IP experts cast doubt on Labor FTA changes

IP industry doubts have emerged as to whether the Australian Labor Party's proposed changes to Free Trade Agreement legislation -- to prevent drugmakers from using spurious patents to block generics -- would be valid.

Labor's proposal, made last week, would see penalties imposed on companies who filed 'dodgy' patents for the purpose of extending a monopoly. But it has drawn a mixed response from legal experts and the biopharmaceutical community.

"We believe that if there is a penalty, there's a chance that people will say they are not going to wear the risk, and therefore won't file a patent," said Malcolm Royal, the president of the Institute of Patent and Trade Mark Attorneys.

The issue at the heart of the controversy is that generics companies seeking a licence to manufacture a drug will have to certify that they are not infringing anyone else's patents, or if they are -- as they often will be when they are readying themselves to launch a generic version of a drug as soon as the original product comes off patent -- they will have to notify the patent holder, which could cause the patent holder to take up action against the generics company.

The potential for legal action might discourage small generics companies from seeking to bring their products to market, which ultimately could have a negative impact on the cost of drugs, said Prof Andrew Christie, the director of the Intellectual Property Research Institute of Australia, at the University of Melbourne.

According to Christie, the proposed Australian legislation resulting from the FTA is a milder version of the rules already in existence in the US. "It suggests that the FTA negotiators might have done quite well," he said.

But the amendments suggested by the Labor party may not be workable, Christie said, and would be hard to draft without affecting the patent system. "One might speculate that for the proposal to be legally valid, it would have to be very narrowly and specifically applied and hence difficult to put into practice," he said.

Central to the issue is the practice of 'evergreening' -- a strategic practice commonly used by pharmaceutical companies to extend the life of their patents, and therefore their monopoly on the market. This process usually involves filing additional patents to cover re-engineered formulations, delivery methods or new uses of a drug, giving the owner of the patent a longer period of patent protection.

But according to Pascal Hickey, the COO of Australian company Eiffel Technologies (ASX:EIF), whose supercritical fluid technology is precisely the kind of drug re-engineering that can be used to extend the life of a patent, many people don't understand the patent process, which added to the confusion around the issue.

"You have to come up with a new product to get a patent -- a novel product with benefits over the existing product," he told Australian Biotechnology News. "Once the patent on a drug has run out, there is no legal recourse for preventing a generics company from putting a generic on the market."

In most cases, Hickey said, a new patent covering a new formulation of a drug would not stop sales of the older product. A good example, he said, was the rapid-acting formulas of common painkillers which often competed with other formulations from the same manufacturer as well as other brands. "There is often room for both types of products in the marketplace," he said.