Amendments to deliver cheaper medicines

Media Statement - 9 August 2004

Labor’s Shadow Ministry has today approved its detailed Senate amendments to the United States Free Trade Agreement Implementation Bill 2004 that will help ensure the PBS continues to deliver cheaper medicines.

When the Government accepted Labor’s demand to legislate for protection of local content rules, it vindicated our decision to use a Senate Committee to examine the content of the FTA, and its enabling legislation.

We now want to get a second dividend for the benefit of the Australian people – greater protection of the Pharmaceuticals Benefit Scheme from evergreening practices.

Labor’s amendments will ensure that where a court determines that part or all of a patent claim is invalid and that legal action has been used to unreasonably delay a generic drug coming on the market, then heavy penalties and damages will apply.

Labor has retained a patents QC to advise on these amendments. This advice has been confirmed by Phillips Fox. The Senate legislative clauses and supporting legal advice will be tabled in the Senate debate later today.

Labor’s plan

The three amendments Labor will move in the Senate are to:

1. Require patent holding companies to issue a certificate when they seek to use the courts to block cheaper generic drugs coming to market. Patent companies will be required to certify that the legal action has been commenced in good faith, has reasonable prospects of success and will be conducted without unreasonable delay. If the certificate is false or misleading, or if any undertakings given under the certificate are subsequently broken, the company can be liable for a civil penalty of up to $10 million for each contravention. The court can also order compensation be paid to the Commonwealth, and States and Territories, for losses sustained as a result of any interlocutory injunction obtained by the patent company. This provision mirrors the Government’s enabling legislation that requires generic companies to certify the patent status of new drugs on the market.

2. Improve the prospects for generic companies, the Commonwealth and States and Territories to recover damages where an interlocutory injunction issued on behalf of a patent company unreasonably delays a generic drug coming onto the market. These damages would include any additional cost incurred by the Commonwealth under the PBS, and by the State and Territory public hospitals, due to any delay in getting a generic drug onto the market.

The third amendment has been proposed on advice from Labor’s lawyers as necessary to ensure that inappropriately high legal barriers do not, under the Government’s proposed certificate regime, prevent generic drugs coming onto the market. It will:

3. Reduce the burden of proof on the generic companies issuing a certificate regarding the patent status of a drug – that is, reducing the burden of proof for certificates from absolute to ‘reasonable grounds’.

Labor will insist on these amendments in the Senate. They are vital to safeguarding Australian consumers against evergreening practices and ensuring that affordable medicines are available in this country.