ALRC’s views

25.32 DP 68 proposed that the ACCC should conduct informal price monitoring of patented medical genetic tests and other genetic inventions involved in the provision of healthcare services, if evidence emerges that such prices are having an adverse impact on healthcare services. The purpose of such monitoring would be to accumulate pricing information to assist the Australian Government to determine an appropriate response to such conduct.

25.33 As indicated above, while many submissions supported this proposal, the ACCC expressed significant concerns about the effectiveness of this approach. In particular, the ACCC considered that there could be inherent difficulties in determining what would constitute excessive pricing in the biotechnology industry—given the highly differentiated products involved—and the need to encourage innovation. In addition, it noted that its powers in relation to pricing apply to price changes, not to absolute price levels. The ALRC agrees with the Centre for Law and Genetics that the role of competition law is not necessarily to prohibit monopoly pricing, but to ensure competition within a market.

25.34 As discussed above, several other mechanisms exist for prices oversight in relation to the supply of goods and services in Australia. For example, the Minister could commission a research study or inquiry by the Productivity Commission. Alternatively, the Minister could commission an inquiry by the ACCC, or another body, into the pricing of specified patented inventions within a market, or into pricing within the biotechnology industry generally.

25.35 The ALRC considers that these options may be more appropriate if evidence arises that the pricing of patented medical genetic tests or other genetic inventions is having an adverse impact on equitable access to healthcare services. Informal price monitoring generally relies on publicly available information, and the cooperation of the monitored organisations. The advantage of a commissioned study or inquiry is that it could facilitate public involvement through a submission and consultation process; and provide detailed information to the Australian Government as to current pricing practices, the concerns arising from these practices, and the options available to the Government to respond to these concerns. These options could include price regulation in the form of price monitoring, or some other appropriate action.

25.36 Accordingly, if evidence arises that the pricing of patented genetic materials or technologies has impacted adversely on access to healthcare services in Australia, the responsible Minister should consider whether to: (a) refer the matter to the Productivity Commission for a study or inquiry pursuant to the PCA; or (b) direct the ACCC, or another body, to conduct an inquiry pursuant to Part VIIA of the TPA.

25.37 This Report recommends that AHMAC should establish processes for examining the financial impact of gene patents on the delivery of healthcare services in Australia.^[36] AHMAC would then be in a position to determine whether pricing is having an adverse effect on the delivery of healthcare. In such circumstances, it may be appropriate for the Minister for Health and Ageing to request the responsible Minister to consider the need for an inquiry in accordance with Recommendation 25–1.