Wednesday, April 03, 2013

Patents. The rules that hurt the Australian drug industry

Yes - that's hurt. Really.

Australia’s enthusiastic approach to extending the life of pharmaceutical patents has cost the economy “billions of dollars” an independent review has found.

Originally 14 years, then 16 years and now the 20 years enshrined in the US Australia Free Trade Agreement, the review finds the extensions to the standard life of drug patents have been made “without careful regard to whether this was in our own economic interest”.

Justified at the time a measures to “encourage the development of the pharmaceutical products industry in Australia” the review finds instead they’ve suppressed the development of a generic drugs industry and cost the government $200 million per year by slowing the entry of cheap generic drugs into the pharmaceutical benefits scheme.

Generic manufacturers have missed out on an estimated $2 billion over eight years.

The report says 70 per cent of drug patents expire later in Australia than in other countries.

“If you want to fill the gap when an original drug comes off patent you want to manufacture and stockpile generics to be ready,” said the inquiry’s chairman Nicholas Gruen Tuesday.

“But, and this is really quite remarkable, patent rights have been defined to mean Australian firms can’t do that while the drug is under patent her, even though foreign firms where patents have expired can. So they get the first-mover advantage.”

“Likewise Australian firms can’t manufacture for export to countries where the drugs have come off patent even though it is legal to sell them there.”..

Dr Gruen said part of the problem was that the legal situation was murky.

“A generic manufacturer is by definition a lower profit per unit than an originator and legal proceedings are highly expensive, five to seven million dollars believe it or not.”

“And there are layers of difficulty. There is the domestic law and then there is the United States Australia Free Trade Agreement which can allow an originator to get the US government to represent its interests.”

“Our government should be helping clarify the law, but there is no evidence we can find that the government has made representations on behalf of the manufacturers affected.”

The draft report recommends Australia cut the term of the five year semi-automatic patent extension to one year, using part of the savings to directly subsidise research and development.

“The funding can be directed to build research and development patents would not. New antibiotics are one example, the sort which once developed would be used as sparingly as possible to prevent the development of antibodies. Also so-called orphan drugs which treat rare and not commercially lucrative diseases, and drugs for diseases in the third world”.

The review wants trade negotiations such as those over the proposed Trans Pacific Partnership to be much more focused on the costs and benefits to Australia of extending intellectual property.

“So far we’ve seen no evidence suggesting the Australian government has shown any vigor in pursuing any of these issues or an agenda for a patent rights regime that would more fully advantage Australia,” Dr Gruen said.

The review wants written responses to its draft report by the end of the month.

It will deliver its final report to industry minister Greg Combet in May.

In The Age

Related Posts

. Dumb, and Dumber. Why on earth did Australia sign ACTA?

. TPP. What's being built under our noses in Auckland

. The case against patents, from the Federal Reserve Bank of St. Louis