Shhhh! It is a secret!  The TPP fights it out over patents

Wednesday 27th November 2013

Most countries in Oceania will be familiar to some degree with the Trans Pacific Partnership Free Trade Agreement (TPPA).  This is currently being negotiated by a number of Governments across the Pacific Ocean.  Twelve countries are party to agreement negotiations: The United States of America, Japan, Mexico, Canada, Australia, Malaysia, Chile, Singapore, Peru, Vietnam, New Zealand and Brunei Darussalam.  The TPP negotiations have been conducted in strictest confidence and the contents of the negotiations have remained secret – until recently. 

Earlier this month, Wikileaks revealed that the TPP negotiations have become a little stuck around agreement on intellectual property rights.  One of the major sticking points relates to the patentability of medicines and extensions to the term of a patent. 

The US and Japan propose to allow patents to be granted when a patentee’s invention provides a distinguishing feature that makes the product novel, even if that product does not provide enhanced efficacy.  This suggestion is opposed by all of the other signatories.  Essentially, such a requirement might lead to patents being allowed for polymorphic forms of pharmaceutical compounds that provide no new benefit over any other already known polymorphic forms.  Therefore, extending a patentee’s monopoly without providing a product with an additional benefit, or potentially an inventive step.  At present in New Zealand, there must be a further advantage provided by a new polymorph, such as enhanced stability or enhanced efficacy.

The United States also proposes to adjust the term of a patent to “compensate for unreasonable delays” in the granting of the patent, and to also compensate the patentee for delays due to the marketing/regulatory approval processes.  At present, New Zealand does not permit any extension to the term of a patent due to time lost in gaining regulatory approval, resulting in a very short “effective” patent term being available once regulatory approval has been granted in New Zealand.  Patent terms for drugs are recognised as being critical to allow drug development companies to recoup the high costs associated with drug discovery and gaining regulatory approval.  However, the time to obtain regulatory approval for medicines is taking longer, making “effective” patent terms even shorter.  This means that costs of the patented pharmaceuticals are likely to be higher because manufacturers have a shorter exclusivity period in which to recover the increasing costs associated with development of a pharmaceutical and taking it through to market.  

A large number of manufacturers choose not to patent in New Zealand because they are not compensated for regulatory delays by means of an extension to the “effective” patent term.  This means that some medicines are not available to the New Zealand public, or are available at a higher price.  The New Zealand public needs to then wait until a generics manufacturer can provide the same drug at lower costs.  New Zealand does not have a large pharmaceutical manufacturing industry, so availability is often dependent on patent expiry in an overseas country where generics are manufactured. 

On the other side of the coin, providing extensions to the patent term of protected products means that patented products will be available for a longer period of time, and the availability of generic pharmaceutical products to the New Zealand public will be delayed.  Extension of the term of a patent would allow longer time periods for manufacturers to recover those costs of development and taking through to market.  Whether this would ultimately result in a reduction of the costs of patented pharmaceuticals would remain to be seen.  However, it may mean that more pharmaceuticals are available earlier, rather than having to wait for availability of generics and improved availability.  Wider options of available pharmaceuticals can only be beneficial to the public health system.
It will be interesting to see how the negotiations proceed and how this could potentially affect the healthcare of New Zealanders.

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