1. Introduction
There is a relationship between the law, the public interest and claims to the reform of law based on the interests of the public. How the public interest is defined and operationalized is highly contested and raises questions about equality, fairness, and transparent decision making. Examining the linkages between the public interest and law reform processes illuminates the way some actions are legitimized, exposing fundamental barriers to effective legislative reform. Revising legislation and policy seeks to protect and benefit the public, but with the increasing concentration of corporate capital, ensuring accountability is paramount. While the ideals of democracy support public submissions-based policy formation, those submissions may not acknowledge that some policies require a mix of market-based tools that have the potential to generate large profits for some. This tension between corporate interests and the wider society places constraints on law reform, and these constraints have to be accommodated in the reform process.
This paper provides an empirical exploration of the “public interest” as a key ingredient in one legislative reform process in Australia. The pharmaceutical industry in that country is a pertinent site for examining such a tension, focusing on the way in which a specific legal question is framed for the purposes of reforming the law. One particular area of concern is the role of patents and how, at some levels, they manipulate the pharmaceutical market. Any such manipulation could deny access to new players and therefore limit the competitive nature of developing new medicines. The specific focus of this paper is the use, and alleged abuse, of the patent system by pharmaceutical companies—a practice that is, in part, referred to as “evergreening.” Evergreening is not a practice that is unique to Australia; much of the commentary on it, in fact, arises from the interaction between pharmaceutical companies and the Food and Drug Administration (FDA) in the United States.Footnote 1 Evergreening practices provide an overt example of the conglomeration of corporate interests in relation to the public interest. As such, it exemplifies the tensions that are pertinent to this discussion. A Federal Government-backed review of pharmaceutical patents in Australia (2012–2013) provides evidence of the relationship between governance arrangements, decisions that aim to encompass the public interest, the role of non-state actors, and their influence on state decision making. The Pharmaceutical Patents Review (PPR), therefore, offers an effective case to examine the reciprocal relations between institutional power, organizational capacity, and the construction of what is constituted as valid knowledge.
The public submissions to the PPR in Australia were closely read for this analysis—using public policy literature as a key tool of analysis on the basis that the body of work offers theoretical insights not found in the legal literature.Footnote 2 A corollary of the use of submissions is the fact that the (limited) Australian case-law is not central to this research—because the focus is on policy creation, rather than implementation or adjudication. As a formal governmental inquiry, the Review aimed to gather new information with the intention of informing, and if necessary reforming, the policy. The key purpose of this examination is to consider how the process structured and, consequently, ordered the debate. The paper demonstrates that this process, in effect, exacerbated the tensions between competing versions of the public interest, which, in turn, reinforced the existing relationship between large pharmaceutical companies and the machinery of government in Australia. The basic premise of the paper therefore is that corporate interests “trump” the public interest; the paper demonstrates how this is manifested in one aspect of society. Further, the paper highlights how, in this instance, legislative and policy review actively legitimized the existing dynamics, further entrenching power in the pharmaceutical domain in Australia. To get to that point, the paper outlines the PPR process, highlighting the key themes from the submissions relevant to the debate, followed by a demonstration of the oligopolistic nature of the policy area and highlighting the manner in which the debate constrains and then legitimizes certain forms of knowledge.
2. Administrating Pharmaceutical Patents in Australia
Before highlighting the problematic nature of pharmaceutical evergreening, it is important to expand upon the meaning associated with the term itself. It has no single definition; however, broadly, the term refers to what is perceived to be the abuse of patenting and drug regulatory systems by pharmaceutical companies to extend their monopoly over a successful drug, thereby preventing the entry of generic competition (Glasgow 2001; Parker and Mooney Reference Moses, Gollan and Tranter2007). Allegations around evergreening cover the practices adopted by pharmaceutical companies seeking to extend the duration of patent protection beyond the expiration of “basic patents” for a successful drug by obtaining secondary patents over different aspects of the same drug (Hutchins Reference Hoppe2003)—with these “secondary patents” sometimes being described as protecting “only trivial changes to the invention itself” (Chalmers Reference Capano and Howlett2006, 29–30). It should be emphasized, however, that, as long as the secondary patent covers an invention that fulfils the requirements for patentability, these patents are still valid.Footnote 3 The term “life cycle management,” related to evergreening, may be regarded as a euphemistic term used by pharmaceutical companies to refer to such strategies. Although evergreening and lifecycle management are sometimes used interchangeably, it can be argued that lifecycle management is even broader, as it also encompasses practices such as branding, product support, and building trade relationships (Angell Reference Amin and Kesselheim2004).
