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I was interested, the other day, to see this Online Opinion article by Nick Gruen (Club Troppo) on Australia’s pharmaceutical industry and the idea of manufacturing generics for export. The basic point of in Nick’s post is that investment in the manufacture of generic biologics in Australia is being prevented by Australian patent law and provisions introduced by the AUSFTA (or, at least, government’s interpretation of those provisions). In summary:

1. Australia extends the term of patents for pharmaceuticals to compensate drug companies for delays in the marketing approval process;
2. Patents last longer in Australia than elsewhere – at least partly because pharma companies apply for marketing approval later here than elsewhere, which means marketing approval is granted later, which means the drugs come off patent later.
3. You can’t manufacture for export during the (extended) patent term, even for export (ie even where the drugs won’t be sold in Australia, and even if they’ll only be sold where the drug is off patent);
4. By the time the drugs are off-patent in Australia, generic manufacturing based elsewhere in the world has garnered post-patent market share in many countries, putting a company that manufactures in Australia too far behind the eight-ball;
5. Result: generics manufacture not possible in Australia meaning that high tech industry not possible here – even though result is only that the manufacture ends up elsewhere (like India) where there is no patent term extension.

Since I’m on record as saying that actual changes to IP law brought about by the AUSFTA were less dramatic than people said at the time, this warranted investigation. So I’ve investigated.

My view? Looking at the literal terms of AUSFTA, it looks like there are reasonably supportable ways through for Australia. AUSFTA is constraining (more constraining than TRIPS is), and that is a problem. But there’s always some room for interpretation. Which makes me wonder. Is this another potential case of Australia being the overly-conscientious ‘stick to full letter and spirit of the treaty law’, ‘don’t rock the boat’ goody two-shoes, adopting a conservative interpretation of treaty language that prevents it taking full advantage of the flexibilities available? More over the fold. (more…)

SMH has the story here.

more analysis later.
updated: judgment now available on AustLII.
Further update: commentary will have to wait until after my classes today. But please consider this an open thread for any discussion!
Further Further Update: Warwick Rothnie has some very interesting thoughts on the case here. He’s certainly right about one thing. There’s a heckuva lot of food for thought in these judgments.