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Review of the Patents Act 1953. The pharmaceutical patent term in New Zealand. Discussion paper [2003] NZAHGovDP 3 (11 June 2003)
Last Updated: 12 July 2020
Review of the Patents Act 1953
The Pharmaceutical
Patent Term in New Zealand
Discussion Paper
June 2003
ISBN 0-478-26333-3
© Crown Copyright
First published June 2003 by the Regulatory and Competition Policy Branch
Ministry of Economic Development
P O Box 1473 Wellington New Zealand
http://www.med.govt.nz
Permission to reproduce: The copyright owner authorises reproduction of
this work, in whole or in part, so long as no charge is made for the supply of
copies,
and the integrity and attribution of the work as a publication of the
Ministry of Economic Development is not interfered with in
any way.
Contents
Disclaimer
The opinions contained in
this publication are those of the Ministry of Economic Development and do not
reflect official government
policy. Readers are advised to seek specific legal
advice from a qualified professional before undertaking any action in reliance
on the contents of this publication. While every effort has been made to ensure
that the information set out in this publication
is accurate, the Crown does not
accept any responsibility whether in contract, tort, equity or otherwise, for
any action taken, or
reliance placed on, any part, or all, of the information in
this publication or for any error in or omission from this publication.
Information for Persons Making Submissions
Submissions in relation to
this discussion paper are invited from researchers, pharmaceutical companies,
health providers and the
public. Submissions will be considered in the
development of policy recommendations to the government on possible legislative
reform.
To aid respondents in making submissions, questions for discussion can be found
at the end of the document.
Submissions should be sent to:
Pharmaceutical Patent Term Submissions Attention Warren Hassett
Regulatory and Competition Policy Branch Ministry of Economic Development
PO Box 1473 WELLINGTON
Emailed submissions are also welcome. They should be addressed to: warren.hassett@med.govt.nz.
Submissions may be subject to disclosure under the Official Information Act
1982. Persons making submissions that include commercially
or otherwise
sensitive material that they wish the Ministry to withhold under the Act should
clearly identify the relevant information
and the applicable grounds under which
the Ministry could withhold the information.
The closing date for submissions is Friday 11 July
2003.
Introduction
In December 2002 Cabinet
decided that the issue of patent term extension for pharmaceuticals should be
considered as part of Stage
3 of the current review of the Patents Act 1953.
A number of other countries, including many of New Zealand’s major trading
partners make provision for patent term extension
for pharmaceuticals.
The main reasons advanced for pharmaceutical patent term extension in those
countries that provide for it are:
- To ensure that
the patent system continues to provide adequate incentives for investment in the
development of new pharmaceuticals;
and
- To provide
incentives for pharmaceutical companies to invest in the country providing for
the extension.
The main reason advanced for not extending pharmaceutical patent terms is the
cost that would be imposed on consumers. These costs
occur directly through
increased retail pharmaceutical prices and indirectly though higher costs to the
public health system.
The patent term for pharmaceuticals has implications for the aims of the
government’s Growth and Innovation Framework and for
the objectives of New
Zealand’s public health system. In considering this issue, the government
will be concerned to achieve
an appropriate balance between the objectives of
fostering increased investment in innovation within New Zealand and ensuring
that
New Zealanders have access to high quality, affordable pharmaceutical
products.
This document sets out the issues surrounding patent term extension for
pharmaceuticals and seeks submissions from interested parties
on the matters
raised as a first step in the government’s consideration of this
issue.
To aid respondents in making submissions, questions for discussion can be found
in Appendix 2.
Patent Term for Pharmaceuticals
Patent Term for Pharmaceuticals: Why Is It an Issue?
- The
grant of a patent gives the patent owner the exclusive right, for a limited
time, to commercially exploit the invention. This
gives the patent owner an
opportunity to make a profit from the patented invention, and thus earn a return
from investment in innovative
activity.
- Currently,
the maximum term of a New Zealand patent is twenty years from the date of filing
of the complete specification. No extension
of this term is provided for. This
regime was instituted in 1994, when the Patents Act 1953 was amended to bring it
into line with
New Zealand’s obligations under the TRIPS1
agreement. The TRIPS Agreement requires member states to provide a minimum
patent term of twenty years from the date of filing of
the patent application.
