Pharmaceutical Patents Review Panel releases background and issues paper

On 21st November 2012 the Pharmaceutical Patents Review Panel released a background and suggested issues paper for a pharmaceutical patents review, inviting the public to make submissions by 21st January 2013. The panel will submit a full report to the government in April 2013. The paper is available at https://pharmapatentsreview.govspace.gov.au/issues-paper/.

Background to pharmaceutical patents review
On 15th October 2012 Mark Dreyfus, parliamentary secretary for industry and innovation, announced a pharmaceutical patents review. In doing so, he stated that he was taking practical steps to ensure access to affordable medicines, while fostering innovation and research. This followed concerns about a number of aspects of pharmaceutical patents, including bringing generic pharmaceuticals to market and the effect of patent terms on innovation.

For the review, the government commissioned an expert panel chaired by Tony Harris (former New South Wales auditor general and parliamentary budget officer), with members Nicholas Gruen (chief executive officer, Lateral Economics) and Dianne Nicol (associate dean of research, University of Tasmania Faculty of Law).

Current extension of term provisions
The term of a standard patent under the Patents Act 1990 is 20 years. The act was amended in 1998 to enable patentees to apply for an extension of term of up to five years for a standard patent that claims a pharmaceutical substance (Sections 70 to 79A of the act). The length of the extension is equal to the period between the date of the patent and the date of the first approval less five years, up to a maximum of five years.

Extensions of term for pharmaceutical patents are in recognition of the longer time required for testing, development and regulatory approval processes of new pharmaceutical products, which means that pharmaceutical patents invariably have a shorter effective life than other patents.

To obtain an extension of term:

• The patent must contain at least one claim covering a pharmaceutical substance per se.
• The pharmaceutical substance must be included in the Australian Register of Therapeutic Goods.
• The first regulatory approval for the substance must have occurred more than five years from the date of the patent.

The rights of a patentee during the extended term of a patent are limited compared to those in the non-extended term. Infringement during the extended term is limited to exploitation of the pharmaceutical substance for therapeutic use.

The definition of "pharmaceutical substance" under the act means that the extensions of term provisions do not apply to medical devices that do not include a novel active ingredient.    

Terms of reference of proposed review
The review will evaluate whether the system for pharmaceutical patents effectively balances the objectives of securing timely access to competitively priced pharmaceuticals, fostering innovation and supporting employment in research and industry.

Central to this review will be an analysis of the pharmaceutical extension of term provisions of the act (Section 70).

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.
• The treatment of new methods of manufacturing and new uses of known products.
• The impact of contributory infringement provisions.
• The impact of extending patent monopolies on entry of generic pharmaceuticals into the market.

Should such evidence be found, the review should provide an assessment of the subsequent impact on competition, innovation and investment.

In conducting the review and making recommendations, the panel is to have regard to the following:

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

Reaction to proposed review
Members of the Generic Medicines Industry Association (GMiA), the national body representing companies that manufacture, supply and export generic medicines, welcomed the review. In a 15th October 2012 news release, GMiA responded to Dreyfus’s announcement as follows:

"Inappropriate extension of patents and the granting of inappropriate patents cost the national economy dearly and should be guarded against. The patent system should not support trivial patents that extend market exclusivity to products that do not deliver a health benefit. Granting of weak patents restricts innovation, competition and diffusion of knowledge and unnecessarily increases the cost to the public."

Brendan Shaw, chief executive of Medicines Australia, which represents the discovery-driven pharmaceutical industry, said:

"Given it takes as long as three years to get a new medicine listed on the Pharmaceutical Benefits Scheme, and rejection rates by the Pharmaceutical Benefits Advisory Committee are increasing, it’s timely to look at whether patent terms are long enough... This review will be an important opportunity to highlight how delays in Government evaluation systems can slow down access to medicines for the Australian community, and therefore why delivering effective patent life is so important."

Ausbiotech, which has provided representation and services to promote the global growth of Australian biotechnology for more than 25 years, said in a 16th October 2012 statement:

"With intellectual property protections the foundation stone of innovation, AusBiotech is keen to see the Australian patent system for medicines and medical technologies harmonised with other key jurisdictions and provisions in countries that are Australia’s key trading partners. Amongst the options to do this is the option to introduce longer initial patent periods, which would provide greater certainty to industry and the government – and reduce the need for extension periods. The length of Government and administrative and review processes prior to the listing of device or medicine needs to be factored into what is seen as the reasonable exclusive period covered by patents."

Other jurisdictions
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), which lays down minimum substantive standards of protection that should be provided in each area of intellectual property, including patents, provides that the available term of patent protection must expire no earlier than 20 years from the filing date of a patent. Although the issue of patent term extension to compensate for regulatory delays in the marketing of new pharmaceutical products was raised in the Uruguay Round negotiations, the TRIPs agreement contains no obligation to introduce such a system.

Due to the effective period of protection for inventions of new pharmaceutical products being much less than 20 years, other major developed countries have introduced extension of term provisions for pharmaceutical patents. These countries include the United States, Japan, South Korea, Taiwan, Israel and a number of EU member states. Most of these countries have a maximum five-year extended term. Other countries, such as China, Canada, New Zealand, Malaysia, South Africa and various South American countries, do not have extended terms.

Background and suggested issues paper

The issues paper released on 21st November 2012 outlines the review panel’s initial impressions of the key issues. It includes questions that may provide ideas for developing a submission, but submissions need not be limited by the questions. The questions are as follows:

• Question 1: Is the breadth of pharmaceutical patents eligible for an extension of term appropriate?
• Question 2: Is the length of the extension of term provided for appropriate?
• Question 3: Are the recent amendments to increase the thresholds for the grant of an Australian patent appropriate in the context of pharmaceuticals? If not, why not and what further changes are necessary?
• Question 4: Do the systems for opposition and re-examination provide appropriate avenues for challenging the granting and validity of a pharmaceutical patent?
• Question 5: Do interlocutory injunctions, as the law is currently applied, provide appropriate relief in cases involving pharmaceuticals?
• Question 6: Is Australian law on contributory infringement appropriate in relation to pharmaceuticals?
• Question 7: Are the current timeframes in which infringement proceedings must commence appropriate for pharmaceutical patents?
• Question 8: Are follow-on patents being used to extend protection for pharmaceuticals inappropriately? If so, how? And, if they are, is this sound policy and what changes, if any, are needed?
• Question 9: Is the law on data exclusivity appropriate?
• Question 10: Are the laws on patent certificates appropriate?
• Question 11: Are the laws on copyright of product information appropriate?

Uncertain outcome to the review
There may be some scope for fine tuning the current extension of term provisions that have recently produced some adverse outcomes for Australian patentees in the Australian courts. With the emphasis of the review being on striking a balance between the need for incentives for innovators of novel drugs to innovate and the interests of the general community, it seems unlikely that the review process will lead to any extension of the current maximum five-year extension term to extend further the life of pharmaceutical patents. This would be seen as delaying the introduction of the less expensive generic medicines, leading to increased cost to consumers and an increase in government expenditure through the Pharmaceutical Benefit Scheme.