01 December 2006
Key Points:
The Intellectual Property Laws Amendment Act 2006 will significantly broaden the circumstances under which generic pharmaceutical companies are permitted to "springboard" under the Patents Act 1990 without infringing a third party's pharmaceutical patent. However, the overall impact of the springboarding amendments on the Australian pharmaceutical industry is unlikely to be as significant.
The Intellectual Property Laws Amendment Act 2006 (the "Act") contains numerous significant amendments to Australia's intellectual property laws (we summarised those changes here). However, one series of amendments is by far the most controversial - those in relation to springboarding ("springboarding amendments"). For those amendments significantly broaden the scope of the springboarding exemption to patent infringement under the Patents Act 1990.
Springboarding
"Springboarding" generally refers to the practice by which a third party, usually a generic pharmaceutical company, uses the subject matter claimed in another party's pharmaceutical patent to gather the information necessary to obtain regulatory approval for a generic version of the patented product while that patent is still in force. If a generic company is able to obtain regulatory approval for its product during the patent term, it is then able to introduce that product onto the market much sooner after the patent expires than would otherwise have been possible, either by commencing the manufacture of, or importing, commercial quantities of that product immediately upon patent expiration.
However, unless exempted, springboarding will constitute patent infringement. Many countries provide a specific springboarding exemption to patent infringement in their intellectual property laws. At present, Australia's springboarding exemption is narrower than that of many of its trading partners.[1]
The current law
At present, under section 78(2) of the Patents Act, Australia only exempts springboarding from patent infringement when it occurs during the extended term of a standard patent and the springboarding activity is in relation to:
Substance of the springboarding amendments
Effective 25 October 2006, the Act repealed section 78(2) of the Patents Act and replaced it with a new section 119A. The new section broadens the type of patents to which the springboarding exemption is to apply. Unlike the previous exemption, which was limited to patents that disclosed and claimed a pharmaceutical substance per se, the new exemption (other than with respect to the export of goods for the purpose of obtaining regulatory approval overseas) applies to patents claiming a pharmaceutical substance, method, use, or product ("pharmaceutical patent"). It does not apply to springboarding activities in relation to medical devices. Nor does it extend to activities required for inclusion of the product in Australia’s Pharmaceutical Benefits Scheme, to veterinary medicines or agricultural products, or to the stockpiling of pharmaceutical products.
Under the new section, springboarding is permitted at any time during the life of a pharmaceutical patent, whether its term has been extended or not.[2] This is provided that the patent is exploited solely for the purposes of obtaining regulatory approval in Australia of goods intended for therapeutic use (other than medical devices or therapeutic devices), or for the purpose of obtaining equivalent regulatory approval overseas. However, this new exemption does not apply to the export of goods for the purpose of obtaining equivalent regulatory approval overseas. This is unless the export occurs during the extended term of the patent and the goods contain a pharmaceutical substance per se that is disclosed and claimed in that patent.
The new exemption applies to all acts occurring after 25 October 2006 in relation to patents in force at that time or granted thereafter.
Rationale for change
In 2002, an Interdepartmental Committee ("IDC") reviewed the current springboarding provisions and concluded that those provisions were:
The House of Representative in the Explanatory Memorandum to the then Bill referred to the IDC's conclusions, but stated the aim of the new springboarding exemption proposed in the Bill more broadly as being to encourage the retention and growth of a competitive generic pharmaceuticals R&D industry in Australia.
The Senate Committee report
The Senate Economics Legislation Committee recommended that the Bill be passed, subject to some amendments to provisions unrelated to springboarding.
The Senate Committee received numerous submissions in the course of its review, including from bodies representing the Australian brand and generic pharmaceutical industries, who respectively objected to or praised the current amendments.[3] A key aspect of many submissions was whether the new exemption should apply to all patents in force at the time the new exemption is introduced or only to those patents that are issued after that date.
Following its review, the Senate Committee concluded that the broader springboarding exemption proposed in the then Bill, which would apply to all patents in force at that time the new exemption passed into law, would allow Australian generic manufacturers to compete more effectively at an international level. This would, in turn, maintain Australia's competitiveness as an investment location for generics research and development. Having reached this conclusion, the Senate Committee recommended that the proposed amendments be passed.
The Senate Committee also recommended an enquiry into whether the springboarding provisions should be extended to other industries (including agriculture and chemicals).
Likely impact
As stated above, the amendments to the springboarding exemption in the Patents Act will significantly broaden that exemption. However, their impact on the Australian pharmaceutical industry is unlikely to be as significant.
This is because brand name pharmaceutical companies already face potential competition from generic pharmaceutical companies that obtain regulatory approval prior to the expiration of their pharmaceutical patents. Often, this potential competition presents itself during the original term of a patent, even though the current springboarding exemption to patent infringement does not apply to this period. Roche, for example, has recently faced potential competition from generic versions of its carvedilol product. Hexal, Alphapharm and Arrow were all able to perform the activities necessary to obtain regulatory approval to market their products in Australia despite that fact that the Roche patent covering its carvedilol product still had (at that time) more than 10 years of its original term to run. This potential competition is possible because generic pharmaceutical companies are already able to undertake the necessary springboarding activities overseas and obtain regulatory approval in Australia on the basis of such activities. The scope of Australia's springboarding exemption has no impact on such activities.
The primary impact of the springboarding amendments will be to permit springboarding activities that are currently undertaken overseas to be undertaken in Australia without constituting patent infringement. Additionally, some local springboarding activities may occur that would otherwise not occur at all either in Australia or overseas.[4] However, neither is likely to represent a significant additional amount of springboarding for the Australian market or lead to a significant increase in the amount of potential competition for brand name pharmaceutical companies taking place prior to patent expiration in Australia than is currently the case.
[1] In its submission to the Senate Economics Legislation Committee on the Bill, Medicines Australia (MA) noted that Australia's pharmaceutical and patent laws that govern the approval and marketing of pharmaceutical products differ from those of many of Australia's trading partners in many respects other than springboarding, such as the presence or absence of patent linking to regulatory approval and the length and breadth of data exclusivity.
[2] Although not explicitly stated in the amendment, we note that section 25A, the data exclusivity provision, of the Therapeutic Goods Act 1989, would prevent a generic company obtaining inclusion of its product on the Australian Register of Therapeutic Goods on the basis of safety and efficacy data submitted by a brand name pharmaceutical company during the five year data exclusivity period.
[3] After noting that Australia's pharmaceutical and patent laws that govern the approval and marketing of pharmaceutical products differ from those of many of Australia's trading partners in many respects other than springboarding, MA submitted that amendments should also be made to these laws to bring them into greater harmony with those of Australia's trading partners.
[4] Some local springboarding activities may also take place earlier than would occur under the current exemption.
For further information, please contact Mary Still.
