The right prescription

Safeguarding intellectual property through the Trans-Pacific Partnership will foster new initiatives and increased investment, writes Emma Press.

Promoted by Emma Press 19 January 2016 Big Law
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The details of the long-awaited Trans Pacific Partnership (TPP) were recently released, unveiling an agreement that will bind 40 per cent of the world’s economy.

One of the most divisive components of the TPP has been the pharmaceutical IP provisions, particularly data exclusivity for biologic products. Under the agreement, countries can decide between two data exclusivity options, either a minimum eight-year data protection period or a minimum five-year protection period, plus ‘other measures […] recognising that market circumstances also contribute to effective market protection’.

It is not entirely clear what is meant by ‘other measures’, and how countries – such as Australia – will implement these to deliver ‘comparable market outcomes’.

It’s not hard to see why this component of the agreement was a point of contention between Australia and the US in negotiations. In the end it appears that Australia did not compromise on the five-year data exclusivity currently offered under our laws.

Proponents of shorter data exclusivity and patent protection periods argue that life-saving medicines can be disseminated more quickly at a smaller cost to patients, especially in emerging economies.

On the other hand, pharmaceutical companies need to recoup the significant investment that goes into creating medicines. For every medicine that succeeds, many more fail, making development costly and time-consuming.

In fact, according to Innothink Center for Research in Biomedical Innovation, on average the development of a new medicine costs anywhere from $4 billion to $11 billion USD and can take up to 14 years. For pharmaceutical companies, patents safeguard investment in compound development and guarantee the ability to continue research for much needed medicines in the future.

It’s not only the research and development of medicines that needs to be taken into consideration, but the approval process as well. Australians are privileged to live in a country that values rigorous testing to ensure all medicines are safe and efficacious.

However, this requires years of hugely expensive clinical trials – all of which could be undermined by an adverse patent ruling depriving the pharmaceutical company of the ability to recoup its research and development expenditure.

We operate in a global market. If a medicine is not protected by a patent either because the patent application is rejected, or a granted patent is subsequently revoked in one country, a strategic decision must be made as to whether it is feasible to introduce that medicine into that or other countries.

For pharmaceutical companies, all these factors, especially stimulation of innovation in the life science sector, must be considered. That is why I advocate for strong intellectual property rights.

Australia’s patent system has tightened significantly over recent years, by lifting the standard that must be satisfied to obtain patent protection and thereby evolving into a standard more closely aligned with the position in the US and Europe.

Weaker patent applications are rejected with the result that patents granted in Australia are stronger, thereby providing protection for their owners and eliminating weaker patents that were previously expensive obstacles to market entry.

Given Australia’s link to Asia and the opportunities across its emerging markets, the benefits offered by a stronger patent system will help create confidence in the Australian patent system, contributing to economic growth and foreign investment.

However, although Australia has made the necessary changes to patent policy over recent years, a period of IP stability is needed to enable the country to continue to attract investment and safeguard the future of the national pharmaceutical and biotechnology sectors.

An environment that supports innovation and is not undermined by constant change will provide the confidence for multinationals to increase their local presence. It will also encourage investors to put more venture capital behind emerging companies.

In early November, the Australian Productivity Commission announced an IP inquiry, with the findings expected to be released in August 2016. The inquiry will examine whether Australia has the right balance between promoting competition and protecting IP. This review has the potential to have a profound impact on how every sector in Australia operates.

The inquiry is timely given the recent decision in D’arcy v Myriad Genetics Inc [2015] HCA 35, where the High Court ruled that isolated DNA was not a patent-eligible subject matter. While the patenting of human genes and their commercial uses is a difficult ethical, emotional and commercial subject, any reduction in patent protection has the potential to affect the willingness of innovator companies to invest.

There are lessons the Australian Government can learn from how the TPP was managed and the damage caused through uncertainty surrounding innovation and competition. These lessons should be taken into consideration as the Productivity Commission inquiry gathers steam and conversations around its impact reach the public agenda.

As Australia continues its shift from the mining boom to a knowledge economy, there needs to be certainty around the laws that govern and reward Australia’s innovators. This will allow the nation to tackle tomorrow’s challenges and ensure that we remain innovatively agile and globally competitive into the future.

Emma Press is the general counsel and head of law, patents and compliance at Bayer Australia Ltd.