Not surprisingly, labour unions in Australia oppose the Trans-Pacific Partnership (TPP), a proposed regional free trade agreement which they know will force Australia’s labour market to become globally competitive and challenge the monopsonies that unions hold.
What was surprising, was hearing Australia’s Minister for Trade and Investment, the Hon. Andrew Robb, an economist and former businessman, claim that Australia does not need to harmonize its biologics intellectual property (IP) regime with the US and others because Australia’s IP protection was better. This is not true.
Negotiations began in 2007 for the TPP; Australia formally joined the TPP in November 2008. Based upon a planned free trade agreement amongst countries bordering on the Pacific Ocean, the TPP market (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam) will be larger than the EU and includes Australia’s largest trading partners (Japan and the US) as well as some of the fastest growing economies in the world. Talks are probably one or two rounds of negotiations away from conclusion and the ratification by each signing country.
In addition to eliminating tariff barriers the TPP will harmonize many legislative and regulatory regimes as much as possible in order to promote trade, and open up markets. With respect to the protection of IP, TPP countries have agreed to build upon the World Trade Organization’s agreements regarding patents, trademarks, copyrights, geographical indicators, regulatory data protection (RDP) and the approval of regulated products all the while respecting the Doha Declaration re public health.
Recently Minister Robb referred to the 2013 Association for Molecular Pathology v. Myriad Genetics US court case (Myriad) which narrowed the scope of patentable subject matter with respect to naturally occurring genes. But that decision is irrelevant to the issue of IP harmonization under the TPP agreement. Full patent protection remains available in the United States for the core technologies relied upon by biologics manufacturers.
What is relevant is the fact that IP, innovation and economic growth are interdependent. Patents and regulatory data protection provide protection to a firm while it seeks to accrue profits on its innovative products, profits which are then invested in new research and development activities to further grow the firm, the taxes it pays, and the jobs it creates.
Since Minister Robb cited the Myriad case, let’s look at the innovative pharmaceutical industry – the most research-intensive industry in the world. Almost every medicine we take was developed by a research-based drug company in the private sector, not by government or generic drug manufacturers. New, brand-name pharmaceuticals today require on average $2.6 billion to develop: first there is the complex and expensive science involved; then the cost of conducting patient trials to ensure safety and efficacy; and finally the cost of complying with government regulations. Recognising these risks and the greater ability by others to work around biologic patents, the US provides 12 years of regulatory data protection for biologics, compared to a mere 5 years in Australia.
Australians surely want medicines and need medicines. Innovative medicines today are conquering cancers and rare diseases that were thought to be unconquerable 10 years ago. But innovative drug-makers are not going to invest in Australia if their discoveries, their IP, are better protected elsewhere; they may not even apply to sell their products there. And then Australians lose; lose lives, lose health, lose high-paying jobs, and lose tax revenues to fund social programmes and infrastructure.
Australia is the most dependent, developed country in the world. It has a chronic trade deficit in goods. It relies heavily upon the export of resources – which are highly vulnerable to cyclical price swings – for wealth creation. Its currency is at its lowest ebb since the 2008 crash. Investments in Australia will grow under expanded free trade. Australian exports will grow under TPP; improving IP standards in the TPP region will help Australia’s export interests in innovative medicines.
To stand pat on IP will put Australia at a disadvantage in attracting investment by industries that rely upon IP protection to make money, create jobs and pay taxes – of which Australia needs more if it is to be an innovative, knowledge-based society in the 21st century. Minister Robb, the Australian government – like all of the 12 TPP nations – needs to harmonize its rules that protect intellectual property, and incent and reward innovative risk-taking.