There is no requirement to provide a longer term, although member states are
free to provide a longer term
if they wish.
- Prior
to the 1994 amendments, the patent term in New Zealand was a maximum of 16 years
from the date of filing, with provision for
up to 10 years extension on grounds
that included inadequate remuneration.
- Most
of the patent extensions granted prior to the 1994 amendments were for
pharmaceuticals, the grounds for extension being inadequate
remuneration. The
average length of extension granted was about 7.5
years.2
- In
most countries including New Zealand, pharmaceuticals cannot be marketed until
they have received approval from the appropriate
regulatory authority. The time
required to carry out the tests and trials required to obtain approval can be
substantial, and this
time has been increasing in recent years, due to increased
safety standards being applied by regulatory authorities
internationally.
- As
pharmaceuticals are primarily developed for international markets, the time
required to carry out the safety and efficacy tests
is generally determined by
international regulatory requirements. New Zealand is rarely the market for
first approval. The New Zealand
regulatory process takes approximately 18
months. It has been estimated, however, that the time taken to carry out all the
tests
and trials required before final approval is obtained in New Zealand has
increased from an average of 4-5 years in the late 1960s
to an average of over
10 years in the 1990s.3 This reduces the time in which the owners of
patents for pharmaceuticals can market the pharmaceutical under patent
protection. That
is, the “effective patent life” (EPL), which is the
portion of the patent term remaining after a pharmaceutical has been
authorised
for sale, is significantly less than the maximum patent term
available.
1 Agreement on Trade Related Aspects of Intellectual
Property Rights, Annex 1C to the Agreement establishing the World Trade
Organisation
(WTO).
2 John Parker Pharmaceutical Patent Extensions in
New Zealand 1953 to 1995: An Appraisal, Economics Discussion Paper No. 0111,
University of Otago, 2000.
3 John Parker "Pharmaceutical Patent Term Restoration
in New Zealand," Prometheus, Vol. 18, No. 3, 2000.
- Some
non-pharmaceutical inventions, such as agricultural chemicals or new organisms,
may also be subject to delays in gaining marketing
approval. Most
non-pharmaceutical inventions, though, can be placed on the market fairly soon
after the patent application has been
filed: for these inventions the effective
patent life is similar to the maximum patent term
available.
- As
a consequence of the reduced EPL for pharmaceuticals, the owners of
pharmaceutical patents advocate that the patent term for pharmaceuticals
be
extended. They argue that such extensions are required to compensate patent
owners for the portion of the patent term lost while
carrying out the tests and
trials required to obtain marketing approval.
- Most
of the costs in developing a new pharmaceutical lie in identifying and screening
new chemical entities that may have pharmaceutical
application in order to
establish their safety and effectiveness. These costs are considerable, and
typically amount to hundreds
of millions of dollars. Once a new chemical
entity has been identified as safe and effective it is relatively easy and cheap
for
others to copy it as they do not have bear these development costs.
Pharmaceutical manufacturing costs are, relatively speaking,
low.
- Once
the patent on a pharmaceutical has expired, generic pharmaceutical companies are
free to copy the pharmaceutical and determine
a price based on their costs.
These prices are significantly lower than those for patented products, which is
why many governments
support the use of generic drugs.
- Because
of this, the pharmaceutical industry argues that if the EPL is too short, the
ability of pharmaceutical companies to recover
their research and development
costs is reduced. If they cannot recover their costs, pharmaceutical companies
may reduce their investment
in research and development, leading to a reduction
in the number of new drugs entering the market.
- When
considering this argument it is necessary to take into account the size of the
relevant market. Most of the world’s pharmaceutical
companies are based in
North America or Western Europe and earn a large proportion of their revenue in
these markets. North America
and Western Europe together account for 60% of the
world pharmaceuticals market and are major exporters of
pharmaceuticals.
- If,
as a consequence of reduced EPL in these markets, pharmaceutical companies were
to reduce their levels of investment, then this
could adversely effect the
economies of North American and western European countries. If this reduced
investment led to fewer new
high health benefit pharmaceuticals entering the
market, this could also have negative consequences for human
health.
