Role of health departments

19.55 Health departments and other public health organisations are directly affected by the patenting of genetic materials and technologies. Health departments are the main funders and users of these technologies and have a major stake in the effects of the patent system on healthcare provision and medical research. The ALRC has examined whether health departments should take a more active role in monitoring patents over genetic materials and technologies and, where appropriate, intervening in the patent process.

19.56 DP 68 noted that recommendations made in 2003 to the United Kingdom Department of Health provide an important lead. The report Intellectual Property Rights (IPRs) and Genetics, by Professor William Cornish, Dr Margaret Llewelyn and Dr Michael Adcock (the UK Report)^[70] was commissioned by the United Kingdom Department of Health because of its ‘serious concern’ about the impact of intellectual property rights upon ‘research and the use of novel developments in genetics affecting health care’.^[71] The UK Report recommended that the Department of Health should take an active role in monitoring developments in relevant areas of intellectual property law (most notably patent law); have in place a mechanism for assessing whether to challenge patent applications or granted patents; instigate a policy for ‘licensing in’ designed to moderate excessive demands by licensors by considering the use of compulsory licensing, competition law and Crown use; and make full use of existing monitoring and horizon scanning work being undertaken by groups such as the Human Genetics Commission and the Nuffield Council on Bioethics.^[72]

Intervening in the patent system

19.57 DP 68 proposed that where particular gene patent applications, granted patents or patent licensing practices are considered to have an adverse impact on medical research or the cost-effective provision of healthcare, Commonwealth, state and territory health departments should consider legal intervention, including by challenging patents or patent applications and exercising Crown use powers.^[73]

19.58 This proposal received qualified support in submissions.^[74] The Department of Health and Ageing agreed in principle with the ALRC’s proposal and noted that the AHMAC Advisory Group may consider legal options ‘on a case by case basis, when addressing concerns with particular gene patents’.^[75] The Royal College of Pathologists of Australasia stated that it is ‘imperative that government health departments take a more pro-active role in ensuring continuous and equitable access to genetic testing’.^[76] The South Australian Department of Human Services stated that it could collaborate with other governments in monitoring patent applications, ‘developing awareness at an early stage of particular patent applications that may be problematic to healthcare’, and ‘providing early warning signals to other healthcare agencies where a patent application has contentious ethical and social dimensions’.^[77]

19.59 However, submissions highlighted the resource and political constraints on health departments in monitoring or challenging gene patents.^[78] Queensland Health noted that the ‘real issue is the time and cost involved’ in pursuing existing legal options.^[79] The Department of Human Services Victoria stated:

The resources required and the necessity to gain agreement/approval means that it is very difficult to mount such a challenge in the current environment. This may be more easily achieved if the HGCA is established.^[80]

19.60 DITR strongly objected to the idea of government departments challenging patent applications or granted patents. DITR submitted that, in general, the prospect of governments ‘adopting a litigious approach towards industry is not considered an economically viable option and is incompatible with the broader government policy’.^[81] DITR observed that, in any case, opposing particular gene patent applications would be ineffective in addressing potential adverse impacts.

[I]t is impossible to make judgements at this stage on the potential adverse impact of a particular patent application on medical research, or, in particular, the cost-effective provision of healthcare. Opposing such applications has the potential to severely stifle industry R&D and commercial activity leading to product development in the biotechnology industry.^[82]

Establishing specialist offices

19.61 DP 68 also proposed that the Commonwealth, States and Territories establish specialist offices within their health departments to monitor and manage intellectual property issues relating to genetic materials and technologies.^[83] This proposal received a mixed response in submissions. Some supported the proposal.^[84] Others expressed reservations, or opposed it, because it would require an undesirable duplication of resources, place an unnecessary burden on state and territory health departments, and not encourage a national approach to gene patenting and healthcare issues.^[85]

19.62 In particular, submissions expressed concern about the resource implications of specialist offices, especially for the smaller States and Territories, and about the possible waste of scarce resources through duplication.^[86] The Department of Health and Ageing observed that ‘duplication of capabilities will need to be avoided in order to contain administrative costs and avoid overlaps in responsibilities’.^[87]

19.63 Submissions proposed other, more centralised, means to ensure health departments can intervene effectively in the patent system. These generally involved one State taking a co-ordinating role, or relying on the establishment of the HGCA or some other new national advisory body.

