Since 1998, Australia has had an extension of patent term (EoT) regime that allows for an extension of term of up to 5 years for pharmaceutical patents. This means that a patent may have a maximum 25 year term.

Patent term extension is available for (i) a pharmaceutical substance per se that is in substance disclosed in the complete specification and in substance falls within the scope of at least one claim of that specification; and/or (ii) a pharmaceutical substance when produced by a process that involves the use of recombinant DNA technology that is in substance disclosed in the complete specification of the patent and in substance falls within the scope of the claim or claims or that specification.

To qualify for EoT, there must be at least 5 years between the date the patent application was filed and the date of first approval of any product containing the pharmaceutical substance.

The extension will amount to the difference of the time period from the filing date of the patent to the first regulatory approval date (determined by the date in which any product containing the pharmaceutical substance is first listed on the Australian Register of Therapeutic Goods (ARTG)) less 5 years.

The Extension of Term Regime is too Generous

According to the Productivity Commission “Intellectual Property Arrangements-Inquiry Report” published in September 2016, “Not only are EoTs unwarranted, they are also expensive.” This statement arises out of the Commission’s findings that the maximum 5 year extension is excessive as well as the scope of pharmaceutical substances which qualify for an extension. Specifically, the Commission found that the “pharmaceutical substances per se” definition in the Patents Act 1990 had been expanded to encompass formulations. It cited the example of oxycodone, invented in 1916, as being the subject of a subsequent EoT for a controlled release formulation of this compound.

The Commission recommended that the scope of pharmaceutical substances should be limited to active pharmaceutical ingredients (API’s) only and the formulaic approach to calculating the extension be replaced with a time frame compensating for any actual delay in obtaining marketing approval. In making these recommendations, it was noted that countries exemplified by the United States limit extensions to API’s only while Singapore limits extensions to both API’s and actual delay.

Australia is Constrained by International Arrangements

Whilst making these recommendations, the Commission recognised that Australia is subject to a number of International Treaties which would act to limit the scope of legislative reform. Presumably this was the reason why the Federal Government declined to adopt any of the Commission’s recommendations. This was in the face of the Government accepting many of the Commissions other recommendations including abolishment of the innovation patent and a tightening of the inventive step threshold.

Alternative Legislative Reform

It would seem at the heart of the recommendation, the intention was to limit EoT to APIs only. That is, a single EoT per API. Currently, the Patents Act 1990 allows for the possibility of multiple EoT’s for an API by way of patentably distinct formulations of an API as well as an EoT for the underlying API.

We think an alternative to achieving this aim is not by changing the definition of “pharmaceutical substance per se” but rather to limit the number of EoT’s per API to two. This would allow for the possibility of an EoT being granted for the API as well as one formulation of that API.

As acknowledged by the Commission, there needs to be a mechanism that compensates delays in obtaining regulatory approval for a new product. In some instances, a pharmaceutical company will have invested considerable time and cost in developing a new formulation of an API and should thus be given the opportunity to seek an EoT for the new formulation as well as the API. Indeed, the subsequent formulation may have been developed by a party other than the API originator. Providing an EoT in these circumstances will provide an incentive to ensure that the best products are available in the market.