“Springboarding”
- In
December 2002, the infringement provisions of the Patents Act 1953 were amended
to add a “Regulatory Review Exception”
(often known as a
“springboarding” provision). The amendment, which is modeled on a
similar provision in the Canadian
Patents Act, provides
that:
It is not an infringement of a patent for a person to make, use,
exercise, or vend the invention concerned solely for uses reasonably
related to
the development and submission of information required under New Zealand law or
the law of any other country that regulates
the manufacture, construction, use,
or sale of any product.
- This
amendment would allow the production, sale, or use of a patented product,
without the patent owner’s permission, solely
for the purposes of
obtaining marketing approval. Such an exception to patent rights (often known as
“springboarding”)
is intended to allow generic products including
generic pharmaceuticals, to enter the market shortly after the patent on the
pharmaceutical
expires.
- Without
this exception, manufacturers of generic products that require marketing
approval (such as pharmaceuticals) would have to
wait until the patent expired
before starting the process of obtaining that approval. As it may take up to two
or three years to
conduct the testing required to obtain marketing approval,
this has the effect of giving patent owners a period of market exclusivity
after the expiry of the patent.
- The
owners of pharmaceutical patents have argued that springboarding provisions
represent a significant erosion of their patent rights.
They also argue that
this is an argument for extending patent terms.
- In
March 2000, a Panel Report4 from the Disputes Settlement body of the
World Trade Organisation ruled that springboarding provisions in the Canadian
Patents Act
were “not inconsistent” with the TRIPS agreement after a
challenge from the European Union. Canada does not provide for
patent term
extension for pharmaceuticals.
- The
Panel Report accepted that the springboarding provision (referred to as a
“regulatory review exception” in the report)
was consistent with
Article 305 of the TRIPS Agreement. In referring to the additional
period of market exclusivity available if generic manufacturers were not
permitted
to conduct testing prior to the expiry of a patent, the Report said
(para 7.57):
The additional period of market exclusivity in this situation is
not a natural or normal consequence of enforcing patent rights. It
is an
unintended consequence of the conjunction of the patent laws with product
regulatory laws, where the combination of patent
rights with the time demands of
the regulatory process gives a greater than normal period of market exclusivity
to the enforcement
of certain patent rights.
- The
Panel Report also went on to comment on the question of patent term extension
(para 7.82):
On balance, the Panel concluded that the interest claimed on
behalf of patent owners whose effective period of market exclusivity
had been
reduced by delays in marketing approval was neither so compelling nor so widely
recognized that it could be regarded as
a "legitimate interest" within the
meaning of Article 30 of the TRIPS Agreement. Notwithstanding the number of
governments that had
responded positively to that claimed interest by granting
compensatory patent term extensions, the issue itself was of relatively
recent
standing, and the community of governments was obviously still divided over the
merits of such claims. Moreover, the Panel
believed that it was significant that
concerns about regulatory review exceptions in general, although well known at
the time of
the TRIPS negotiations, were apparently not clear enough, or
compelling enough, to make their way explicitly into the recorded agenda
of the
TRIPS negotiations. The Panel believed that Article 30's "legitimate interests"
concept should not be used to decide, through
adjudication, a normative policy
issue that is still obviously a matter of unresolved political debate.
4 Panel Report WT/DS114/R
5 “Members may provide limited exceptions to the exclusive
rights conferred by a patent, provided that such exceptions do not
unreasonably
conflict with a normal exploitation of the patent and do not unreasonably
prejudice the legitimate interests of the
patent owner, taking into account the
legitimate interests of the patent owner.”
How Might Patent Term Extension in New Zealand Be
Implemented?
- There
are no internationally recognised standards for implementing patent term
extension. Countries are free to decide for themselves
the conditions under
which they will grant extensions, provided that these conditions are consistent
with international agreements
such as the TRIPS Agreement. Those countries that
have implemented patent term extension have adopted broadly similar standards.
Appendix 1 lists the features of patent term extension as it is implemented in
some of these countries.
Is There a Case for Pharmaceutical Patent Term Extension in New
Zealand?
- The
New Zealand market represents only a fraction (much less than 1%) of the world
market for pharmaceuticals, and is a significant
net importer of
pharmaceuticals. The small size of the New Zealand market means that the nature
and scope of the patent rights available
in New Zealand (including patent term)
are unlikely to have any influence on whether or not an overseas pharmaceutical
company decides
to invest in developing a new
pharmaceutical.
