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THE EFFECTIVE PATENT LIFE OF PHARMACEUTICALS IN NEW ZEALAND — A SIMULATION
Abstract
This paper estimates effective patent life of pharmaceuticals in New Zealand (NZ EPL). A simulation technique is used based on the linking effect of the International Convention for the Protection of Industrial Property. The simulation procedure suggests that NZ EPL is declining and will yield no protection in the fairly near future, for drugs from the USA, UK and Switzerland. Two consequences for pharmaceuticals are suggested. One, the focus of the NZ patent term is likely to shift from the normal period of 16 years to the maximum available when extensions are included. Two, applications for extensions are likely to become routine. In these terms the recommendations by the Industrial Property Advisory Committee (IPAC), at least as they apply to pharmaceuticals, that the current patent life remain unchanged at 16 years and extensions have a maximum of 4 and not 10 years, are somewhat puzzling.
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NOTES AND REFERENCES
Industrial Property Advisory Committee, The Patent Monopoly Term and Extensions Thereof. Report to the Minister of Justice, September 1985. In June 1987, the Department of Trade and Industry produced a discussion paper called Intellectual Property Protection — A Business Perspective.
Work is in progress by the present author, to collect individual drug EPL information. It will be some time before the results are available.
Industrial Property Advisory Committee, 1985, op. cit.
J.E.S. Parker, ‘The effective patent life of American originated drugs in New Zealand’, New Zealand Economic Papers, 19, 1985. Strictly the year 1978 refers to a three year moving average of drugs for the years 1977 to 1979.
Parker, op. cit. Notional patent life in New Zealand extends for 16 years from the filing date of the complete specification. Notional patent life in the USA extends for 17 years from the date of grant.
See Martin M Eisman and William M. Wardell, ‘The decline in effective patent life’, Research Management, 21, 1, 1981, pp. 18-21; Wiliam M. Wardell and Lorraine E. Sheck, ‘Is pharmaceutical innovation declining?’, in Bjorn Lindgren (ed.), Pharmaceutical Economics, IHE, 1984; and Richard N. Spivey and Gene A. Trimble, ‘Effect of the Drug Price Competition Act on market exclusivity of new drugs: a similation’, Drug Information Journal, 20, 1986, pp. 27–35.
Parker, op. cit. The procedure relies on the linking effect of the ‘grace period’. Under the International Patent Convention a patent holder has 12 months in which to apply to other Member countries. During this time ‘prior publication’ does not apply. Hence the grace period procedure defines the maximum time interval between application in the first and subsequent countries.
The 1984 NZ figures are derived from single year EPL values because the three year moving average values do not extend to 1984.
The USA EPL figures used are ‘base line’ in the sense that no adjustment is made to reflect the extensions available under the Drug Price Competition and Patent Term Restoration Act of 1984. See Spivey and Trimble, op. cit.
Frontispiece of the Hearings on S 1306, The Patent Term Restoration Act, 1983, Serial no. J-98-46.
See Sub Committee's Hearings, pp. 129-81, including an interim report of work by H.G. Grabowski and J.M. Vernon: ‘A sensitivity analysis of expected profitability of pharmaceutical research and development’, Managerial and Decision Economics, 3, 1, 1982.
The minimum period of exclusivity is 5 years. The maximum period of effective patent life is not permitted to go beyond 14 years. See Spivey and Trimble, op. cit.
See Stuart A. Walker and Roger A. Prentis, ‘Drug research and pharmaceutical patents’, Pharmaceutical Journal, 5 January 1985.
In the UK prior to the 1977 Patents Act, there was a 12 months period during which a provisional application became a complete application. Under the 1977 Patents Act there is, in practice, a similar type of arrangement. Up to 12 months is available for an application to become ‘substantive’. In both instances, the patent term runs from the filing date of the complete or substantive application. A Convention application in New Zealand is classed as ‘complete’ and patent life runs from that date. Thus an original UK application supporting a drug developed and first patented in the UK, will begin its patent life at the same time as its Convention equivalent in New Zealand. The first (UK) application triggers the Convention grace period, hence the NZ application occurs twelve months after the UK original.
Walker and Prentis, op. cit.
See Nancy Mattison, Eileen Thomas, Gene A. Trimble and William M. Wardell, ‘The development of self-originated drugs by Swiss pharmaceutical firms, 1960-1980’, Regulatory Toxicology and Pharmacology, 4, 1984, pp. 157–73.
1.5 years is chosen guided by advice from Pharma Information of Basle. In response to the question: ‘What is the typical time interval between synthesis and patent appliction?’, the answer between 1 and 3 years, was given.
IPAC Report to the Minister of Justice, September 1985, op. cit., p. 17.
Department of Trade and Industry, 1987, op. cit., p. 24.