US Senator Hatch accuses Australia of stealing American patents and will not accept anything less than a 12 year data exclusivity term

The finalised proposal of the Trans-Pacific Partnership trade agreement was signed on 4 February 2016 following seven years of negotiations amongst the twelve participating countries. Those participating countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam.

The TPP sets forth an aim to “promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in our countries; and promote transparency, good governance, and enhanced labour and environmental protections”.

While the TPP trade agreement was originally envisaged to have been finalised in 2012, several disagreements amongst participating countries delayed the official signing. Of these issues, the intellectual property provisions proved particularly contentious.

On 9 October 2015, the final TPP Intellectual Property chapter was published by WikiLeaks. The chapter details the minimum level of protection that each party to the trade agreement must grant for intellectual property rights, including copyright, trademarks and patents. Of these provisions, it was the data exclusivity period that proved the most controversial subject.

To bring a pharmaceutical to market in Australia, it is a requirement that clinical data supporting efficacy and safety of that pharmaceutical be submitted to the regulatory authorities in order for that pharmaceutical to be approved for use. When a generic product – a product containing the identical active pharmaceutical(s) as that already registered – seeks regulatory approval, it is possible for the manufacturer of the generic product to leverage off the previously submitted clinical data in order to register the generic product. This can save a generic company millions of dollars and years in clinical trial studies.

However, most countries enforce a data exclusivity period. In Australia, there exists a five year data exclusivity period, meaning that it is not possible for a generic manufacturer to utilise this previously submitted data for a five year period. Once this period expires, a generic manufacturer is then able to rely on the previously submitted clinical data to expedite the regulatory approval and subsequent commercialisation of its generic product.

Although such data exclusivity periods run concurrently, yet separately, to patent protection, many argue that the expiration of the data exclusivity period, in effect, deteriorates the patent term by allowing the generic manufacturer to prepare to enter the market before the exclusive patent rights have expired.

In negotiating the terms of the TPP trade agreement, Australia was adamant in maintaining its five year data exclusivity period. This was met with opposition by key US authorities, as the Unites States takes a much stricter approach by enforcing a twelve year data exclusivity period for biologic therapeutics.

US Senator Orrin Hatch, the US Senate Finance Committee chairman, has been a fierce opponent of the TPP, and has been holding out on passing the TPP through US Congress. Yesterday, Senator Hatch met with US President Barack Obama to further discuss the trade agreement. However, it would seem that the discussions may have been fruitless.

Senator Hatch has since claimed that “in essence what the Australians are saying is, ‘Let us steal your patents’.” He sees Australia’s five year data exclusivity period as something that he cannot agree to as it would, in his view, destroy the biologics industry. Hatch states that Australians want things to come off patent as quickly as possible, and he argued that “there still has to be enough patent term to be able to recoup approximately $2 billion and 15 years of effort that you have in biologics, and there’s no way you can do that in five years.”

Spearheading the TPP trade agreement negotiations for Australia is Trade Minister Steven Ciobo, who has dismissed concerns over the trade agreement following Hatch’s recent comments. Minister Ciobo stated that he has met with Senator Hatch in what he has described as a “constructive meeting”. However, with Senator Hatch on record stating that he would accept no less than a 12 year data exclusivity period, it is difficult to see a swift resolution.

With US Presidential candidates Hilary Clinton and Donald Trump having gone on record in opposing the TPP trade agreement in its current form, it could be some time before we receive a final outcome on the TPP trade agreement and its intellectual property provisions.