19.64 The Department of Health Western Australia submitted that it was unlikely that Australia would need separate offices in each State and that, until the HGCA is established, it would be appropriate for one state health department to monitor gene patents, and all jurisdictions contribute towards the costs.^[88] The South Australian Department of Human Services submitted that there were two options:

devolving the role to the HGCA once it is established; [or] assigning the role to one well resourced state health department with support from all the other health departments. The second option may need to be considered as an interim measure until the HGCA is up and running. This would enable coordinated strategies to be adopted, with consistent national outcomes.^[89]

19.65 Other submissions expressed a preference for leadership by a single national body, such as the HGCA, with responsibility for advising Commonwealth, state and territory health departments on gene patenting issues.^[90] The New South Wales Health Department submitted:

Although each state should retain the freedom to choose to undertake proceedings individually if it wished, as the states have common interests and goals and limited resources, and the cost of patent litigation is prohibitive, HGCA should assume responsibility for co-ordinating or raising the possibility of collective state action in relation to individual patents. A co-ordinated system would enable smaller states to mount challenges that they may not otherwise have the resources for, and ensure that larger states do not find themselves running ‘test cases’ while other states avoid contributing to the cost of litigation but enjoy any subsequent benefits.^[91]

The role of the HGCA

19.66 DP 68 proposed that the HGCA should monitor the application of intellectual property laws to genetic materials and technologies, where these may have implications for medical research or human health, both generally and in specific cases. The HGCA would have a number of functions, including liaising with AHMAC, health departments, and other stakeholders about the advisability of legal intervention in the patents process, such as by challenging patents or patent applications or exercising the right of Crown use. Pending the establishment of the HGCA, it was proposed that AHMAC should perform these functions.^[92]

19.67 These proposals were widely supported.^[93] The involvement of the HGCA was seen as important in developing a national approach to gene patents and human health. The New South Wales Health Department observed that, given the Commonwealth’s responsibility for patent law ‘it is logical that it should be the HGCA, rather than each state government, that should monitor issues relating to human gene patents’.^[94] Submissions also highlighted the importance of the HGCA having appropriate expertise, especially with regard to legal matters.^[95]

19.68 Some submissions suggested that the HGCA should perform additional functions to those proposed by the ALRC. The South Australian Department of Human Services suggested that the HGCA should assume ‘leadership in the setting up of an expert committee that would consider patent applications where ethical and social concerns are evident’ and ‘co-ordinate the economic and social evaluation of the impact of gene patenting on healthcare and research, with particular focus on access and equity in healthcare provision’. The Department also suggested that there would be advantages in the HGCA being linked closely with ‘a national body such as the NHMRC which has existing infrastructure for the provision of ethical advice’.^[96]

19.69 The NHMRC suggested that the HGCA should, across much of the subject matter dealt with in this Report, provide ‘an overarching monitoring and review role and, where appropriate, make recommendations to other bodies to implement particular strategies that may best be carried out by other agencies’. The NHMRC further stated that, ‘while it is recognised that this would be a difficult role, it would ensure that following the completion of the ALRC Inquiry, the important issues surrounding gene patenting and human health do not simply “fall off the agenda”’.^[97]

ALRC’s views

19.70 There are overseas precedents for intervention by public sector authorities in patent processes. In May 2004, an Opposition Division of the European Patent Office decided to revoke a patent granted in early 2001 to Myriad Genetics Inc (Myriad), the University of Utah Research Foundation and the United States of America.^[98] This patent covered methods and materials used to isolate and detect a human breast and ovarian cancer gene (BRCA1), some mutant alleles of which cause susceptibility to breast and ovarian cancer.^[99] Oppositions to the patent were filed in October 2001 by a number of parties including the Assistance Publique–Hôpitaux de Paris, the Paris public hospitals authority.^[100] The Belgian, Netherlands and Austrian Ministries for Health are among the bodies that have filed oppositions to another Myriad patent.^[101]

19.71 The Myriad patent was revoked on the grounds that, in view of relevant prior art, it did not satisfy the requirements for patentability under European law, in particular as regards inventive step.^[102] While the grounds for the decision were based on legal requirements for patentability, the reasons behind opposition to the patent were firmly based on concerns about the impact of Myriad’s patents on healthcare provision and the conduct of genetic research.^[103]

19.72 There are other instances of similar intervention in the patent system by government authorities. For example, the Ontario provincial government, through the Attorney-General for Ontario, intervened in a court case involving genetically modified crops, in part because of concern about the impact of gene patents on healthcare and research.^[104] In New Zealand, the Pharmaceutical Management Agency—the Crown entity responsible for managing New Zealand’s equivalent of the PBS—has challenged the grant of patent claims directed to methods of medical treatment.^[105]

19.73 The ALRC remains of the view that health departments should develop the capacity to monitor patent processes and intervene where appropriate. The ALRC does not suggest that in-house departmental capacity needs to be extensive or comprehensive. There should, however, be some ‘horizon-scanning’ capacity and a willingness to engage in a detailed way with specific issues of patent law and practice as they emerge. In some circumstances, health departments should be willing to challenge patents, or their exploitation, in the public interest. Patent holders will have an incentive to ensure that the exploitation of their patent rights does not prejudice public healthcare or medical research if they face the realistic prospect that their patents will face detailed scrutiny by government authorities.

