ruling from the Court of Justice of the European Union (CJEU) now establishes that a similar disparity exists between Australian and European law and practice.

The upshot of this is that patentees in Australia may obtain a shorter term of protection for various classes of pharmaceutical inventions, when compared with trading partners such as the US, Europe and Japan.  While some may see this as a benefit – shorter patent terms mean earlier availability of generic competitors, resulting in lower prices – the flip side is that jurisdictions with lesser protections tend to seen as less attractive for investment.  This may mean less funding for R&D to be conducted in Australia, fewer innovative drug manufacturers operating in this country, and a reduced focus on the specific needs of the Australian community and environment.

If Australia wishes to stand side-by-side with other advanced developed economies, to maintain and develop local capabilities for drug discovery and development, reduce its reliance on primary industry, and progress along the path of becoming a ‘knowledge economy’, we need to ensure that the laws protecting IP in this country are on a par with those nations against which we would compare ourselves.

As matters stand right now, this is clearly not the case when it comes to patent protection for pharmaceutical inventions.


While there are no international ‘standards’ for the implementation of patent term extensions for pharmaceutical products, provisions exist in most developed nations, and the policy objectives are essentially the same.  Term extensions recognise that the effective period of patent protection for pharmaceuticals is often much less than the full 20 years, because a large part of that period will have expired before marketing approval is obtained from the relevant public health regulatory bodies, e.g. the Therapeutic Goods Administration (TGA) in Australia.   A prolonged period of protection therefore provides compensation, at least in part, for this loss of effective period of protection.

For a novel therapeutic compound, or an existing compound for which no therapeutic effect was previously known, the law is substantially consistent across all of the jurisdictions mentioned above.  Once the compound has received regulatory approval for use on human subjects, and a corresponding patent has been granted, the patentee may be granted an extension of the term of the patent to compensate, wholly or in part, for the time taken to obtain approval.  In Australia the principle behind the rules used to calculate the term extension is to ensure that, in typical cases, the patentee is provided with at least 15 years of effective protection.

The disparities arise when a new therapy is developed which involves the administration of a substance previously known to have a therapeutic effect for which it has received prior regulatory approval.  The new therapy may involve a different use of the substance (e.g. in a new form, or composition, or combination with other compounds) for improved treatment of the same condition, and/or it may be for treatment of a different condition.

In either case, the newly-discovered use will often be eligible for independent patent protection, and will also typically be required to pass through the usual processes of trial and approval before the drug can be marketed for the new purpose.  The investment in identifying and developing second and subsequent therapeutic uses can therefore be comparable to that involved in developing the first use of the substance.

It therefore seems reasonable that extensions of term should be available for patents covering improved therapies, as well as second and subsequent therapeutic uses, so long as they meet all of the relevant criteria:
  1. there must be a patent covering the compound for use in the new or improved therapy;
  2. regulatory approval must have been required in order to bring a product to market, directed to the new use; and
  3. the delay in obtaining regulatory approval must have been sufficient to justify an extension of the patent term, i.e. the duration of the extension should be calculated based on the date of registration for the new therapeutic use.


As we have discussed previously, recent judicial decisions have established that the above principles essentially apply in the US and Japan, where the new use – being considered novel and inventive for the purposes of patent protection – is considered effectively to relate to a ‘different drug product’, at least where independent regulatory approval is required.


The new ruling from the CJEU establishes that a similar rule applies in Europe (where term extensions are called Supplementary Protection Certificates, or SPC’s).

The European ruling is a little different from the recent Australian, US and Japanese cases, in that the original marketing approval for the product in question (melatonin) was for veterinary use (controlling reproduction in sheep), with the new use being for the treatment of insomnia in humans.

Never mind this, the CJEU ruled as follows:
  1. the mere existence of an earlier marketing authorisation obtained for a veterinary medicinal product does not preclude the grant of an SPC for a different application of the same product for which a marketing authorisation has been granted, provided that the application is within the limits of the protection conferred by the basic patent relied upon for the purposes of the application for the supplementary protection certificate;
  2. the marketing authorisation which is relevant for the grant of an SPC is that of a product which comes within the limits of the protection conferred by the basic patent relied upon for the purposes of the application for the supplementary protection certificate (i.e. it is necessary to ‘match’ the specific authorisation to its corresponding patent); and
  3. the situation would be no different if the same active ingredient is present in two medicinal products having obtained successive marketing authorisations, the second of which also required a full application for approval for human use, or if the product covered by the first marketing authorisation of the corresponding medicinal product is within the scope of protection of a different patent which belongs to a different registered proprietor from the SPC applicant (i.e. it is irrelevant that the first authorisation in the present case was for a veterinary, rather than human, use).


Australia thus becomes an even more anomalous case.  Due to the rather short-sighted wording of the extension of term provisions in the Australian Patents Act 1990, along with the manner in which these provisions have been interpreted by the courts, it remains the case that a request for extension of term can be based only upon the ‘first regulatory approval date’ of a ‘pharmaceutical substance’.  Furthermore, this limitation applies in respect of any relevant substance ‘contained in’ a product that has been given regulatory approval (see H Lundbeck A/S v Alphapharm Pty Ltd [2009] FCAFC 70, at [109]-[111]).


The position in Australia is not only out-of-step with other jurisdictions, it is also illogical.  If a valid patent is granted in respect of the use of a substance for a specified therapeutic purpose, and a corresponding regulatory approval obtained for the use of the same substance for the same purpose, it is only reasonable that any extension of the patent term should be based on the related regulatory approval.  Furthermore, it makes very little sense that any extension which might be available must be based on a completely different regulatory approval process.

This is just one of the flaws in the convoluted Australian term extension provisions, and it is not as though there are not workable models in other jurisdictions which could be used as a basis for improvement.

In our view, this is a situation that needs to be rectified, and it is a shame that the opportunity was missed with the recent Raising the Bar reforms.


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