- This
is likely be the case even for New Zealand based pharmaceutical companies. The
very high costs involved in developing new pharmaceuticals
mean that it is the
availability of returns from large markets such as those in Europe and North
America that are likely to determine
whether it is worthwhile to invest in the
development of a new pharmaceutical.
- The
reasons advanced for providing pharmaceutical patent term extension in such
jurisdictions as the United States and the European
Union are therefore not
necessarily applicable to New Zealand. The question needs to be asked as to
whether there are any other reasons
why New Zealand might consider extending the
patent term for pharmaceuticals.
- Two
main reasons can be advanced which might be used to justify patent term
extension for pharmaceuticals in New Zealand:
- to avoid
accusations of “free riding”; and
- to provide an
incentive for overseas pharmaceutical companies to increase (or at least
maintain) their levels of investment in New
Zealand and thus contribute to the
development of the New Zealand pharmaceutical industry.
- Failure
to allow patent term extension may lead to accusations that New Zealand is
“free -riding”; that is, benefiting
from the investment made by
overseas companies in developing new pharmaceuticals, while contributing less
than a “fair share”
of the costs. This is perhaps a
“moral” rather than an economic problem, although it could become an
economic one if
failure to extend the patent term led, for example, to reduced
investment in New Zealand by pharmaceutical companies.
- While
the provision of patent term extension in New Zealand is unlikely to affect the
total level of investment worldwide by pharmaceutical
companies, it may have an
influence on where this investment takes place. Pharmaceutical companies have
indicated that the patent
term is one of the issues that they consider when
deciding where to invest.
- Many
of the countries that New Zealand is likely to be competing with for
pharmaceutical company investment already have patent term
extension (for
example, the United States, European Union, Australia). There is a risk that if
New Zealand does not also offer patent
term extension, the pharmaceutical
companies could decide to invest their research and development funds in these
countries rather
than in New Zealand. Any reduction in investment by
pharmaceutical companies could adversely affect the future development of
innovative
New Zealand pharmaceutical or biotechnology
companies.
- There
are, of course, factors other than the patent term that may influence the
activities of pharmaceutical companies in New Zealand.
Pharmaceutical companies
have identified a range of other reasons why New Zealand may be considered to be
a less favorable place
for R&D investment compared with other OECD nations.
These include:6
- a limited
venture capital base;
- a lack of
science graduates in key positions;
- lack of
qualified international R&D management; and
- low investment
in R&D by the rest of the private sector.
- The
small size of the New Zealand market, and restructuring amongst the
international pharmaceutical companies may also be factors
in discouraging
investment in New Zealand by pharmaceutical companies.
- On
the other hand, there are a number of factors that make New Zealand an
attractive place to do research. These
include:7
- the calibre of
investigators conducting clinical trials is of the highest order and this is
recognised internationally by pharmaceutical
companies;
- the results of
research and the integrity of researchers and data are rated
highly;
- New Zealand
researchers deliver on time and on budget;
- researchers are
proficient in the language of international pharmaceutical
companies,
i.e. English;
- research
facilities, although in some cases aging, are of a good
standard;
- communications
are relatively cheap and effective;
- New Zealand is a
cost-effective place to do trials.
6 New Zealand Institute of Economic Research
Bio-Pharmaceuticals – A Pathway to Economic Growth?, 2002, Part 1,
p15.
7 Ibid., Part 2, pp. 18 – 19.
Implications for New Zealand of Pharmaceutical Patent Term
Extension
- Extending
the patent term for pharmaceuticals in New Zealand may provide benefits for the
New Zealand economy, but will also impose
costs. In deciding whether New Zealand
should provide for pharmaceutical patent term extension, these costs and
benefits will need
to be considered to determine what the net effect on New
Zealand of patent term extension will be.
Potential Benefits of Extending the Patent Term for
Pharmaceuticals
- As
noted above, any benefits to New Zealand from extension of patent term for
pharmaceuticals are likely to lie in the possibility
of increased investment (or
at least maintenance of existing levels of investment) in New Zealand by
overseas pharmaceutical companies
that occurred as a
result.
