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Community Affairs Legislation Committee
Office of the Gene Technology Regulator

Office of the Gene Technology Regulator


Senator HEFFERNAN: In March 2010, two years ago, the High Court of Australia rejected an application for leave to appeal in a patent case concerning the drug clopidogrel. Are you familiar with that?

Dr Smith : No. If you are talking about patents issues, it is not an area—

Senator HEFFERNAN: No. I am talking about an administration issue. Standby. Until then, the drug had been subjected to two Australian patents. You are the gene regulator. The original patent for the chemical compound expired in 2003. Sanofi Aventis, the patent owner, had applied for and was granted a second patent over virtually the same chemical compound. The difference was immaterial, so the full Federal Court found that. The second patent was due to expire in 2013, but because the full Federal Court held it was invalid, a decision the High Court was not prepared to interfere with, the second patent came to a premature end in March 2010. This saved the PBS and the Australian taxpayers tens of millions of dollars. It is a good example, actually, of lax patents and what they are costing, as granted by IP Australia, a soft entry point.

Here is the problem, and I would like an explanation. As part of the legal proceedings, Sanofi Aventis sought and was granted an interim injunction to prevent Apotex, a generic medicines company, from marketing a generic version of this product. That was in 2007. As a result of the injunction, Apotex was enjoined about marketing the generic version. As a result, two things happened. First, the automatic price reduction, as you would know, of about 12½ per cent and now 16 per cent that applies to any PBS listed drug on the market entry of a generic version, did not happen. So that cost the Commonwealth. This meant that the PBS had to keep paying the same price to Sanofi Aventis as it had agreed to under the PBS while the patent was alive and while the injunction was enacted.

Ms Halton : Senator, I do not want to break your flow, but are you sure this is the gene technology regulator and not the TGA?

Senator HEFFERNAN: This is actually as much for you as anyone.

Ms Halton : Okay. Just as long as we are clear, then.

CHAIR: You need to get to the question.

Senator HEFFERNAN: This is only going to take a couple more minutes. Second, it was a condition of the grant of the interim injunction—this is for you, Ms Halton—that this company had agreed to compensate any party, which included the Commonwealth, adversely affected by the interim injunction. This means when the High Court of Australia refused the application for leave, the condition to the interim injunction took effect.

Ms Halton : Yes.

Senator HEFFERNAN: The estimated cost to the Commonwealth PBS of the interim injunction between September 2007 when the injunction was granted and March 2010 when the injunction was lifted was something of the order of $60 million.

Ms Halton : I know the issue well.

Senator HEFFERNAN: And that figure does not take into account the benefit of the illegal patent monopoly—that is, the invalid patent monopoly—that this company had since the first patent expired. It has been estimated at between $480 million and $600 million.

Ms Halton : To whom? To whom would be a separate question. Anyway, keep going.

Senator HEFFERNAN: I have three questions. Question 1: putting aside the $600 million, what has the Department of Health and Ageing done or planning to do to collect the $60 million from that company as agreed to under the payer’s compensation to the Commonwealth?

Ms Halton : We are pursuing it, but it will require legal action. We will be pursuing it.

Senator HEFFERNAN: Will you be also including in that pursuit the interest on the money?

Ms Halton : That will be a matter for legal advice. This matter is still on foot so I cannot answer that question.

Senator HEFFERNAN: I am pleased you are on to it.

Ms Halton : I am on to it.

Senator HEFFERNAN: Question 2: what involvement has the Department of Health and Ageing had in the patent litigation between Apotex and Sanofi Aventis? I understand that any patent lawsuits must be served on IP Australia under the Patents Act. IP Australia has the right to be heard by the court. Can the department enlighten me on what steps it took to ensure IP Australia intervened in these proceedings so as to protect Australian taxpayers from overpaying Sanofi Aventis?

Ms Halton : I will have to get the relevant officers on that particular question. These here are not the relevant officers.

Senator HEFFERNAN: You might take that on notice.

Ms Halton : I am happy to take it on notice, absolutely.

Senator HEFFERNAN: Question 3: I also understand that this is one of many patents, as we have discussed over many hearings involving what one might call evergreening patents.

Ms Halton : Indeed.

Senator HEFFERNAN: That is to say, patents over pharmaceuticals that renew the period of patent protection for so-called innovations that amount to little more than tinkering or involve some minor modifications to the delivery of the drug—a coating on the tablet or whatever.

Ms Halton : Yes.

Senator HEFFERNAN: I would like to know what, if anything, the Department of Health and Ageing is doing with regard to this kind of patent misuse?

Ms Halton : There is probably a longer answer that we can give to this.

Senator HEFFERNAN: You may care to take that on notice.

Ms Halton : Why don’t we do that. This is quite a complex area, as you would know. I will make one point because I think it is relevant for the record now. Essentially the way that the arrangements work with the TGA is that there is an opportunity for people to have some form of disclosure about things that are about to come forward. So we do have visibility of when these challenges are going to occur. I have to say we do not think we have quite the same problem with evergreening in this country as in some other places. But the particular case to which you refer, I can assure you, we are pursuing with what might best be described as vigour.

Senator HEFFERNAN: I hope it is a quicker process than the other one that is hanging around.

