The Australian government has rejected proposals by the Productivity Commission regarding extending the length of pharmaceutical patents.
The commission, which provides independent advice to the Australian government on economic, social and environmental issues, recommended that the government amend the patent law by making extensions available for patents covering an active pharmaceutical ingredient.
Also the commission wished to calculate the length of the extension based on the time taken by the Therapeutic Goods Administration for regulatory approval above 255 days.
The commission suggested reforming section 76A of the Patent Act 1990 to improve data collection requirements, based roughly around the system adopted in Canada.
However, the Australian government rejected these proposed ideas and will not be proceeding with the recommendations.
Despite this, the government said it is willing to discuss ways to improve the patent term extension system with the sector.
The government said it is aware that patent life is shortened by the time taken for companies to acquire evidence to support applications under the regulatory process. This may result in a decreased incentive to discover and develop new pharmaceutical products.
According to the government, the commission debates whether a 15-year effective patent life supports a reasonable return on investment for pharmaceutical products.
The government said it recognises that extending patent terms only prolongs market exclusivity and adds large costs to consumers, the government and taxpayers. The commission estimated that the cost of providing extensions to pharmaceutical patent terms is A$260 million ($205 million).
According to the government, “the effective patent life of extended Australian patents is 12 months longer at the median than those in the United States and the average expiry date of extended Australian patents is 18 months later than those in the United States”.