- What
form might this investment take? The development of a new pharmaceutical
includes several stages:
- discovery
of a potential new pharmaceutical;
- preliminary
testing;
- assessment
of safety and toxicity
- assessment
of efficacy;
- clinical
trials; and
- marketing
and production.
- The
bulk of the funds that go into research and development are spent in steps iii,
iv and v. The pharmaceutical industry believes
that increased investment in
those areas would provide the infrastructure to develop the first three steps in
the pharmaceutical
development process.8 That is, increased
pharmaceutical company investment in New Zealand has the potential to increase
New Zealand’s capability to
carry out basic pharmaceutical
research.
- In
Biopharmaceuticals – A Pathway to Economic Growth?, a report
prepared for the Researched Medicines Industry by the New Zealand Institute of
Economic Research, it was suggested (see
Part 1 p25) that:
The scale of global R&D investment and the developments in
biotechnology favoring smaller specialist R&D providers, suggest
that New
Zealand has an opportunity to build on its existing agriculturally based
biotechnology sector and nascent biotechnology
industry to expand exports
substantially.
- This
suggests that in the future, more and more biotechnology research will be
carried out by specialist research and development
firms rather than by the
major pharmaceutical companies. If extending the patent term for
pharmaceuticals, by stimulating greater
investment in New Zealand by overseas
pharmaceutical companies, led to an increase in
8 Ibid., Part 1 p19.
New Zealand’s capacity to carry out such research, then New Zealand could
be well placed to take advantage of this trend. This
would contribute to the
goal of the government’s Growth and Innovation Framework to build a
“knowledge economy”.
Will Pharmaceutical Patent Term Extension Result in
Increased Investment in New Zealand?
- The
effect of extending the term for pharmaceutical patents would be to increase the
revenue that pharmaceutical companies derive
from their New Zealand operations.
There is, though, no certainty that this increased revenue would lead to
significant additional
investment in research and development activities in New
Zealand by overseas pharmaceutical companies.
- This
is because nearly all the profits that might be earned from any new
pharmaceuticals developed from these activities would be
earned in other, larger
markets such as the United States and the European Union rather than in New
Zealand. Increasing the length
of the patent term for pharmaceuticals in New
Zealand will not affect the level of profits from these other markets. This
suggests
that the issue of the patent term in New Zealand should not be a
significant factor in pharmaceutical companies’ decisions
on whether to
invest in New Zealand.
- As
noted above, any benefits to New Zealand from pharmaceutical patent term
extension are likely to lie in the possibility of increased
investment in New
Zealand by overseas pharmaceutical companies. This raises the question: what is
the likelihood that these companies
would increase their investment in New
Zealand in return for an extended patent term for
pharmaceuticals?
- When
considering whether it would be possible to require pharmaceutical companies to
increase their levels of investment in New Zealand
as a condition of extending
the term of their patents, it is necessary to have regard to New Zealand's
international obligations.
- Among
other things, Article 27.1 of the TRIPS Agreement specifies that patent rights
shall be enjoyable without discrimination as
to the field of technology or
whether the products are imported or locally produced. Requiring increased local
investment as a condition
of pharmaceutical patent term extension may be seen as
a form of discrimination inconsistent with Article 27.1. No other country
that
provides for pharmaceutical patent term extension (see Appendix 1) requires
increased investment as a condition of extension.
- If
the provision of pharmaceutical patent term extension did lead to an increase in
investment in New Zealand by pharmaceutical companies,
there would be benefits
to some sectors of the New Zealand economy. It is not clear, though whether the
overall benefits of this
increased investment would be sufficient to offset the
costs imposed on New Zealand by an extended patent term. That is, would
providing
for pharmaceutical patent term extension provide a net benefit to New
Zealand as a whole, even though there may be benefits to particular
groups
within the economy?
- It
may also be difficult to repeal provisions for pharmaceutical patent term
extension if, once provided, it was determined that they
were providing no
benefit to New Zealand. Repealing provisions for patent term extension would not
contravene New Zealand’s
obligations under the TRIPS Agreement, provided
that New Zealand maintained a minimum 20 year patent term. Such a move could be
seen
as a “backward” step by New
Zealand’s major trading partners and may harm New Zealand’s
relationship with those countries.
