Patent Amendment Bill: finalisation

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
30 October 2002

Patents Amendment Bill B64-2002
Patents Act No. 57 of 1978
National Association of Pharmaceutical Manufacturers submission
Pharmaceutical Manufacturers Association submission

SUMMARY
The Department went through the Bill clause by clause explaining the objectives and providing practical examples of the provisions.

The National Association of Pharmaceutical Manufacturers and the Pharmaceutical Manufacturers Association made submissions in this meeting which was also attended by the Health Portfolio Committee.

The discussion focused on research and development during the patent term. The PMA wanted a patent term restoration whereas the NAPM wanted an end to data exclusivity so that it could access data earlier for research. The second focus was on balancing national priorities and the protection of patent rights. Committee members felt that national needs should take precedence. The PMA felt that there was a need to balance everyone’s needs. The NAPM argued for legislation to protect it so that it could develop its capacity.

The Bill was passed by the Committee without any changes being made to it.

MINUTES
Patent Amendment Bill - briefing
Ms Ludin from the Department of Trade and Industry went through the clauses of the Bill. As she did so she reviewed the rationale behind the Bill, explaining the objectives and practical implications (see original briefing).

Discussion
Ms Malumise (ANC) asked if medicines were also included in the patent disposal from the patent holder to another party. The legal advisor explained that the amendment only specified the contractual possibility in the law of patents and that medicines may be included in that contract subject to applicable legislation such as the Medicines and Related Substances Control Act.

Mr. Bruce (DP) wanted to know the difference between "sale" and "dispose of" in Clause 16. The legal advisor explained that "sale" was restricted to exchange of patent for money whereas "dispose of" included any contractual agreement between the original patent holder and any other party.

Pharmaceutical Manufacturers Association submission
The CEO of the Pharmaceutical Manufacturers Association (PMA), Ms Deeb argued that the Patent Act should ultimately balance the needs of both the original inventors and those of generic drugs manufacturers. By this, she mean that the law should protect the patent rights of the inventor and still allow the generic drugs manufacturers to benefit as soon as the patent protection expired. She based her argument on the claim that the Patent Amendment Bill did not strike such a balance at all. She said that the present system did not allow the patent holder to reap the benefits of their invention. She emphasized the twenty years protection was a myth because given the delays in registration, marketing and selling, there was little time to enjoy returns on investments.

She suggested that the South Africa should adopt the America’s Drug Competition and Patent Term Restoration Act (1984) commonly known as the Hatch-Waxman Act. She believed that the provisions of the Hatch-Waxman Act could foster such a balance in South Africa. These provisions were data exclusivity, patent term restoration and access to information by generic drugs manufacturers.

Discussion
Mr. Bruce (DP) asked if the Medical Control Council was the problem in registering products.

Ms Deeb explained that the problem was not simply speeding up the registration process but rather having structures that balanced both the needs of patent holders and those of generic drug manufacturers. She said that the issue was enhancing "fair and just balance" of interests.

Ms. Malumise wanted to know the impact of registration delays on the price of drugs when they finally reached the market.

Ms. Deeb explained that prices might be set higher than if the drugs reached the market earlier. However she warned that the pricing system was more complex than that.

The Chairperson wanted to know what might happen if the Bill was passed as it was.

Ms Deeb said that it would decrease investor confidence.

Ms September (ANC) asked why the PMA wanted generic drug manufacturers to access data of invented drugs only a year before the expiration of the patent.

Ms Deep explained that it would avoid beforehand manufacturing of the drugs and that it would also protect trade secrets.

Ms September asked how PMA could reconcile its argument with the need for affordability of drugs for the poor majority.

Ms Deep explained that the PMA had a tier-pricing system and that 80% of their drugs were sold to the government at a lower prices that could not be matched by international agencies if they were to sell to South African government.

Mr. Nefolovhodwe (AZAPO) wanted to know if the PMA’s unhappiness with the regulatory delays was due to a matter of profit-making or practicality.

Ms Deep replied that it was both. She said that the pharmaceutical companies had to enjoy returns on investments and also provide affordable prices.

Mr. Bruce (DP) asked what would happen if the PMA’s requests were granted.

Ms Deep said that it would certainly increase returns on investments and lower prices and thus be competitive.

One member asked if there was any positive relationship between good, effective medicine and higher prices.
 

Ms Deeb said that there was no such relationship - as long as generic drugs complied with the Medical Control Council criteria, it was good medicine.

Mr. Rhoda asked if the PMA would be happy if the Hatch-Waxman provisions were incorporated into the amendments.

Ms Deep agreed, especially for the inclusion of the patent term restoration.

In reply to Ms Malumise asking what discount percentage the PMA was selling medicines to the government, Ms Deep said it ranged from 66% to 90%.

National Association of Pharmaceutical Manufacturers submission
The Chairperson of the National Association of Pharmaceutical Manufacturers (NAPM), Dr. Bodhania stated that the association was in favour of the Bill but was not if favour of data exclusivity. He emphasized that local generic drugs manufacturers should be given access to data of invented drugs earlier so that they can compete with international generic drug manufacturers, which was something that had not yet happened. He was not in favour of the patent term restoration because he saw it as an artificial extension of the twenty years patent protection.

Discussion
Mr. Bruce (DP) was confused by the NAPM presentation - how could they support the right of patent holders to enjoy returns on investments and yet be against patent term restoration?

Dr. Bodhania explained that NAPM was simply against the extension of the twenty years protection because it meant delays and loss for the local generic drugs manufacturers.

In answer to Prof Ripinga (ANC) asking if generic drugs manufacturers had the capacity to take advantage of the provision of section 59(a) of the principal Act, Dr Bodhania said they did not.

Mr. Nefolovhodwe asked why the NAPM supported the amendments.

Dr. Bodhania explained that the amendment would empower local manufacturers to be competitive against international competitors because they would be able to carry research at an earlier stage.

In reply to Mr. Bruce (DP) asking if local generic drugs manufacturer were able to manufacture drugs fighting against malaria, Dr. Bodhania said that they were not able to.

One member asked if it was a fact that generic drugs in South Africa were expensive by international standards.

Dr. Bodhania answered that the perception was false and that a study had indicated the contrary. He added that a presentation on that study was made to the portfolio committee on health.

The same member asked if there were any guarantees that the law would decrease prices of generic drugs.

Dr. Bodhania replied that there was need for legislation that would increase the use of generic drugs and hence lower the market price thereof.

Ms Ludin commented that the turnaround time of the Medical Control Council had decreased to one year. Ms Deeb shook her head in disagreement.

Ms Ludin added that the patent term restoration was for countries whose registration delays lasted up to five years, which was not the case in South Africa.

Mr. Bruce (DP) suggested that it would be a little price to pay if the patent term restoration could be effected for drugs against AIDS and malaria.

The Chairperson commented that everyone should not lose sight of the fact that South Africa had priorities such as increasing manufacturing capacity and productivity and also the need for access to affordable medicine. Mr. Nefolovhodwe agreed and added that all countries had contextual specificities.

Ms Sono (ANC) wanted to know why only the pharmaceutical sector was invited when the amendments affected other sectors.

Ms Ludin agreed that all sectors could be included but that the pharmaceutical sector was more research and capital intensive.

Mr. Rhoda, commenting that he had twenty years research experience in the field of pharmaceuticals, moved that the Bill be adopted as it stood.

The Chairperson read the motion of desirability and the Committee agreed to it with no amendments.

Meeting adjourned.