Trade Minister Andrew Robb is expected to submit a compromise proposal on IP for pharmaceuticals at ministerial talks early this week on the 12-country Trans Pacific Partnership Agreement (TPPA).
US-based sources told BiotechDispatch the USTR is anticipating some movement from Australia on data exclusivity, although it is not expected to be enough to satisfy US demands.
Intellectual property protection for pharmaceuticals is one of a small number of unresolved issues ministers will be attempting to finalise at the meeting in Atlanta.
The US wants Australia to adopt a 12 year data exclusivity period for biologics, up from the current five year period for all pharmaceuticals.
While the US and several other countries are insisting on higher intellectual property standards across all 12 markets, for Australia, which already has a comparatively high standard, the practical impact would be largely limited to the longer data exclusivity period for biologics.
The fact ministers have travelled to the meeting has been interpreted as a sign of optimism the agreement could be finalised.
Failure to finalise the agreement this week could deliver a long-term setback to the hopes of securing the TPPA, with the political cycle turning in Canada and the US.
Australia's approach to pharmaceutical issues in the TPPA appears to be replicating the experience with the US-Australia Free Trade Agreement (FTA) more than ten years ago.
In the FTA, the then Howard Government eventually relented in its sustained intransigence on including the PBS in the negotiations in the face of US demands.
While Mr Robb has consistently refused to countenance any compromise on the Government's opposition to an extended data exclusivity period in the TPPA, including during a recent address to the National Press Club in Canberra, the US appears to be standing firm in its demand that the agreement include higher intellectual property standards for pharmaceuticals.
The recent ascension of Malcolm Turnbull and his stated support for innovation has not gone unnoticed, with sources telling BiotechDispatch the USTR will be reminding Australian negotiators of the relationship between support for innovation and strong intellectual property protection.
Sources anticipate a potential discussion between US President Obama and Mr Turnbull this week to resolve the issue.
The USTR has been frustrated by Australian arguments against an extended data exclusivity period for biologics. Australian negotiators are thought to have argued an essentially contradictory position - that existing arrangements provide longer protection periods, in practice, while legislating the longer term would increase the cost of the PBS.
USTR negotiators have also highlighted that any additional cost from extending data exclusivity would pale in comparison to the savings generated in the recently legislated multi-billion dollar PBS Access and Sustainability Package.