24 February 2013

Attorneys Slam Australian Pharmaceutical Patents Review

Pills and GavelIn a submission to the Governments Pharmaceutical Patents Review [PDF], the peak body representing Australian registered patent attorneys, the Institute of Patent and Trade Mark Attorneys of Australia (IPTA) has accused the Terms of Reference for the review, and the composition of the review panel, of being biased towards the interests of generic drug manufacturers.  IPTA has also criticised the timing of the review and the short period provided for public submissions, and alleged that the overall conduct of the review sends a ‘negative message to the research-based pharmaceutical industry’.

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 Reference

As 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 Panel

The three-member Panel of the Pharmaceutical Patents Review comprises:
  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.
(I note, in passing, the greater extent to which economists appear to be influencing the evaluation and development of the patent system these days.  In addition to the members of this Panel, IP Australia now has an economist on staff, while since November last year the Chair of the Australian Government’s Advisory Council on Intellectual Property (ACIP) has been health economist Professor Jim Butler, and the current Director of the Intellectual Property Research Institute of Australia (IPRIA) is economist Professor Beth Webster.)

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.


My concerns about the accelerated timeframe for the review are shared by IPTA.  Its submission points out that:
  1. the overall timeframe is insufficient to enable the Panel to carry out detailed consultations to identify all important issues for consideration;
  2. 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;
  3. providing a period for submissions covering this holiday period does not portray a genuine interest in obtaining detailed and considered feedback; and
  4. no explanation was provided for the short time period for conducting the review.
This last point is a good one.  With many activities of government taking place at a glacial pace, the sudden urgency to complete a review of the pharmaceutical patents regime is a little hard to fathom!

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 Message

IPTA 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.


I 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


Tyrone Berger, PhD candidate said...

If you're a fan of sequels, then the government's approach to patent reform may appeal. On a less frivolous note, putting up reviews and producing reports seems aimed at only serving two purposes: to generate more discussion (as the many blog posts will attest to!) and create more uncertainty amongst stakeholders.
A new paradigm for law reform is needed. Taking the lead from Hon Michael Kirby, where he gave a 2011 speech at the University of Hong Kong on the same subject: one of the procedural reforms he highlighted involved providing draft bills along with all reports where legislative reform is recommended, so as to expedite implementation into primary legislation. It would now seem like a good time to consider such ideas before we are made to watch yet another batch of sequels next season.

Mark Summerfield said...

Thanks for your comment, Tyrone.

This approach would certainly work, and indeed has worked. If IP Australia had conducted its review and consultation process which led to the Raising the Bar reforms, and simply handed up reports and recommendations to the government, there is no question in my mind that we would still be waiting for legislation to be drafted.

The down side of this would be cost. IP Australia's legislation was prepared by the Parliamentary Draftsman, which is a limited resource. Whatever criticisms may be levelled at the official legislative drafting office, these apply many times over to the efforts of 'amateurs' (in which I include lawyers, who are generally more accustomed to reading - and criticising - legislation than actually drafting it).

A compromise approach might be to require reports to include drafting instructions, with the default position that these a passed to the Parliamentary Draftsman for action unless expressly blocked by the parliament.



tim said...

I thought IP Australia had added two economists and the undue influence of economists was very probably due to Jim Round.

Mark Summerfield said...

Thanks for your comment, Tim. You may well be right, on both counts. I am just an observer, and do not have any specific inside knowledge.
It is hard to image what IP Australia could do with two economists that they could not do with only one (unless one or both of them are part-time). But since the organisation is largely self-funding, that would be the fees of users of the system hard at work, so I hope they are delivering good valuie!

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