20 March 2014

Pharma Review Recommendations

The Pharmaceutical Patents Review report [PDF] noted in the preceding post features several findings of interest to intellectual property specialists, health policymakers sand civil society advocates -
F3.1 In their negotiation of international agreements, Australian Governments have lacked strategic intent, been too passive in their IP negotiations, and given insufficient attention to domestic IP interests. For example, preventing MFE appears to have deprived the Australian economy of billions of dollars of export revenue from Australian based generic manufactures. Yet allowing this to occur would have generated negligible costs for Australian patentees. The Government does not appear to have a positive agenda regarding the IP chapters of the TPP Agreement. The Government has rightly agreed to only include IP provisions in bilateral and regional trade agreements where economic analysis has demonstrated net benefits, however this policy does not appear to be being followed. 
F9.1 There is insufficient evidence to support an increase in data protection beyond the current five year period for biologics at the present time. However, the Panel acknowledges that the regulatory environment and market for biologic and biosimilar medicines is still developing and that the situation should be revisited when further market experience gives us a better understanding of the relevant issues. 
F10.1 The patent system is of obvious significance to the pharmaceutical industry, trade negotiations and health policy. However, the government agencies with policy and program responsibility in these areas are not engaging sufficiently with each other and are not taking highly relevant issues into account in their deliberations. Each agency needs to be the eyes and ears of the system from various perspectives, aware of inter-actions of several factors – end users, innovation, industry and international implications – in order to optimise policy settings for the pharmaceutical system in what is a complex regulatory and service delivery environment. The areas of Government influencing pharmaceutical pricing particularly have both the need and the resources to obtain a detailed appreciation of the pharmaceutical patent system and its impact on a range of health issues.
The Review's recommendations are accordingly -
R3.1 The Government should expeditiously seek a situation where Australia has strong yet parsimonious IP rights – that is, rights that are strongly enforced and that provide the incentive necessary to underpin an appropriate level of investment in innovation - but that are not defined so broadly as to impose costs on innovation or other activity without commensurate benefits. Australia should take a leadership role in seeking consensus with jurisdictions with similar interests to identify and pursue a range of changes in international patent law and practice along these lines. 
R3.2 The Government should ensure that future trade negotiations are based on a sound and strategic economic understanding of the costs and benefits to Australia and the world and of the impacts of current and proposed IP provisions, both for Australia and other parties to the negotiations. The Government should strongly resist changes – such as retrospective extensions of IP rights – which are likely to reduce world economic and social welfare and it should lead other countries in opposing such measures as a matter of principle. 
R3.3 Given the current constraints placed on Australia by its international obligations, as an interim measure the Government should actively seek the cooperation of the owners of Australian pharmaceutical patents to voluntarily agree to enter into non-assertion covenants with manufacturers of generic pharmaceuticals seeking to manufacture patented drugs for export. This would help them avoid the embarrassment of Australia’s trade and investment performance being penalised by its previous agreement to strengthen IP rights. 
R4.1 The Government should change the current EOT to reduce the maximum effective patent life provided from 15 years. Harris and Gruen support reducing the effective life to 10 years, whereas Nicol supports reducing the effective life to 12 years. The length of the extension should be calculated as being equal the number of days between the patent date and the date of first inclusion on the Australian Register of Therapeutic Goods minus 20 years less the maximum effect patent life. The current 5 year cap on extensions should remain, providing a maximum of 25 years patent term for extended patents. 
R4.2 The Government should use part of the associated savings from R 4.1 to fund R&D directly. Some of this funding could be targeted to socially beneficial research where patent incentives may be inadequate. Such areas include new antibiotics which, once developed, must be used as sparingly as possible to prevent the development of antibodies, and pharmaceuticals to address rare diseases, paediatric illnesses and endemic health issues in low income countries. This option could also include an annual review of the savings delivered through any reduction in effective patent life with some share of those savings used to fund replacement R&D subsidies. 
R4.3 Section 76A of the Patents Act should be deleted. The Pharmaceutical System Coordinating Committee recommended in R 10.1 should consider whether a mechanism for reporting on the use of public and private research funds in pharmaceutical R&D, similar to that established by the Canadian Patent Medicine Prices Review Board (PMPRB) and superior to s.76A, can and should be developed. 
