New Zealand’s 53-year-old patent law has undergone full review. The Patents Bill should go through Parliament in 2007. But will the new law achieve its intended objectives when it finally comes into force in 2008? And how well does it reflect on the Government’s objective to harmonise trans-Tasman business laws?
A patent is form of social contract. The state gives the patent owner time-limited exclusive exploitation right; the patent owner makes the patented invention available to the public. The reform debate has been over how long the exclusivity period should be, the permissible scope of exclusivity and what is patentable invention.
To great extent, these issues have already been determined by the TRIPS Agreement – one of the bundle of agreements that resulted in the formation of the World Trade Organisation in 1994. TRIPS sets minimum thresholds of protection that member countries must provide under their laws.
The stated purpose of the Patents Bill is to encourage innovation, particularly in the growth areas of information and communications technology, biotechnology and the creative industries. No doubt the changes will bring most parts of our law into line with that of our trading partners. But peel away the rhetoric and look at the detail, and different policy objective emerges. This objective is to limit patent protection to the extent allowed under TRIPS. The result is to disadvantage big pharma.
The Bill provides patent term limited to 20 years. The 20-year term includes development time during which clinical trials of new drugs must be funded, but no income is derived. Most of our major trading partners allow the patent term to be extendible to compensate for those lost years.
Another provision of the Bill excludes patents for methods of medical treatment of humans on moral and social grounds. Australia has no such exclusions. After an extensive three-stage review, the Australian Law Reform Commission recommended against the exclusions contemplated in the New Zealand legislation. Why the difference? It has been trans-Tasman objective for over 20 years to harmonise business laws to create single economic market. It is not unreasonable to expect that better policy objective than limiting patent protection would trump the harmonisation one.
The limits represent the last vestiges of trade protectionism. Putting these limits on patent protection has been encouraged by the success of Pharmac in keeping the lid on drug costs here. The trouble is that disadvantaging big pharma has become an end in itself, not just means to the end of reducing the pharmaceutical bill. The current Government has been pursuing that end with fundamentalist zeal that would make even President Bush’s advisers blush. Disadvantaging big pharma has become more important than harmonising our patent law with Australia.
What is the benefit of this policy to New Zealand? The potential for collateral damage is high. The policy not only disadvantages big pharma, it also disadvantages research and development in the life sciences. Medical research is increasingly directed to identifying customised and targeted medicines using information from genetic research, such as the human genome project. Independent researchers in New Zealand stand as good chance of identifying such medicines as do researchers in multinational pharmaceutical companies. But the Government is denying them patent protection where it is most needed.
Government agencies actively seek to promote private spending in research and development in New Zealand. Foreign direct investment is the most promising source for such spending. The Government is shooting itself in the foot with the protectionist policies motivated by its fundamentalist war against big pharma. Australian researchers and inventors will be quietly cheering.
It is time to stand back and look at the bigger picture. Restricting patent protection will have little or no effect on lowering the price New Zealanders pay for medicines. Pharmac has more than enough legal power to do that already. Limiting patent protection will have continuing strong negative effect on foreign direct investment in research in New Zealand. The victims of the resulting collateral damage will be New Zealand researchers. They will have to work where they can get funded, and just over the ditch will be the first port of call.
There is still time to make sensible changes to the Patents Bill before it goes through Parliament. Why is the Government not listening?
By Doug Calhoun, partner, intellectual property specialist firm, J Park. www.ajpark.com
