Productivity Commission proposes a 'free-ride' for Australia

Latest News

The final report of the Productivity Commission's inquiry into Australia's intellectual property arrangements is almost certain to trigger a global firestorm from the research-based life sciences industry.

The final report has stuck by the controversial recommendations contained in its draft report, suggesting radical changes to pharmaceutical patent law, including what amounts to the practical abolition of the five-year patent term extension.

A review of the section on pharmaceutical patents suggests its primary source was the 2013 Pharmaceutical Patents Review that was shelved by the former government following a visceral response from the research-based sector globally.

The challenge for the Turnbull government is how to respond to the report in the context of a political and policy agenda that places heavy emphasis on innovation.

The report acknowledges the increasing cost and complexity of drug development, including requirements imposed by regulators, but then essentially argues Australia should 'free-ride' on larger commercial markets.

"The Commission understands that, in most cases, where drugs are developed and approved for sale in larger overseas markets, the additional burden of obtaining regulatory approval in Australia (relying largely on data already submitted overseas) is not large and would not be material to the global returns available from a given drug."

It calls for the virtual abolition of the patent-term extension but acknowledges Australia is heavily constrained by its international trade commitments.

It recommends extensions only be granted where delays occur in the statutory 255 day TGA approval process, which clearly absolves regulators from any role in establishing the multi-stage technical requirements of what is a ten-year drug approval process.

It claims abolishing patent-term extensions would save the PBS $258 million annually.

Only the strict wording of Australia's obligations under trade agreements, chiefly the US-Australia Free Trade Agreement, spare the research-based sector from changes in relation to data protection and manufacture for export. The report, which reflects the largely anti-patent position pushed in the dumped Pharmaceutical Patents Review, which again appeared to be its primary source, unsurprisingly argues against a longer data protection period for biologics.

The report will undoubtedly generate a direct response from the US, Europe and Japan. It will also need to be considered against the backdrop of Australia's desire to negotiate a free trade agreement with post-Brexit UK.