- In
summary, then, there is no guarantee that extending the patent term for
pharmaceuticals will lead to increased levels of investment
in New Zealand by
overseas pharmaceutical companies. If investment levels are increased, then
there is no guarantee that the benefits
of the increased investment would be
sufficient to offset the costs.
Potential Costs of Extending the Patent Term for
Pharmaceuticals
- If
the patent term for pharmaceuticals is extended, then this would delay the entry
of generic pharmaceuticals onto the New Zealand
market. Generic pharmaceuticals
are generally cheaper than the original patented pharmaceutical. This would have
the effect of increasing
the total amount that New Zealanders pay for patented
pharmaceuticals.
- The
cost of this would be reflected through higher prices to consumers of the
pharmaceuticals. For New Zealand, most of the cost would
be incurred by the
publicly funded health system. While the actual cost would depend on the design
of an extension, the Government’s
agency for managing pharmaceutical
expenditure, PHARMAC, has estimated that the cost of extending patents over the
next four years
could be from $85 to
$135 million depending on PHARMAC’s ability to renegotiate supply
agreements. This will either reduce the availability of subsidised
pharmaceuticals to New Zealanders or, to maintain the same level of access,
require the government to increase health sector funding.
There will also be
increased costs to consumers for nonsubsidised pharmaceuticals.
- As
most pharmaceutical patents granted in New Zealand are owned by overseas
companies, it is likely that most of the extra revenue
generated for patent
owners by an extended patent term will flow overseas.
- An
extended patent term for pharmaceuticals may also disadvantage local
manufacturers of generic pharmaceuticals. As well as delaying
the entry of New
Zealand generic manufacturers into the local market, patent term extension may
also make it more difficult for them
to compete in export markets. Generic
manufacturers in countries that do not have patent term extension9
will be able to enter the market in those countries sooner than New
Zealand manufacturers can. In addition, foreign generic manufacturers
may be in
a stronger position to sell in New Zealand once the New Zealand patent expires,
as they will already be in production.
Alternatives to Patent Term Extension
- The
main benefit to New Zealand of extending the patent term for pharmaceuticals
would appear to be the possibility of increased local
investment by overseas
pharmaceutical companies. As discussed above, while pharmaceutical patent term
extension may result in an
increase in investment in New Zealand, there is no
guarantee that this investment will provide a net benefit.
- In
light of this, are there measures other than patent term extension which could
provide greater incentives for overseas pharmaceutical
companies to invest in
New
9 For example, Argentina, Brazil, Canada, China,
Hungary, India, Malaysia.
Zealand? If so, these measures may be more likely to provide a net benefit for
New Zealand than patent term extension.
- In
many OECD nations (but not in New Zealand), governments and pharmaceutical
companies have come to agreements over research and
development investment and
pharmaceutical pricing.10 Two examples of such agreements are found
in Canada and Australia. Both these schemes focus on pharmaceutical prices. Any
similar
scheme may have implications for how New Zealand manages its
pharmaceutical purchases.
- Canada’s
patent legislation also contains provisions (s79 – 103 of the Patents Act
1985) that allow pharmaceutical companies
to charge higher prices for their
patented pharmaceuticals where some of the research involved in developing the
medicine has been
done in Canada.
- The
Australian government’s Pharmaceutical Industry Investment Programme
(PIIP) compensates pharmaceutical companies for the
effects of low prices of
pharmaceuticals supplied under the Pharmaceutical Benefits Scheme (PBS) where
the companies are required
to increase their research and development
expenditure, as well as their domestic manufacturing and export activity in
Australia,
by agreed amounts.
- The
PIIP has also been the subject of a recent report by the Australian Productivity
Commission.11 The report included the following comments (“Key
Points”, pXIV):
The PIIP has been effective in stimulating R&D and, to a
lesser extent, value added in production. It has also had broader benefits
for
the capabilities of the industry, for example, by shifting R&D to more
complex areas.
Despite this effectiveness, the program is not likely to make
Australia better off overall.
- Its major
rationale - to help counter the effects of low PBS prices on pharmaceutical
activity - is, by itself, insufficiently strong
to justify a tax-funded program,
with the costs that this entails.
- Notwithstanding
some benefits, particularly from spillovers associated with R&D activity, it
is likely that the program generates
net costs for Australians. This mainly
reflects the distorting costs of raising taxes and the difficulties in targeting
the program
that lead to significant transfers abroad.