According to the Review’s Terms of Reference (ToR), the overall intention was to explore allegations as noted above. Specifically, the ToR state the purpose was to “evaluate whether the system for pharmaceutical patents is effectively balancing the objectives of securing timely access to competitively priced pharmaceuticals, fostering innovation, and supporting employment in research and industry” (PPR 2012, 42). Two partial justifications for the work of the Panel were provided (PPR 2012, 42). The first was an evaluation of specific legislative reforms from 1998. The second is a non-specific reference to the raising of the “evergreening” issue by the industry—though the Panel did not use that term. With respect to these and other calls for patent law reform, the Review was preceded by a range of inquiries into the patent system (Dent Reference Colebatch2012, 16). Further policy pressure emerged from criticism regarding the use of patents in the Australia–United States Free Trade Agreement (AUSFTA), which were noted as not being in the best interests of Australia (Productivity Commission 2010), and negotiations over the Trans-Pacific Partnership, especially around protection for data from clinical trials for pharmaceuticals that enables a monopoly over drug manufacturing (Gleeson, Moir, and Lopert Reference Glasgow2015, 307; Wilson Reference Thomas2015).
There are two further aspects to the pharmaceutical policy context that highlight the problematic nature for policy makers. First, the pharmaceutical industry is multi-dimensional, with each level, potentially, staking out its own version of public interest. There are, of course, the “Big Pharma” firms, such as Pfizer and GlaxoSmithKline. There are also generic manufacturers—companies that step in to manufacture drugs after the patent protecting the drug expires. In addition, there are smaller companies that have a role in developing and manufacturing new drugs. Finally, there are public sector bodies, such as universities and hospitals, which carry out research on, but do not manufacture, pharmaceuticals. All these categories seek patent protection for their inventions (Christie et al. Reference Chalmers2013). All therefore have an interest in protecting their innovations, and for some, there is the imperative to financially profit from their work. The different role that each plays in the pharmaceutical sector, and their different sources of funding, also suggest that they may each have different justifications for their continued existence.
The pharmaceutical industry is also heavily regulated in Australia. There is the patent system, which regulates the use of a company’s innovations, and the two systems that control the manner in which the products get to their market. With respect to the safety of the products in Australia, the Therapeutic Goods Administration (TGA) “carries out a range of assessment and monitoring activities to ensure that the quality, safety, and efficacy of therapeutic goods in Australia is of acceptable standard” (Hill, Kirchner, and Holmes Reference Heclo2001, 53). In other words, the role of the TGA in Australia is similar to that of the FDA in the United States. Approval of a drug by the TGA is a pre-condition to marketing in Australia. The system is relevant to the evergreening debate because of the extension of patent term for pharmaceutical patent-holders (Patents Act 1990 ss. 70-79A). These provisions allow for up to an additional five years of patent protection for pharmaceutical products in circumstances where a product has undergone regulatory testing with the TGA. The justification for the extension is that the products cannot be sold in Australia (and the patent-holder cannot fully exploit the patent) until TGA approval is given, and the approval process may take a number of years. This restriction on exploitation does not apply to most other categories of inventions, and, therefore, the system provides the capacity to extend the monopoly for (some) pharmaceutical patents.Footnote 4
The second regulatory instrument refers to price regulations that manage competition in the industry. In Australia, this is implemented through the Pharmaceutical Benefits Scheme (PBS). There is no equivalent to the PBS in the United States; in short, the Scheme allows the Federal Government to get the best possible price for drugs that are listed on the Scheme—in part due to the Government acting as a monopsonist in the market. The listing of pharmaceuticals on the PBS is on the advice of the Pharmaceutical Benefits Advisory Committee (PBAC). The Committee “assesses the clinical need, effectiveness, and cost effectiveness of drugs proposed for listing compared with alternative treatments” (Hill, Kirchner, and Holmes Reference Heclo2001, 57). If the PBAC recommends a drug to be listed for a particular use on the PBS, then the cost of that pharmaceutical to the consumer is subsidized by the Australian government. It should be noted that a pharmaceutical does not have to be PBS-listed in order to be sold; a listing, however, may facilitate market-share, as these drugs are more affordable and therefore more likely to be prescribed by a doctor (see, for example, Duckett and Breadon Reference Derzko2015). This means that listed drugs provide much higher sales for the manufacturer than unlisted pharmaceuticals do.
3. Analysis of the Review Process
Before moving on to analyze the Review, the Review content and processes need some explanation. Prior to the Review’s Final Report (PPR 2013b), a Background and Suggested Issues Paper (PPR 2012) and a Draft Report (PPR 2013a) called for submissions from the public and stakeholders.Footnote 5 The submissions received by the Review provide a range of responses that were all aimed at guiding the recommendations of the review. The recommendations, in turn, were aimed at reforming the administrative practices and associated laws if deemed appropriate. The Review covered a range of topics relevant to the pharmaceutical industry, such as the breadth and length of extension of terms of patents (PPR 2012, 4–14), review of the standards around patents (PPR 2012, 15), appropriate process to oppose the validity of pharmaceutical patents (PPR 2012, 17–20), injunctions, and infringements of patents (PPR 2012, 20–24) and follow-on patents (PPR 2012, 25–29). It is the last of these topics that is the focus of this paper because these secondary patents directly impact access to affordable medication, which is central to the public interest.
