Australia-US FTA Patent Terms Still Controversial

Australia's Free Trade Agreement (FTA) with the US, implemented on Jan. 1, has further tightened patent legislation, and strengthened data and marketing exclusivity provisions. However, consumer groups and multinationals have opposed some provisions in the accord, and controversy over pharmaceutical patents is likely to continue.

The FTA also sets out patent term adjustments to compensate for "unreasonable" delays in patent approvals, as well as for curtailment of patent terms. However, the FTA has prompted widespread criticism from the generics sector and consumer groups over a number of issues, particularly over so-called evergreening.

The government has been obliged to amend the FTA in response, tightening regulations on patent extensions. However, multinational sector opposition has focused on the new measures' strong penalties against patent holders ruled to have filed false or misleading registrations to extend patents. Branded drugmakers judged to have infringed the rules face fines of up to AUD7.3mn (US$5.63mn).

However, despite the apparently stiff penalties against it, there are accusations that some provisions of the US FTA actually encourage evergreening. The FTA requires generic drugmakers in Australia to notify the producer of the originator product prior to registration, potentially enabling research-based firms to block generic launches.

Concerns aside, it is nevertheless hoped that the US FTA will improve the transparency of the drug reimbursement system, the Public Benefits Scheme (PBS). The agreement's approach to the PBS emphasises the need to reward manufacturers of innovative new pharmaceuticals, placing less emphasis on consumers' need for inexpensive generics.