Labor's amendment of the free-trade agreement to penalise drug companies for lodging "dodgy" patent claims is a good one in theory, but impossible in practice. The amendment would render it an offence to lodge spurious patent claims in order to prevent cheaper generic drugs from entering the market.
This practice, generally referred to as"evergreening", occurs where large manufacturers of "blockbuster" drugs seek to extend the effective life of their monopoly by introducing new patents before the old one has expired.
In doing so, they are not introducing new products, but rather patents on methods of administration, or other non-essential features of the drug.
Evergreening is rife in the US, but is has yet to become a widespread problem in Australia. Nevertheless, the practice is easily transportable and could occur equally in Australia, if only because our patent laws don't actually preclude it.
This is an undesirable practice for various reasons, the main one being that it keeps drug prices high by preventing competition, while consumers get little in return for the extension of this monopoly.
Some of these patents can be innovations as minor as the shape, colour or packaging of pills, and still be enough to delay generic patents for a significant period of time.
But the situation in the US is far more onerous than that in Australia, a fact that initially gave rise to concern within our pharmaceutical industry.
The US process involves automatic and lengthy injunctions placed on the marketing of generic drugs each time a pharmaceutical company takes action to prevent a generic drug from entering the market.
Given that we had pledged to adopt various other US-style features into our intellectual property law, it seemed entirely possible at one stage that a similar patent process would be a feature of the Australia-US free-trade agreement.
The good news is that under the agreed scheme, generic drug manufacturers in Australia will be spared the worst of the US system.
Instead, the FTA would require them to certify either that they would not propose to infringe a patent when they marketed a drug, or that they had notified the patent holder of their marketing application.
The FTA legislation will place an extra burden on manufacturers of generic drugs and reduce their market advantage by requiring this preliminary notification.
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