- It has some
inflexibilities in its design that reduce its benefits.
- These
agreements are in addition to other incentives for research and development
investment which governments may provide, for example,
tax incentives or direct
support for research or joint ventures.
10 Ibid., Part II, p14.
11 Productivity Commission Evaluation of the Pharmaceutical
Industry Investment Program, Research Report, AusInfo, Canberra, 2003. http://www.pc.gov.au/research/studies/piip/finalreport/
Appendix 1: Pharmaceutical Patent Term Extension in Other
Countries
- A
number of countries now provide for extended patent terms for pharmaceuticals.
These include Australia, Japan, Korea, Israel, the
United States, and the member
states of the European Union. Although there are no internationally agreed
standards for patent term
extension, the provisions for patent term extension in
those countries that provide for it contain some common
features:
- Extension is not
automatic; the patent owner must make a specific
application;
- The length of
the extension granted depends on the length of time between the date of filing
of the patent application and the date
of marketing
approval;
- A maximum
extension of 5 years is provided for;
- The rights of
the patent owner in respect of the patent are usually limited during the
extended term compared with the rights available
during the original
term.
- Although
some countries do provide for patent term extension for pharmaceuticals, many
countries do not. These include Argentina,
Brazil, Canada, China, Colombia,
Ecuador, Hungary, India, Malaysia, Peru, South Africa and
Venezuela.
Australia
- Sections
70 – 79A of the Australian Patents Act 1990 provide for the terms of
patents for pharmaceuticals to be extended by a maximum of five years. To
qualify for such an extension,
the pharmaceuticals must be included in the
Australian Register of Therapeutic Goods, and the period beginning on the filing
date
of the patent and ending on the first regulatory approval date for the
substance must be at least 5 years. These provisions were
inserted into the
Patents Act 1990 by the Intellectual Property Laws Amendment Act
1998.
- The
effect of these provisions is to provide for an EPL of at least 15 years
provided the time between the filing date of the patent
application and the date
of first regulatory approval is less than 10 years. If regulatory approval takes
longer than 10 years the
EPL will be less than 15 years. The rights of the
patent owner are restricted though. The patent owner’s rights are not
infringed
by exploitation of the patented product for non- therapeutic uses, or
for the purposes of gaining regulatory approval in Australia
or
elsewhere.12
European Union
- Members
of the European Union issue “supplementary protection certificates”
(SPCs) which can be in force for a maximum
of 5 years from the date that a
patent expires in cases where the commercialisation of a product has been
delayed by the need to
seek a marketing authorisation for that product.
Supplementary protection certificates are only available for medicinal products
and plant protection products. The protection is only
12 S78 Patents Act 1990.
available for the specific product for which marketing authorisation was sought,
not all the products covered by the patent.
- The
duration of an SPC is the time between the date of first regulatory approval in
an EU Member State and date of filing of the patent
application, less five
years, with a maximum duration of five years. It is necessary to apply for an
SPC on a nation by nation basis
throughout the EU.
United States
- Section
156 of the United States Patent Act allows for the term of a patent to be
extended where the patent relates to a product where
the commercial exploitation
of the product is delayed by the need to seek regulatory approval to market it.
The duration of the extension
is the period between the date the patent was
granted and the date of marketing approval, with the proviso that the sum of
this period
and the patent term remaining at the date of approval must not
exceed 14 years. This provides for a minimum EPL of 14 years. The
United States
administration has sought comparable patent extension policies from trading
partners.
Appendix 2: Questions
- Should
New Zealand make provision for extension of patent term for pharmaceuticals? If
so why?
- Will
extension of the pharmaceutical patent term lead to increased investment in New
Zealand by overseas pharmaceutical companies?
If so how likely is it that
increased investment will occur?
- What
would be the benefits to New Zealand of an increased level of investment by
overseas pharmaceutical companies (if it occurred)?
- What
would be the costs to New Zealand of extending the patent term for
pharmaceuticals?
- How
likely is it that the benefits to New Zealand of pharmaceutical patent term
extension will exceed the costs (that is, will there
be a net benefit to New
Zealand)?
- Are
there any alternatives to extending the patent term for pharmaceuticals that
might provide greater benefits for the same or lower
cost?
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