ALRC’s views

20.72 The ALRC remains of the view that there is little evidence to date that gene patents and licensing practices with respect to genetic testing have had any significant impact on the cost of healthcare provision in Australia. Similarly, there is no firm evidence of any adverse impact, as yet, on access to medical genetic testing, the quality of such testing, or clinical research and development.

20.73 Expressions of concern about gene patents—from health authorities, health consumer groups, health professionals and others—have generally been based on assumptions about the future development of the market in medical genetic testing and about the intentions of patent holders with regard to the exploitation and enforcement of gene patents. In particular, they have been based on assumptions that patent holders will use exclusive licences as their business model and that exclusive licensees will charge monopoly prices.

20.74 In this regard, health sector concerns in Australia have been influenced, directly or indirectly, by overseas experience of the patent enforcement activities and business model of Myriad, with respect to its BRCA patents. The extent to which this experience may be replicated in relation to other gene patents is uncertain. While the behaviour of Myriad is not an isolated example of ‘rogue behaviour’ by gene patent holders,^[118] it remains uncommon. The extent to which such business models will be adopted in Australia is unclear and it is problematic to extrapolate from the experience in other countries, like the United States, which have very different healthcare systems.

20.75 Concerns about the cost of, and access to, medical genetic testing are also influenced by broader concerns about Australian healthcare policy, that are applicable to all new medical technologies. These concerns include the future of Medicare, the respective roles of tax-financed healthcare and private health insurance, and the mix of public and private healthcare provision generally.^[119]

20.76 One view of the impact of gene patents is that the problem, if any, does not lie in the patenting of genetic material and technologies but in the way in which such patents may be commercially exploited. While some individuals and organisations involved in the healthcare sector hold ‘in principle’ objections to the patenting of isolated genetic materials,^[120] it is the level of future royalties or licence fees, and how these may be funded, that provokes most anxiety within this sector. For example, the South Australian Department of Human Services noted that:

no one can predict whether patent holders might impose exorbitant licence fees in the future … Given that licence fees that well exceed the entire budgets of Australian testing laboratories have been sought overseas in the recent past, it is possible that just one such challenge could devastate genetic testing services across Australia.^[121]

20.77 Leaving aside issues of cost, there is no doubt that some people in the Australian public health sector harbour genuine and serious concerns about the implications of gene patents for the quality of healthcare provision. In particular, there are arguments, discussed at length in this chapter, suggesting that the exclusive licensing of patents relating to medical genetic testing may have adverse consequences, depending on the behaviour of licensees.

20.78 As medical genetic tests are developed for more common diseases—for example in relation to attention deficit hyperactivity disorder, diabetes or osteoarthritis—commercial opportunities and pressures can be expected to increase and lead to more intense enforcement of gene patent rights. The nature of any such trend, and whether existing legal mechanisms such as those in patent law and competition law may be used effectively to address problems for healthcare, is not certain. What is clear is the need for healthcare providers and healthcare policy makers to be proactive in responding to problems as they emerge.

20.79 Elsewhere in this Report, the ALRC has made recommendations intended to ensure that any such problems are identified at an early stage, for example, through economic evaluation of genetic medical technologies and examination of the financial impact of gene patents, and through the monitoring activities of the Human Genetics Commission of Australia. There are also existing mechanisms through which problems might be addressed should they emerge. For instance, there are ways in which Commonwealth, state and territory governments, as funders and purchasers of healthcare services, may be able to influence the way in which patent holders exploit or enforce patent rights (Chapter 19).

20.80 Importantly, in Chapter 19 the ALRC recommends that where particular gene patents have an adverse impact on the provision of healthcare, Commonwealth, state and territory health departments should consider whether to exercise existing legal options to facilitate access to the inventions. These include rights of Crown use and compulsory licensing under the Patents Act 1990 (Cth) (Patents Act)^[122] and recourse to laws dealing with anti-competitive conduct.^[123] Patent holders should be on notice that, if patent rights are exploited in a manner that threatens the public interest in cost-effective and high quality healthcare, health authorities may take action.

20.81 Finally, other recommendations are intended to address possible adverse effects of gene patents on healthcare provision. These include the development of new Australian Research Council and National Health and Medical Research Council principles and guidelines on intellectual property management for publicly funded research (see Chapter 11); changes to laws and practices concerning patentability, which are relevant to some gene patents (Chapters 6 and 8); enacting a new experimental use exemption (Chapter 13); and amendments to clarify the Crown use and compulsory licensing provisions of the Patents Act (Chapters 26 and 27).