The key concern raised by the Review with respect to follow-on patents relates to “patent thickets” that emerge from the use of those patents.Footnote 6 The Background and Suggested Issues paper notes that a thicket may occur where a “basic” patent over a drug is “surrounded by follow-on patents.” All these patents, “when combined with particular marketing strategies … [can] hamper generic entry” (PPR 2012, 26). The Issues Paper, however, referred to the Cutler Review (2008), a report that did not identify the pharmaceutical sector as one in which thickets were seen to be a problem (PPR 2012, 26). Finally, the Issues Paper included four case studies, three of which related to patents owned by a Big Pharma company, while the fourth concerned a patent owned by a smaller Australian “biotech company.”
The case studies, or more properly examples of potential evergreening, were used to highlight potentially problematic areas. The first referred to Viagra. The relevant patent here was for a “new therapeutic use” for a previously known drug—the compound had been used for treating heart disease and the follow-on patent covered its treatment of erectile dysfunction (PPR 2012, 25). The second case study highlighted formulation patents through the example of a patent for a new formulation for omeprazole. This follow-on patent protected the manner in which the drug was formulated for delivery; specifically, the patent was for the coatings on the drug that delayed its release into the patient until it reached the small intestine (PPR 2012, 27). The final case study described a patent,Footnote 7 taken out by an Australian company, for a process to manufacture a drug, rather than for the drug itself (PPR 2012, 29). These case studies provided concrete instances of how the patent system is, in most cases legally, used—inviting questions as to whether its use was inappropriate from a policy perspective.
3.1 Submissions to the Issues Paper
There were thirty-nine submissions at this stage of the Review; not surprisingly, thirteen were from pharmaceutical companies, with around half from “Big Pharma” corporations. In addition to these firms, there were four pharmaceutical industry associations that made submissions—including the Japan Pharmaceutical Manufacturers’ Association and the Generic Medicines Industry Association (GMIA). Five organizations that represented those who acted for pharmaceutical companies also contributed. These included patent attorney bodies (such as the Institute of Patent and Trade Mark Attorneys of Australia) and one law firm.
The balance of the submitters reflected a disparate bunch of entities. There were four community/consumer organizations (such as the Consumer Health Forum of Australia), three non-pharmaceutical industry associations (including the US Chamber of Commerce), and three public research organizations (including Monash University). Five different sets of academics made submissions—reflecting a range of expertise from law to medicine and public policy. There was a submission from the Law Council of Australia and one from the Advisory Council on Intellectual Property (a body set up to advise the Federal Government on intellectual property matters). The latter body’s submission consisted of two academic articles with no additional commentary. Finally, there was only one individual who made a submission. That submission was based on a student’s Honours thesis and, while not an academic one, the submission could be seen to be founded on a particular body of knowledge. Again, it must be noted that not all of these thirty-nine submitters engaged with the central question of the “evergreening” of pharmaceuticals.
The responses in the Issues Paper to the question of follow-on patents can be grouped by submitter category. Only seven came from pharmaceutical companies. These tended to be from the major multi-nationals and tended to emphasize the fact that secondary patents, such as the formulation patents, still had to meet the same tests for patentability as did the “basic” patent covering the Active Pharmaceutical Ingredient (API). They also noted that a secondary patent did not prevent other companies marketing versions of the API after its patent had expired. Coupled with these comments was the assertion that the system operated as an incentive for companies to enter into research for new drugs and other pharmaceutical inventions—either implicitly, or explicitly, saying that this was in the public interest. Notably, all six submissions that came from legal associations such as the Law Council of Australia also supported the view that any follow-on patents still had to meet the requirements of the Patents Act and did not impede the capacity for competitors to make the API after the API patent had expired.
Two of the pharmaceutical industry association submissions agreed with the general thrust of the individual pharmaceutical company submissions. One industry association disagreed. Unsurprisingly, the GMIA said that “members remain very concerned about the inappropriate use of follow-on patents” (2013, 41). The level of concern prompted an eight-page discussion of the patents. Central to the argument were statements from legal judgments that questioned the validity of specific follow-on patents (including Merck v Arrow 2006Footnote 8)—a matter concerning how the patent applications were examined by IP Australia rather than, necessarily, the actions of the owners of the API patent. The GMIA, however, did not criticize the Office, only the pharmaceutical companies.
There were three other submissions that dealt explicitly with the question of follow-on patents. One was from a public research organization that broadly supported the capacity of innovators to seek secondary patents. The second was from a pair of academics from health disciplines that is not readily assessable as it used terminology that was not based on the language in the Issues Paper. The final one was from a collection of community organizations. This last submission opposed follow-on patents on the basis that they delayed the entry of generic drugs into the market—stating that patents “need to be regulated judiciously to ensure that public policy goals such as access to affordable medicines are not impeded” (AFTINET et al. 2013a, 2). That position was supported by one peer-reviewed journal article that brought into question the examination practices of the United States Patent and Trademark Office as well as the practices of pharmaceutical companies (Amin and Kesselheim 2012).