R5.1 The Government should maintain the current approach that allows extensions for drugs and formulations but not for methods of use and manufacture. This will continue to provide an incentive for the development and supply of active pharmaceutical ingredients and new formulations, without adding to the existing cost of medicines in Australia. 
R5.2 Section 70(3) should be amended to clarify that the ARTG registration on which an EOT is based is that of the relevant product, the use of which would infringe the claim. 
R6.1 The Government should establish an external patent oversight committee (eg. as part of the ACIP) that is tasked with reviewing grants issued by IP Australia and auditing the decisions involved in making such grants, to ensure that IP Australia’s decisions are consistent with the relevant Australian law as well as being aligned with Australia’s major trading partners and with Australia’s interests. 
R6.2 The Government should request the Productivity Commission to undertake a broad review of the patent system, including of the effectiveness of Raising the Bar Act no later than five years from the commencement of the Act. 
R6.3 The Government should implement strategies for minimising the extent to which PBS policies permit evergreening practices, where these practices provide no net benefit to Australia. An overarching body, such as the PSCC (see recommendation 10.1) should be tasked with oversighting such strategies. 
R7.1 As the party that ‘internalises’ the most benefits of a successful challenge to a patent for a product on the PBS, the Government should take a more active role in managing the cost of the PBS where a patent relating to a PBS-listed pharmaceutical is successfully challenged in the courts. This should involve the Government sharing with the successful challenger of a patent the savings to the PBS from earlier generic entry or recovered costs to the PBS through compensation or repayment of damages from the patentee or manufacturer of the PBS-listed drug. The quantum of savings should be formula driven rather than negotiated on a case-by-case basis, with savings estimates based on the price reductions following first listing of a competitor brand on the PBS (currently 16 per cent) and price disclosure arrangements. 
R7.2 Section 117 of the Patents Act should be amended to provide that the supply of a pharmaceutical product subject to a patent which is used for a non-patented indication will not amount to infringement where reasonable steps have been taken to ensure that the product will only be used in a non-infringing manner. It may be presumed that “reasonable steps” have been taken where the product has been labelled with indications which do not include any infringing indications. 
R7.3 The Government should introduce a transparency register linking therapeutic goods included on the ARTG with related patents. The register should include the numbers of all patents owned by, or licensed to, the sponsor of the therapeutic good and relevant to the therapeutic good. Patent numbers should be supplied to IP Australia when the sponsor receives notification of the ARTG inclusion, or when the patent is granted, if grant is subsequent to ARTG listing. A sponsor should only be able to commence infringement proceedings in respect of a patent that is on the register. Upon inclusion of a generic product on the ARTG that relies on information provided earlier in relation to another product, the TGA should directly notify the owner(s) of the patent(s) listed on the transparency register in relation to that earlier product about the inclusion. 
R8.1 The Government should actively contribute to the development of an internationally coordinated and harmonised system where data protection is provided in exchange for the publication of clinical trial data. 
R10.1 The Government should establish a non-statutory Pharmaceutical System Coordinating Committee (PSCC) that reports to Parliament on an annual basis on the success and effectiveness of the patent, marketing approval and PBS systems, particularly where these interface. The PSCC should ensure there is sufficient engagement and coordination between the relevant agencies and take account of costs to Government, efficiency of registration and approval processes and respond to issues raised by industry. The PSCC should comprise senior officials from at least DIICCSRTE, IP Australia, DoHA (Pharmaceutical Benefits Division and TGA), DFAT, Finance and Treasury (as chair). 
R10.2 When drafting the objects clause to be inserted in the Patents Act, as agreed to in the Government’s response to the Senate Community Affairs Committee’s Gene Patents report, the Government should take into account that the purpose of the legislation is to: • further Australia’s national interest and enhance the social and economic welfare of Australians; and • provide strong, targeted IP protection - but only up to the point at which the costs (to consumers and through impediments of ‘follow on innovation’) are no greater than the benefits of incentivising innovation.