19.74 It is often unclear—even to experts—what the ultimate impact of a patent will be at the time the patent is applied for or granted. The vast majority of patents are never exploited or enforced, and therefore will be unlikely ever to have adverse consequences on the provision of healthcare. It is often only many years after the grant of a patent that healthcare providers become aware of its existence and its possible implications. For example, the patents on methods of using non-coding DNA polymorphisms held by Genetic Technologies Limited were first granted in 1994, but it was eight or nine years before the possible implications of these patents for the provision of medical genetic testing became a focus of health department concern. Therefore, while opportunities to challenge the grant of patent rights exist at each stage of the patenting process,^[106] it is much more likely that any intervention by health departments will be at the ‘tail-end’ of the process, namely involving the way in which granted patents are licensed or otherwise exploited.

19.75 Even assuming the existence of an active and well-resourced HGCA, the ALRC considers that health departments should develop the expertise and resources necessary to play a more active role in the patent system. Obtaining access to such specialist legal and policy advice and other relevant expertise may be easier for some jurisdictions than for others. In some contexts, further departmental expertise could be obtained through out-sourcing. Health departments should also be able to draw on expertise in other government departments and agencies to advise and assist them in dealing with intellectual property issues arising from gene patents. The ALRC does not wish to be prescriptive about how health departments should approach this challenge and no longer proposes that specialist offices should necessarily be established within health departments.^[107]

19.76 However, consistently with the proposal made in DP 68,^[108] the ALRC recommends that where particular gene patent applications, granted patents or patent licensing practices are considered to have an adverse impact on medical research or the cost-effective provision of healthcare, Commonwealth, state and territory health departments should consider whether to exercise any existing legal options to facilitate access to the inventions (Recommendation 19–3).

19.77 These options include challenging a patent application or granted patent by initiating proceedings to oppose a patent application,^[109] requesting re-examination of a patent, or applying for revocation of a patent under the Patents Act; making a complaint to the ACCC where evidence arises of a potential breach of Part IV of the Trade Practices Act; exploiting or acquiring a patent under the Crown use and acquisition provisions of the Patents Act; or applying for the grant of a compulsory licence under the Patents Act. In some situations, it may also be appropriate for health departments or their agencies to continue using a patented invention without the authority of the patent holder where, after obtaining appropriate legal advice, the patent is considered to be invalid. Section 20 of the Patents Act expressly states that nothing in the Act or in the Patent Cooperation Treaty^[110] guarantees that a patent is valid.

19.78 It has sometimes been suggested that government legal services policies may constrain the options open to health departments in dealing with patent issues. For example, the Legal Services Directions issued by the Commonwealth Attorney-General provide that the Commonwealth has an obligation to act as a ‘model litigant’, which requires it to act honestly and fairly in handling claims and litigation, including by ‘paying legitimate claims without litigation’ and ‘not taking advantage of a claimant who lacks the resources to litigate a legitimate claim’.^[111] Such policies do not prevent health departments from robustly protecting important public interests in healthcare provision or medical research by selective intervention in the patent system through use of existing legal mechanisms—especially since nothing in the Patents Act guarantees that a patent is valid, and that patents by their nature are open to challenge.^[112] The Legal Services Directions state that the obligation to act as a model litigant does ‘not prevent the Commonwealth from acting firmly and properly to protect its interests’.^[113]

19.79 In practice, the implications of gene patents are likely to affect all health departments in similar ways. To avoid duplication of activities, initiatives should be coordinated at a national level, where practicable. The ALRC considers that the establishment of the HGCA is vital to the capacity of the Australian healthcare system to respond in a rational and informed way to the issues raised by gene patents. Without a centralised source of expertise and legal policy guidance, there is a risk that future developments in gene patenting and enforcement by patent holders will create uncertainty and confusion among front-line healthcare providers.^[114] While AHMAC may, in the interim, be able to perform some of the roles suggested for the HGCA, it is not currently equipped to do so in a systematic way.

19.80 The membership, structure and proposed functions of the HGCA, as recommended by the ALRC and AHEC, ^[115] make the HGCA potentially well equipped to perform the sort of monitoring and horizon-scanning work that is undertaken in the United Kingdom by the UK Human Genetics Commission and the Nuffield Council on Bioethics. There would also be synergy with the HGCA functions recommended in ALRC 96.^[116]

19.81 Consistently with proposals made in DP 68,^[117] the ALRC recommends that the HGCA should monitor the application of intellectual property laws to genetic materials and technologies, where these may have implications for medical research or human health, both generally and in specific cases. The HGCA should liaise with and provide advice to AHMAC, health departments and other stakeholders about ways to facilitate access to inventions; for example, by challenging patents or patent applications, or exercising the right of Crown use (Recommendation 19–4). Pending the establishment of the HGCA, AHMAC should establish a mechanism to perform these functions.

19.82 Neither the HGCA nor AHMAC are appropriate bodies to initiate and prosecute litigation involving patents in their own right because they have purely advisory and policy making roles. Health departments and other healthcare providers are the bodies most likely to incur liability for patent infringement where patented inventions are used in healthcare, or to take any financial advantage arising from a successful challenge to patent rights. Although strategies for patent negotiation or litigation could be coordinated at a national level, it is likely that an individual health department, hospital or medical research institute would take any necessary legal proceedings.