There are also three submissions that, while not specifically dealing with the question of follow-on patents, did comment on the patent system generally. The Pharmaceutical Society of Australia (a body that represents pharmacists) focused on the impact of multiple formulations of the same drug on pharmacists—noting, almost in passing, that the issue is about TGA registration, rather than patents. That said, the Society asserted that “evergreening can delay the entry of generic medicines into the Australian market as well as any listing on the PBS” (2013, 3). The next was from an academic with knowledge of the patent system; and, again, the issues raised were as much to do with the regulatory system (the PBS and the tests of patentability) as with the behaviour of pharmaceutical companies. The third came from a non-Big Pharma pharmaceutical company that proposed a suite of reforms aimed at remedying “evergreening … the end product of a systemic failure in the pharmaceutical patent system” (Alphapharm 2013, 1). The company’s solutions, as a result, focus on changing the tests for patentability, making patent information more readily available, and the creation of an oversight body for the system.
The balance of the responses to the Issues Paper covered a range of foci. A couple responded to submissions that had already been received—one purported to correct factual errors in an earlier submission and others expressed support for different submissions. Another, from a legal academic, dealt with the technical issue of the extension of term for pharmaceutical patents. There were also two that only answered questions in the Issues Paper unrelated to secondary patents. A number were broadly supportive of the current settings of the patent system without engaging with any of its specifics. Two submissions (one from a Big Pharma company and another from an industry association) went so far as to say that patent protection should be enhanced, rather than limited, as a result of the Review. The remaining four submissions—three from community organizationsFootnote 9 and one from (non-legal) academics—engaged minimally with the detail of the patent system and, instead, argued for health outcomes to be prioritized over the economic interests of patentees.
3.2 Draft Report
The Draft Report contained a greater discussion of follow-on patents than the Issues Paper. The Review considered four aspects of the patents—“patentability standards,” “evergreening strategies,” “patent thickets,” and “follow-on patents by third parties.” The focus on patentability standards reflects the concerns raised by the GMIA in its submission to the Issues Paper. First, it is important to note the Review introduced some of the basics of the law of patents—though, unsurprisingly, there was little discussion of them. One key point of discussion was the 2012 amendments to the Patents Act—the Intellectual Property Amendments (Raising the Bar) Act 2012. Without going into the technical detail, the amendments were intended to “raise the thresholds for the grant of patents” (PPR 2013b, 123); thereby reducing the number of “low quality” patents that can restrict the activities of non-patentee competitors. Given the limited opportunity for those changes to have had an impact on the prevalence of follow-on patents, the Review drew no conclusions from the amendments.
After a discussion of the evergreening strategies, thickets, and follow-on patents, there was a short analysis of two case studies and some data around follow-on patents provided by IP Australia. The examples were more technical, exemplified by the references to the patent numbers, than in the Issues Paper. The first related to two follow-on patents associated with the drug Venlafaxine—one that related to a formulation patent and the other for a “metabolite” of the drugFootnote 10 (PPR 2013a, 131–32). The second case study again referred to Omeprazole. Three types of follow-on patents were referred to here: a formulation patent, one for an “enantiomer” of the basic patent,Footnote 11 and a combination patentFootnote 12 (PPR 2013a, 133–34). In the Draft Report, the examples were used to engage with specific submissions to the Issues Paper. The Panel also conducted its own analysis, arguing that while “some follow-on pharmaceutical patents [have been] found to be invalid by the courts, this does not mean that all forms of follow-on patenting are invalid” (PPR 2013a, 140).
The Review then discussed the issue more broadly. The first focus of discussion was that the strategies employed by the pharmaceutical companies are those that “would be expected when … dealing with high levels of risk, high costs, and high returns” (PPR 2013a, 139). This included the assessment that pharmaceutical companies (big and small), when seeking secondary patents, were “legitimately operating within the confines of the various legal and regulatory systems” (PPR 2013a, 110). The second point focused on the notion that it may be within the purview of the PBAC to consider the impact of the pricing regulatory systems on the entry of generic medicines into the market. This was on the basis that the “only customer capable of having any significant impact on the pharmaceutical market is the PBS [although] intermediaries, [like] physicians and pharmacists, also have strong influence on the choice of drugs for patients” (PPR 2013a, 141).
Only two Draft Recommendations were made in the chapter on follow-on patenting. Both of these arose from the discussion of patentability standards. The first focused on the Productivity Commission reviewing the effect of the “Raising the Bar” amendments to the legal tests of patentability (Draft Recommendation 7.1). The second recommended the establishment of “an external patent oversight committee” to audit and review the practices of the Australian Patent Office (Recommendation 7.2). The focus of the work of the committee would be to “review patent grants and decisions issued by IP Australia” (PPR 2013a, 125), presumably to monitor compliance with the law.
The Panel’s lack of recommendations with respect to follow-on patenting was justified on the basis of three claims. First, the behaviour of the Big Pharma companies is “consistent with what would be expected when operating in a complex legal environment” (2013a, 139). Second, “follow-on patents must be examined and found by IP Australia to … meet the requirements of the Patents Act” (2013a, 140). Third, a “number of issues raised in regard to evergreening practices may be more appropriately dealt with by reviewing processes involved in regulatory systems outside the patent system” (2013a, 141). Given the limited ToR, and the specific expertise, of the panel, there was little they could say around the patenting strategies of pharmaceutical companies (big or small) or the operation of the PBS.
