It takes a lot of bravery for governments to stand up to big business. But the Gillard government has shown a lot of guts during its tenure.
It stood up to Big Tobacco in the battle over plain packaging of tobacco products and has defended individuals and families affected by asbestos. It took on Big Oil in its Clean Energy Future reforms and stood up to the resource barons with the mining tax.
The government is now considering Big Pharma – the pharmaceutical industry and their patents – and has launched several inquiries into patent law and pharmaceutical drugs.
The evils of evergreening
One of Julia Gillard’s finest speeches in the Australian Parliament was on the topic of dodgy drug patents. She took the Howard government to task for allowing patent owners to engage in the nefarious practice of “evergreening” – extending the life of patents beyond their natural term by making minor changes.
The context for the speech on August 4 2004 was a debate over the Australia-United States Free Trade Agreement.
In October 2012, the Australian government announced an inquiry into pharmaceutical drug patents. The Parliamentary Secretary for Industry and Innovation Mark Dreyfus QC observed, “In certain circumstances, pharmaceutical patents can be extended by up to five years beyond the normal patent term. These provisions were introduced back in 1998, and are due for review.”
An expert panel will consider a number of matters relating to patent law, the pharmaceutical industry, health care and competition.
Medicines Australia, which represents big brand-name pharmaceutical drug companies, has demanded direct patent term extensions. Its chief executive, Brendan Shaw 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.”
In fact, brand-name pharmaceutical companies are alarmed about the expiry of patents on blockbuster drugs. Such companies have been demanding direct and indirect patent extensions to obtain some final windfall benefits from these medicines.
But such special pleading is unjustified by either patent policy or empirical evidence. Patent term extensions – whether they take the form of direct term extensions, or indirect evergreening – undermine the fundamental objectives and purposes of patent law.
As Justice Michael Kirby observed in the case on reflux drug Losec, patent law “should avoid creating fail-safe opportunities for unwarranted extensions of monopoly protection that are not clearly sustained by law.”
Inquiry into compulsory licensing
Compulsory licensing is a public interest mechanism recognised under international law, which allows for the use of a patent without the permission of the patent owner, subject to procedural constraints and adequate remuneration.
India – the world’s leading supplier of generic medicines – has weathered challenges to its patent regime from Big Pharma.
Thailand has engaged in compulsory licensing for essential medicines, as has Malaysia and Indonesia – much to the indignation of patent owners. By contrast, Australia lacks the effective mechanism of compulsory licensing to allow for access to patents for the greater good of public health.
The Productivity Commission is conducting an inquiry into compulsory licensing under patent law. The inquiry’s purpose is to assess, advise and recommend on the impacts and mechanisms of compulsory licensing invoked by the Patent Act’s public interest and anti-competitive safeguard. The Commission has released an issues paper on the topic of patent law and compulsory licensing.
Taking a maximalist stance, Medicines Australia has opposed modernising Australia’s compulsory licensing regime. The lobby group maintains, “The fact that no compulsory licenses have ever been granted in Australia for pharmaceutical products proves that there are other, much more effective, means available to all members of the Australian community to resolve patent related disputes.”
Somewhat dourly, AusBiotech has complained about Australia’s neighbours, such as India and Thailand, engaging in compulsory licensing.
By contrast, the Department of Health and Ageing has recommended “simplifying the use of the Crown Use and Compulsory Licensing provisions”. The department insists that such mechanisms are “an important safeguard for governments to be able to ensure access to a patented technology in the event that this is required to provide equitable access to affordable healthcare”.
And the Australian Fair Trade and Investment Network argues that public interest mechanisms – such as compulsory licensing – should not be curtailed by trade agreements. There’s some concern that the Trans-Pacific Partnership may curtail access to essential medicines.
Exporting essential medicines
It has taken nearly ten years for the Australian Government to prepare legislation – Intellectual Property Laws Amendment Bill 2012 (Cth) – to implement the WTO General Council Decision 2003 that allows for the export of essential medicines.
So far, very few countries have implemented an effective regime to allow for the export of essential medicines. Indeed, there’s only been one instance of the WTO General Council Decision 2003 being used – where the Canadian generic manufacturer Apotex relied upon the export mechanism to send drugs to Rwanda.
Indeed, it would be fair to say that, over the course of the last decade, various Australian governments have been slow to respond to the matter of patent law and access to essential medicines.
After long debate in 2011, Trade Minister Craig Emerson and the then-Innovation Minister Kim Carr promised better access for medicines for countries in need. Emerson said, “Pandemics and other serious health issues remain a terrible problem in many of the world’s poorest countries. Anything Australia reasonably can do to alleviate the suffering in these countries should be done and we are delighted to be able to help through this initiative.”
Australia’s proposed regime – contained in the Intellectual Property Laws Amendment Bill 2012 (Cth) – is quite narrow and rigid in its design. The draft legislation seems overly eager to appease brand-name pharmaceutical drug owners. The drafters should revise the scheme so there’s an effective mechanism for the export of essential medicines in Australia.
The key test is whether the regime has a positive health impact. There’s a need to enable generic manufacturers to export medicines and other humanitarian inventions to developing countries to address public health concerns, such as HIV/AIDS, tuberculosis, malaria, and other diseases. An effective compulsory licensing regime should be a part of a larger strategy in respect to intellectual property and global health research and development.