It would come as a surprise to many Australians that one of the country’s most significant exports to the United States is pharmaceutical products – a broad class of goods that covers blood products, packaged medicaments, bandages and wound treatment products as well as pharmaceutical products. In 2024, the value of these exports was approximately US$1.35B – a figure which save for the period of the pandemic, has been rising at a relatively rapid rate over the last 10 years.1 In the same year, Australia imported pharmaceutical products from the USA to the tune of US$2.38B.
So, what’s the issue? And why is patent strategy at its core?
Balancing access to best-in-class, patented medicines with access and cost.
Australia’s pharmaceutical regulatory systems have long been criticised by the US for the way in which they deliberately seek to provide equitable access to medicine. The Special 301 Report published by the Office of the US Trade Representative is the result of an annual review of the state of IP protection and enforcement in U.S. trading partners around the world. The concerns expressed have been bipartisan. As far back as 2005, when the Australia US Free Trade Agreement came into force, the Report expressed concern about Australia’s Pharmaceutical Benefits Scheme which subsidizes medicines for Australians. This same concern was raised in 2024 by the Biden administration. In 2013 the Report mentioned concerns about Australia’s IP enforcement, particularly in relation to pharmaceutical patents. US companies were worried about the adequacy of patent protection and the potential for generic competition before patent expiration. The current issue goes as far back as 2015 when the Report raised concerns about delays in the approval process for new medicines in Australia. It was argued that these delays hindered the ability to bring innovative products to the Australian market promptly. This issue was reiterated in 2021, and in the most recent Report it is characterised as being about implementation of the notification process as required, for example, under Article 17.10.4(b) of the United States-Australia Free Trade Agreement.
Article 17.10.4(b) of the United States-Australia Free Trade Agreement.
Article 17.10.4(b) requires that if a pharmaceutical product is subject to a patent, the regulatory authority must not grant marketing approval to a generic version of the product before the patent expires, unless the patent holder consents.2 The provision was designed to protect the interests of patent holders by preventing the premature entry of generic competitors into the market.
The way this Article was implemented in the regulatory framework for pharmaceutical products in Australia is through the patentee notification process set out by s26B of the Therapeutic Goods Act 1989.
Enforcing market entry notification to patentees
The Therapeutic Goods Act 1989 is a cornerstone of Australia’s regulatory framework for therapeutic goods, including medicines and medical devices. Section 26B specifically addresses the requirements for certificates related to patents when applying for the registration or listing of therapeutic goods.
When a company applies to register or list a therapeutic good in Australia, they must provide a certificate under Section 26B if they rely on information or evidence previously submitted by another party to establish the safety or efficacy of the product. The certificate must state one of two things:
- Non-Infringement of Patents: The applicant acting in good faith, believes on reasonable grounds that it is not marketing, and does not propose to market, the therapeutic good in a manner, or in circumstances, that would infringe a valid claim of a patent that has been granted in relation to that therapeutic good.
- Notice to Patentee: If ta patent has been granted in relation to the therapeutic good and the applicant proposes to market the therapeutic good before the end of the term of the patent, the applicant has given the patentee notice of the application for registration or listing of the therapeutic good.
If an applicant provides a false or misleading certificate, a penalty (currently A$330,000) can be imposed.
In accordance with Article 17.10.4(b) of the AUSFTA, the intention of the section is to ensure that patent rights are respected. However, the s26B certificate is not required until very late in the process for obtaining marketing approval of a pharmaceutical product before the Therapeutic Goods Administration, and an application for marketing approval does not become public until the s26B Certificate has been provided by the Applicant. Moreover, applications for marketing approval and submissions to the Pharmaceutical Benefits Advisory Committee can be made in parallel under some circumstances. All this means that a Patentee may have only very short notice that a competitor is about to enter the market, which can make defence of their legal rights that much more difficult for Patentees.
Will the imposition of tariffs change anything about the USTR’s concerns?
Australian political leaders are clear that a health system that allows maximum access to best-in-class pharmaceutical products at an affordable cost will not be compromised as part of the current global establishment of a new normal in US trade relationships. While it possible that s26B could be amended to allow for a greater balance between the rights of patentees and new market entrants, it is unlikely that wholesale changes such as the introduction of an Orange Book type system such as exists in the US will occur in Australia.
Conclusion – IP strategy
Whether as a patentee or as a would-be competitive market entrant, developing a strategy to manage the requirements and implications of receiving a notification in accordance with s26B of the Therapeutic Goods Act is critical. Griffith Hack practitioners individually and collectively have immense experience in working with patentees to understand and strengthen their patent position, to develop strategies to fulfil s26B obligations, and to respond to notifications received under the section. With a long and deeply connected history of working collaboratively with US attorneys and clients, and our local understanding of the Australian regulatory environment for pharmaceutical products, Griffith Hack lawyers and attorneys can help make market entry and defence for pharma companies as smooth as possible.
2 ustr.gov [2]: globalizationandhealth.biomedcentral.com : austlii.edu.au