3.3 Submissions to Draft Report
In terms of who made submissions to the Draft Report, it may be noted that there were twenty-five entities (either individuals or organizations) that had also made submissions in response to the Issues Paper. Of the fifteen that only made a public submission to the second phase, six were from the pharmaceutical industry (four companies and two industry associations). Two non-pharmaceutical industry associations, two community organizations, and one non-profit legal association provided submissions. Finally, three academics and one public research organization made submissions to the Draft Report.
First, it should be said that twenty-six of the forty submissions included statements that were supportive of the role of patents in the pharmaceutical sector. The remainder engaged with the detail of the Draft Recommendations without expressing broader sentiments of support or antagonism to pharmaceutical patents. Very few were against the use of patents to protect inventions in the industry—though Pope and Selten did refer to the “evil innovation of patented drugs” (2013, 4). Others, though, were simply unhappy with the perceived low standards of patentability in the system.
Few submissions engaged explicitly with the issues of follow-on patents or of evergreening generally. This is not surprising as there were no Draft Recommendations that related to them. Of the nine that did refer to the issue, three highlighted the results of Christie et al. (Reference Chalmers2013) to the Review. Two of these emphasized the fact that the owner of the basic patent for a drug did not monopolize innovation in the area, and the third was from the authors of the study itself. Expressed differently, Christie et al. (2013, 3) note that entities other than the owner of the basic patent own more patents surrounding the basic patent than the basic patent owner. Four of the other submissions discussed follow-on patents in terms of their legality; that is, that the patents were only granted if the inventions met the patentability standards and the grants acted as a spur to innovation. The final two, on the other hand, characterized follow-on patents as representing “trivial” (Moir Reference Matthews and Gurgula2013, 3) or “insignificant” (AFTINET et al. 2013b, 5) advances in the technology. They, then, were focusing on the level of invention that the standards currently required and, for Moir at least, the interpretation of the legal tests by the courts (2013, 5–7).Footnote 13 In short, none of the submissions disagreed with the Review’s assessment of patent law as it relates to follow-on patents.
3.4 Final Report
As with the Draft Report, there was a chapter in the Final Report on evergreening. Much of the later chapter was taken from the Draft Report; as such, there is little value in dissecting the Final Report in any greater detail. Importantly, the two Draft Recommendations were reworded and included as final Recommendations. In addition, there was a new section on factors outside the patent system that focused on the decisions of the PBAC. This led to a Recommendation to the effect that the Government should minimise the possibility that PBS policies facilitate evergreening strategies “where these practices provide no net benefit to Australia” (PPR 2013b, 124). This Recommendation reflects a view that the evergreening strategies are not contrary to the law and that it is the intersection of multiple regulatory systems that has an impact on the entry of generic medicines into the market.
Finally, reference may be made to the government’s response to the Recommendations. The Review was instituted by the Federal Labor government in October 2012. The Final Report was delivered in the following year. The then government neither released the Report, nor offered a formal response to it. The new Liberal/Nationals Coalition (conservative) government did release the Report. The government, however, did not offer any concrete reform proposals—the status quo was maintained. It is, therefore, a reminder that contributions to a public debate do not guarantee change.
4. The “Public Interest” and the Evergreening Debate
As previously stated, the question we keep returning to is the nature of the public interest, how it is shaped, and subsequently embedded in society through regulatory and legal mechanisms. A simple description of the submissions above does not provide insights into the impact of the different claims of those who wrote them. An examination of those claims, using a lens from public policy theory, allows a deeper understanding of the nature, and limitations, of public debates such as these. To do that requires a preliminary analysis of the claims to the public interest that are made by the submitters.
4.1 Debate as Oligopolistic
As previously stated, the purpose of the PPR was to evaluate how the pharmaceutical patent system in Australia was faring in terms of its capacity to balance the range of interests involved in producing pharmaceuticals. While the ToR provided criteria for submissions, the outline above suggests that many submitters framed their response in terms of their own interests. As in any public debate, most groups want their version of the issue to shape any reforms decided upon, and it may be over-generous to consider the PPR process as a debate over evergreening and not simply an administrative process of review. However, there are indeed different positions that can be drawn from the submissions that highlight the dynamics of the debate which shed some light on the governing structures that frame this policy domain. In a market-based oligopoly with very few sellers, it is up to buyers to choose between the limited options available. In this instance, with competing versions of the appropriateness or not of evergreening, underpinned by competing versions of the public interest, it appeared up to the Review to decide on which view seemed most valid.
While the Review aimed to examine administrative practices that cover the development of, and access to, medication, the underlying issue appeared to be how to ensure the public interest was actually being taken into account. In order to do so, the Review needed some way to define the public interest, and subsequently the well-being of society, and how to manage any risks associated with choosing one version over another. It is this basic issue that appears to have shaped the debate at one level. The different versions of the public interest that are embedded in the submissions include: (1) the better health of the population (through greater access to better drugs); (2) more innovation generally; (3) profitable businesses—either Big Pharma or smaller pharmaceutical companies—for the health of the economy; and (4) effective legal and regulatory systems that meet the needs of the public. Unsurprisingly, the self-interest of some is behind a number of the claims as to the public interest; however, that does not necessarily negate any such claim as the term itself is always incomplete (Malpas and Wickham Reference Lascoumes and Le Gales1995). Of course too, all versions of the public interest are, at least in part, in conflict with the others.
