Australia Announces Review of Pharmaceutical Patents

In the search for the cure for Tasmania, patents are often considered an important incentive for innovation. This makes IP Australia's announcement of a review of Pharmaceutical Patents an intriguing development.  The review will focus on three main issues: access to affordable medicines, a planned review of Australia's pharmaceutical patent extension and the effects of these patents on competition, innovation and investment.

Innovation occurs in leaps and bounds

Due in early 2013:
"The review will evaluate whether the system for pharmaceutical patents is effectively balancing the objectives of securing timely access to competitively priced pharmaceuticals, fostering innovation and supporting employment in research and industry.

Central to this will be an analysis of the pharmaceutical extension of term provisions of the Patents Act 1990 (s.70).

The review will also consider whether there is evidence that the patent system is being used to extend pharmaceutical monopolies at the expense of new market entrants. In doing this, the review will consider how patents for new formulations are granted, consider the treatment of new methods of manufacturing and new uses of known products, the impact of contributory infringement provisions and the impacts of extending patent monopolies on entry of generic pharmaceuticals into the market.

Should such evidence be found, the review should provide an assessment of the subsequent impact on competition, innovation and investment."

The review hits on some of the key debates in patents and pharmaceuticals.  Access to affordable medicines is an important concern for society and is often seen to compete with the need to create financial incentives to develop new medicines.  The effect of patents on competition and the key word "evidence" are also hot topics in economics of IP.

However, the catalyst for the consultation appears to be a review of the patent term extension for pharmaceuticals (known as a Supplementary Protection Certificate (SPC) in Europe.)  The extensions were introduced to encourage innovation in pharmaceuticals and to mitigate the effective shortening of pharmaceutical patents stemming from long regulatory drug approval processes.  However, these extensions also represent a strengthening of patent protection which potentially upsets the balance of social welfare and innovator's incentives. SPCs were quite popular in the late 1980s and 1990s when most of the major markets introduced them.  An interesting point for the pharmaceutical industries is that, in countries with socialised health systems, the body responsible for regulating the industry and its largest customer are one and the same (the government.)

It looks like Ben Mitra-Kahn, who is leaving the UK IPO to take up a post as Chief Economist of IP Australia in November, will have his work cut out for him.  [Merpel congratulates Ben on the new post and asks if he may be rooing his decision...]

So, as we ponder the koala-ty of pharmaceutical patents and their role in innovation, should we re-think SPCs?  It will be interesting to see where Australia takes this, and if it is the start of a trend.