Australia targeted in US trade review

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US President Donald Trump has issued an Executive Order ordering officials to conduct 'comprehensive performance reviews' of all existing trade agreements.

The order requires officials to review the performance of trade agreements against their commitments on intellectual property, policies targeting innovation, research and development, and even market access.

The order will apply to the US-Australia bilateral trade agreement ('FTA').

The FTA includes explicit commitments on the PBS and intellectual property. Many of the processes now taken for granted, including sponsor hearings before the Pharmaceutical Benefits Advisory Committee and independent reviews of its recommendations, were commitments made by the Australian government in the FTA's PBS side letter.

It also entrenched many aspects of the existing listing process, including sponsor responses to reports and evaluations from PBAC sub-committees.

US-based PhRMA has recently ramped up criticism of Australia's performance on its FTA commitments, notably in relation to intellectual property.

It has criticised the lack of a US-style patent notification system in Australia.

The US FDA maintains a list of products and current uses under patient in its 'Orange Book'. It will not grant marketing approval for a generic copy of a product that would infringe a patent listed in the 'Orange Book'.

In contrast, while a system was introduced in Australia following ratification of the FTA, it does not involve any substantive role for the TGA and gives patent holders virtually no capacity to challenge a product until after it is registered.

The system requires companies seeking marketing authorisation to simply declare to the TGA their application does not breach any patent. The TGA will not register a product if a company declares it will infringe a patent. Yet the regulator has no obligation to test an applicant's declaration.

PhRMA has also criticised the Australian government's pursuit of companies over failed patent defence cases.

As recent as late last week, PhRMA CEO Stephen Ubl accused Australia of ignoring its FTA commitments by "creating a 'poison pill' measure that effectively prohibits American and other innovator companies from challenging the theft of their patents.”

Mr Ubl argued the cases ultimately undermine investment in innovation and jobs in the US.

It is unclear what FTA provision would prevent the Australian government from pursuing the cases.

An additional challenge for PhRMA is Australia's exclusion from a list of countries of 'concern' in the latest Special 301 report from the United States Trade Representative (USTR). Australia barely rated a mention in the report, which surprised many, given ongoing concern regarding the recommendation of last year's Productivity Commission report that recommended the wholesale winding back of pharmaceutical patents.

The USTR produces the Special 301 Report every year as a review of the state of intellectual property protection and enforcement across major trading partners.