At another level however, the debate was shaped by the way the Review interpreted the merits and relative risks alluded to in the competing versions of the public interest. Accordingly, there was the barest minimum of technical detail (despite the centrality of patent law), in terms of justifying the particular version of the public interest in the submissions. This may, in part, be due to the view that the submitters did not speak from a position of expertise on patents. It may also be that there is a perception that the public interest is more important than the detail around patents. That is, the technical aspects of the patent law may explain the situation now, but the law may be changed in order to further a specific version of the public interest.Footnote 14 Submitters, therefore, may have seen their task as convincing the Review of the rightness of their version of the public interest rather than convincing them that their analysis of the facts is correct. This, in turn, demonstrates the oligopolistic nature of the debate—only articulations of the public interest have a chance to reform administrative practice, and as this example highlights, there are only a small number of these articulations that may be deployed in a given policy debate.
This raises two important considerations for policy-based law reform: first, without a common understanding that articulates a “calculative” view of “the public interest,” stakeholders are left to compete blind, in a sense, which does little to challenge the existing oligopolistic tensions that underpin policy debates. Second, any review process, especially one that covers the link between government, business, and society, generally is going to be fraught with difficulty. In the Australian political system, the review process does not hold any authoritative power, reviews are a means to gather information and inform government. While the ToR set out the aims of a review, the fact that those who call for the review are not bound to respond to the findings of a review leaves open the possibility that a review can be used for political means to support a particular response, or to appear to be actively engaging with the issue, but with little intention to alter the status quo.
4.2 A Constrained Debate
Further, despite the “rules” of the debate set out in the ToR, it is clear from the submissions that not all aspects of the topic were covered. In this particular policy domain, the Review acted as a conduit for all interested participants to contribute to a discussion on the appropriateness or not of patent evergreening. As an institution of government however, the Review process structured the discourse, and due to the historical context of government intervention, such organizational context narrows the range of options considered viable (Peters, Erkkliä, Maravić Reference Peters and Pollitt2016, 89). What is particularly interesting in this debate, given the language of public interest and the importance of improved health outcomes, is that not all interested parties participated and several important aspects of the topic were missing.
It is not to be expected that every person, or every company, with an interest in the pharmaceutical sector will make a submission to the Review. That said, there are still certain categories of entities that are notable by their absence. First, of all those that made submissions, there was only one individual who was speaking in a private capacity—and that was based on Honours research carried out at a university. There were, of course, individual academics who made submissions; however, they were speaking from a position of expertise, rather than personal insight and desire. Further, despite the fact that patents are aimed at incentivizing innovation, no individual inventors (as opposed to the companies that employed them) contributed to the Review. There may be an argument that individuals, qua individuals, did not know about the process; however, given 2012–13 was still in the social media age, the groups that did submit could have mobilized their constituents. Further, despite patents being seen as economic tools for promoting innovation, there was only one submitter known to have a significant background in economics.
Certain organizations also did not contribute much to the process. Most universities, for example, did not—despite their interest in pharmacological research and the patenting of their research outputs. It is also notable that bodies such as the Australian Medical Association (the body that represents medical practitioners) did not make a submission. That Association often speaks on matters relating to public health; however, it did not in this case. Hospitals, institutions that spend a significant portion of their funds on drugs, did not make a submission. There is not enough information available to explain their lack of engagement. That is not the case for IP Australia, the body tasked with examining patent applications and central to the patent system here. It also did not make any submissions (though it did provide some data). Given that it provided administrative support for the Review, it is possible that it would not have been seen as appropriate to make a submission; however, the choice for the Review to be sited there may be seen as providing a constraint on the debate.
Of course, those things that were not said in the process outnumber the people who did not speak. In other words, there were certain categories of statements that could have, usefully, been added to the debate but, in the end, were not. There were other statements—such as the profit motive of pharmaceutical companies (large and small)—that are so well-known that they did not need to be uttered. This article cannot go into the reasons why the first category of things were not said; however an analysis of the nature of the discussion cannot ignore the evident gaps.
For a start, there was not a great amount of technical detail in the submissions. In terms of patent law, the Review did provide an overview of the tests of patentability in the Draft Report, but that extended to fewer than three pagesFootnote 15 (PPR 2013a, 121–23)—despite the fact that treatises in the area can extend to hundreds of pages. Further, there was no detail at all about the complexities of pharmacology in any of the submissions or Review publications. There was also little about the detail of the registration processes of the TGA or the complex calculations, and other tests, conducted by the PBAC when considering a product for inclusion in the PBS. Finally, there was little empirical evidence. There was the study of Christie et al. (Reference Chalmers2013), and some data provided by IP Australia, but beyond that, there were just anecdotes about specific drugs—including their use as case studies by the Panel (with different people disagreeing about their relevance).