Ms Halton : It should be. But, at the end of the day, lawyers—what can I say.

Senator HEFFERNAN: Do not use the $60 million up in legal fees before we get the $60 million.

Ms Halton : I do not think it should go anywhere near that.

Senator HEFFERNAN: I will watch carefully.

Ms Halton : I would be happy for you to do so.

Senator HEFFERNAN: Thank you very much.

Ms Halton : You are welcome.

CHAIR: Senator Xenophon has questions of this agency.

Ms Halton : But he is not here.

CHAIR: But he has got questions both for this one and therapeutic goods.

Ms Halton : We are expecting the latter.

Senator HEFFERNAN: Would it assist the committee if I table the injunction from the court?

CHAIR: That would be very useful. Given there are other senators with TGA questions, what we will do is say thank you very much to the officers of the Office of Gene Technology Regulator. I apologise that those questions were not directly for you and Senator Xenophon is not here. Senator Xenophon is returning.

Ms Halton : Apace.

CHAIR: Senator, if you could be quick with the Office of Gene Technology Regulator.

Ms Halton : Because we have been indulging on your behalf, Senator, in a filibuster.

Senator HEFFERNAN: We just repeated The Man from Snowy River. We just repeated it backwards.

Ms Halton : Do not make us repeat it forwards again!

Senator XENOPHON: I want to ask a couple of questions about buffer zones. When will the OGTR be reviewing buffer zones for GM crops? Is there any review planned at the moment?

Dr Smith : Our approach to setting buffer zones for field trials, what we call limited and controlled release, is something that we review every time we do a risk assessment for a field trial. So it is a case-by-case basis. We set the buffer zone on the basis of the risk assessment for that particular field trial.

Senator XENOPHON: But the parameters for that risk assessment have remained about the same. You have a set of criteria in terms of how you assess these things, do you not?

Dr Smith : We have a risk assessment framework which is published. It is on our website. It is consistent with world’s best practice. The criteria for setting buffer zones, as you call them, or isolation zones, is set on the basis of what we determine is necessary after our risk assessment on the particular crop that has been grown and the particular circumstances. So it is not one size fits all; it is very much a case-by-case-situation.

Senator XENOPHON: But still based on that framework within what you say is world’s best practice?

Dr Smith : Yes. It is a consistent risk-analysis framework.

Senator XENOPHON: Has any review or reassessment been prompted by the Steve Marsh case?

Dr Smith : The Steve Marsh situation, as you call it—

Senator XENOPHON: I said case.

Dr Smith : I understand the legal action has not actually commenced yet but it is underway. As I mentioned at a previous estimates, it is important to distinguish between a situation in relation to commercial cultivation of genetically modified crops and a field trial of genetically modified crops. With the Steve Marsh case, as you refer to it, that was a situation where genetically modified canola had been approved for commercial cultivation back in 2003. In fact, it was approved on the basis of a very extensive and public risk assessment which determined that the risks to public health and environment were no different with that genetically modified canola than for conventional canola, if you like. So on that basis, from the Gene Technology Regulator’s perspective, there is no facility or any justification for the Gene Technology Regulator under the Gene Technology Act to put in place any restrictions which might limit the cultivation of the crop because the risks to the environment were no different from that of conventional canola. Related to that, I guess the other thing that is relevant here is that when the Gene Technology Regulator approved that canola for commercial cultivation in 2003, each state and territory except Queensland and the Northern Territory put in place a moratorium on its cultivation, which you probably remember. Since that time, New South Wales and Victoria rescinded those moratoria, so GM canola has been cultivated commercially in those states since about 2008, I think. In Western Australia, which is the Steve Marsh situation, commercial cultivation was allowed in Western Australia in 2010. This is a decision by the Western Australian state government to rescind their moratorium, if you like, after they had done a number of what they call commercial scale field trials. So the issue of segregation of commercially approved GM canola from other non-GM crops on the basis of trade or marketing considerations, which is the core of this issue, is a matter for industry and the relevant state governments. They are not matters which I have any ability to influence under the Gene Technology Act.

Senator XENOPHON: Just help me out here. What am I missing? If there is an issue of cross-contamination, if a farmer has a particular crop that markets will not take because it has GM contamination and if there is not an adequate buffer zone for contamination by GM crops, are you saying that is not your concern?

Dr Smith : That is a trade and marketing issue. It is not an issue to do with risk to public health or environment, which is the basis of the Gene Technology Act. So any decisions that we take under the Gene Technology Act have to be based on the risks to public health and the environment.

Senator XENOPHON: So you do not see any risks whatsoever, not even on the precautionary principle, to the crops being approved?

Dr Smith : It was an extensive risk assessment. It was public. There was a lot of consultation with experts in this area. The conclusion was that there was no greater risk to public health or to the environment from that genetically modified canola than there is from conventional canola. On that basis, there is no rationale and no justification at all under the Gene Technology Act, under the legislation.

Senator HEFFERNAN: And in a practical farming sense there is no possible way of segregating it. So it is all in or all out. They use more chemicals growing strawberries than they do cotton these days.

CHAIR: Senator Xenophon, have you completed your questions?

Senator XENOPHON: I am done. Thank you, Chair.

CHAIR: Thank you to the Office of the Gene Technology Regulator. We will now move to the TGA.