In a similar vein, there was minimal discussion of competition policy and no reference to the specifics of competition law. At one level, this is not surprising, given the ToR only referred to “competitively priced pharmaceuticals,” rather than asking submitters to engage with the detail of competition law. Only two academics (one of whom had an economics background) referred to competition principles in their submissions (for example, Moir Reference Matthews and Gurgula2013). This lack of discussion is partly explained by the fact that the technical detail of competition law is outside the expertise of most who participate in the patent system, though the intersection of the two is a developing area of research (for an example in the area of pharmaceutical patents, see Matthews and Gurgula Reference Malpas and Wickham2016). The exclusion of competition law from the debate is, nonetheless, another constraint that limited the potential input, and outcomes, of the Review.
Finally, the criticism included in the discussion was generally focused on the Big Pharma companies. There was little comment on the actions of IP Australia when examining patent applications, and there was little negative comment on the practices of generic companies—either when they sought patents themselves or when they set their prices when they introduced their versions of drugs into the market. With respect to the latter point, studies have shown that the cost of drugs does drop when a single generic manufacturer enters a market, but it drops further when additional manufacturers sell the drug (Sweeney Reference Shapiro, Jaffe, Lerner and Stern2002, 8). This suggests that the first generic manufacturer is as profit-focused as Big Pharma companies and only drops its price when it has to. Finally, a number of submissions refer to doctors prescribing newer versions of drugs, instead of the older versions of the same drugs (in line with one of the case studies in PPR 2012), as a result of the marketing of the pharmaceutical companies. There is, however, no criticism of the doctors for doing this, with all the blame being placed on, again, the Big Pharma companies, as though the practitioners had no capacity to resist marketing techniques.
4.3 Understanding the Constrained Oligopoly using Ideas from Public Policy
A mere description of the limits of the debate is useful; however, greater insights may be achieved through stepping outside the confines of legal analysis. From the perspective offered by public policy theory, the pharmaceutical industry and the PPR function in a broad historical governing framework that has implicitly framed knowledge, values, and the legitimate recognition of expertise. For all policy responses, these functions are an important step in the “collective puzzling” (Heclo Reference Haigh1974, 304) over how to deal with societal issues. This puzzling includes various long-running forms of intervention, the regulations that cover the safety of products, and the pricing controls managed by the PBS. These administrative practices inextricably link the health of society and access to medicine with the ideals of a competitive market economy.
As instruments of government, each scheme and initiative bears political messages which further organize the relationship between the state, the market, and civil society (Lascoumes and Le Gales Reference Lancaster, Ritter and Colebatch2007; Haigh Reference Gleeson, Moir and Lopert2012). In effect, the long-term framing of the issue sets out two important implications for the debate around evergreening and, subsequently, the public interest. First, that any discussion on evergreening cannot be viewed in isolation from market outcomes, and as a consequence, the economy becomes one of the primary structuring agents that helps to define the well-being of society. Second, this establishes a hierarchy that privileges some forms of knowledge and subtly organizes the value base that shapes the issue. Structural and regulatory interventions are not neutral features of society (Hoppe Reference Hill, Kirchner and Holmes2010); rather they act as the primary mechanism to reproduce the status quo (Capano and Howlett Reference Angell2009).
Situating the Review process as a mechanism that acts to reproduce the status quo also highlights how knowledge and collective values are embedded and consequently reinforced in the relationship between the state and civil society. While the primacy of the competitive market economy provides an organizing principle, knowledge claims of the various groups within the debate actively legitimize some forms of knowledge and expertise, which further orders the debate, and makes it difficult to challenge the status quo. There are three aspects of the submissions that need to be considered in this context: the nature of the “speakers,” the body of knowledge that their speech may relate to, and the values that are attached to the respective positions.
The speakers may be, simplistically, divided into two groups—those who speak from a position of expertise and those who speak from experience. The distinction, however, is more technical. The first group includes those academics who make statements attached to the discipline they are trained in (this would not include medical doctors who speak about the finer points of patent law) and to the bodies that represent professionals who operate within an area of technical expertise (such as the Institute of Patent and Trade Mark Attorneys of Australia). For this group, the statements are delimited by the discipline (see, for example, Foucault Reference Duckett and Breadon1989). The second group includes businesses and community organizations. There is no structured discourse that delimits the operation of a business or non-profit organizationFootnote 16—at least not in the way that patent law delimits the knowledge of an academic working in the field. Instead, pharmaceutical companies and community bodies speak to the experiences and beliefs as to the operation of the systems. It is worth noting, too, that those who spoke from experience tended to be representative bodies (such as associations), whereas the experts were more likely to offer individual submissions.
There is also, of course, the pre-eminent speaker in the process—the Review Panel itself. In terms of its expertise, its Chair was Tony Harris, a former New South Wales Auditor General and Parliamentary Budget Officer, Professor Dianne Nicol, a law academic with patent expertise and a PhD in cell biology, and Dr. Nicholas Gruen, an economist and former government advisor. The Panel, after accepting the ToR, then framed the debate in the manner that they saw appropriate (they did, after all, have relevant expertise). The vast bulk of the submissions then kept within the bounds of that frame. This is not to suggest that the approach was wrong (or that the frame was misaligned). It is a simple acknowledgement that, to the extent this debate operated as a marketplace for ideas, the Review, as the monopsonist, was setting the ground-rules.
While the groups that made submissions have slightly different positions on the evergreening debate, each brings a set of values that further shape what is appropriate to “say” and, as such, these values are institutionalized in particular ways. For those with patent law expertise, especially those who operate within a specific organization, while not suggesting that the role and purpose of the law is unchanging, their positions reinforce the role that law has as the legitimate authority that holds the system together. While the Review set in place the opportunity to change the law, the possibility to do so was remote given the power of the oligopoly that functions in the broad pharmaceutical domain. Certainly, the Review found that the actions of pharmaceutical companies were operating within the various legal and regulatory systems (2013b, 121),Footnote 17 which further adds weight to the existing structures that govern the issue. For the group who speak from the position of experience (the business and community sector), the values embedded in these submissions emphasize the importance of exchange relations. While not a specific value per se, such as respect, equality, and freedom, the emphasis on exchange relations is based on the principles of fairness. This ideal of fairness is evidenced in the view that the patent system provides the same incentives for all pharmaceutical companies to develop new drugs. The underlying implications of the interaction between the state, knowledge, values, and societal well-being is a form of “authoritative allocation of values” (Peters Reference Parker and Mooney2013, 104) that no doubt aligns public interest more closely with the interest of pharmaceutical companies and the competitive market than with the health profession.
Further, the interplay between the different participants highlights the influence non-state actors have in this context. This increasing influence between the private sector and policy makers adds extra dimensions to governing and administrating, especially when competing versions of “the public interest” are in play. As previously stated, the Review did not result in any formal reform proposals and there was no response to the Final Report by the Minister who commissioned the Review, nor by the new incoming government in 2014. A subsequent Inquiry into the complexities of Intellectual Property Arrangements undertaken by the Australian Government’s Productivity Commission (2016) also remarked on the lack of response from the Australian Government to the PPR. Moreover, this later report recommended the need for the Australian Government to reform the extensions of patent process as the current approach imposes a net cost on the community (Productivity Commission Reference Pope and Selten2016, 298). This raises several considerations concerning the process of governing, especially across a domain that has multiple, and perhaps competing, goals, such as health, innovative drug development, employment, and ensuring there is a competitive market for the pursuit of private interests, all the while coalescing around versions of the public interest. A simple suggestion could be the government of the day needed to appear to be doing something (see Lancaster, Ritter, and Colebatch Reference Hutchins2014); however, such a suggestion does little to expand our understanding of the practices of governing and the administrative and organized forms through which governing takes place (Colebatch Reference Christie, Dent, McIntyre, Wilson and Studdert2009).
From another perspective however, the intersection of competing goals could be seen as a fundamental barrier to reform. The interplay of the patent, pricing, and regulatory approval systems evidences the many levels of public administration involved. The practices of government officers, or the decisions they make, constitute agencies of order (Hoppe Reference Hill, Kirchner and Holmes2010); they equally tie the government and pharmaceutical industries in a symbiotic relation. It is this reliance that underpins the way in which governing in this context takes place. In effect, the process and the types of engagement are more likely to support the prevailing discourse that reinforces the power of the oligopoly.
This connection between the nature of the relationships of governance and the lack of government-backed reform proposals may have implications for law reform in other areas—ones in which the interactions are less complex. Expressed differently, for a review to actually challenge the status quo and provide the possibility to reform a policy or piece of legislation, broader forms of governance would need to be considered. That is, the insights from this research highlight that legislative reform may be more likely if the settings of the review were different. For example, the underlying assumptions that link the public interest to the health of the economy could be rendered transparent, rather than leaving this up to those who choose to respond; alternatively, a more technical approach, one that excludes a greater proportion of potential respondents along with broad claims to the public interest, may result in actual change.Footnote 18 More work would need to be carried out in order to explore these questions.
5. Conclusion
This paper has provided an empirical study of the role of the “public interest” in a legislative reform process in Australia. This paper has used submissions to the PPR to highlight how competing versions of the “public interest” underpin the use of patents and the debate over evergreening. In pointing to these conflicting positions, the paper has demonstrated the difficulties involved in championing reform in this policy area. We have shown how the dominant stakeholders framed the debate—with these frames representing a form of oligopolistic control over the discourse. Acknowledging that the evergreening debate in Australia has not been resolved, however, is not necessarily negative. That the Review did not “fix” the problem is perhaps not surprising. Pharmaceutical firms will continue to patent their inventions, the government and its agencies will not stop ensuring pharmaceutical products and their prices are regulated, and firms will continue to use regulatory mechanisms to their own advantage. The government’s “cop-out” may simply be an acknowledgement that government is imperfect and that the status quo can be “good enough.”
