3 Assessment of the draft Order
12. Our role is to assess whether the proposal
meets the statutory conditions required of an order under the
Legislative and Regulatory Reform Act 2006 (the "LRRA 2006"),
and to examine the proposals against a number of tests. Standing
Order No. 141 sets out the criteria under which the Committee
makes that assessment. In this section we assess the draft Order
against those criteria.
A: APPEARS TO MAKE AN INAPPROPRIATE
USE OF DELEGATED LEGISLATION
13. The draft Order does not appear to make an
inappropriate use of delegated legislation and therefore does
not raise any issues in respect of this test.
B: SERVES THE PURPOSE OF REMOVING
OR REDUCING A BURDEN, OR THE OVERALL BURDENS, RESULTING DIRECTLY
OR INDIRECTLY FOR ANY PERSON FROM ANY LEGISLATION
14. A burden is defined in section 1(3) of the
LRRA 2006 as any of the following: a financial cost; an administrative
inconvenience; an obstacle to efficiency, productivity or profitability;
or a sanction, criminal or otherwise, which affects the carrying
out of any lawful activity.
15. The Government's view is that the draft Order
would remove a financial burden on companies running clinical
trials. The Department states that "due to the commercial
sensitivity of the information, very little quantified evidence
was provided"[12]
via consultation responses.
16. We asked the IPO whether there was evidence
that actual or threatened patent infringement proceedings have
resulted in trials being moved outside the UK. The IPO responded
as follows:
Stakeholders have told us that the risk of infringement
proceedings for UK-based trials is greater than for trials run
in EU countries with broader infringement provisions. They have
indicated that when this risk is significant, they may decide
to locate a trial abroad. Thus, legal action may be avoided, due
to the location of the trial.
If a patentee threatens infringement proceedings,
it would generally be made in confidential correspondence between
the parties, which is unlikely to be made public. As regards
actual proceedings, we would not become aware of these until a
case was brought and was reported.[13]
17. Testing the strength of the evidence base
for the draft Order, we asked the IPO whether the risk of infringement
proceedings is theoretical rather than practical. The IPO provided
a summary of the case law on the scope of the current research
exemption, on which it based its argument that the risk is practical.[14]
18. The Department provided a number of examples
of burdens which it argued would be reduced or removed by the
draft Order in the Explanatory Document (paragraphs 3.1-3.5):
· The financial burden caused to the pharmaceutical
industry by the need to carry out expensive legal assessments
of the infringement position in respect of all relevant patents
prior to running clinical trials in the UK;
· The financial burden which might result
from an injunction being granted against a company running a trial
in the UK; or the delay in getting a product to market due to
legal challenges;
· The efficiency burdens placed on companies
when they locate a trial abroad due to the narrow infringement
exceptions in the 1977 Act (compared to most other EU countries)
and the financial burden to the UK clinical trial sector and medical
institutions when clinical trials are run abroad;
· The financial and efficiency burden on
small and medium enterprises and academic institutions who may
not have the budget to assess infringement risk and who may be
more at risk of infringing third party patents.
19. We agree that the draft Order would reduce
a burden, or burdens as defined in the LRRA 2006.
C: SERVES THE PURPOSE OF SECURING
THAT REGULATORY FUNCTIONS ARE EXERCISED SO AS TO COMPLY WITH THE
REGULATORY PRINCIPLES, AS SET OUT IN SECTION 2(3) OF THE ACT
20. The draft Order does not raise any issues
in respect of this test.
D: SECURES A POLICY OBJECTIVE WHICH
COULD NOT BE SATISFACTORILY SECURED BY NON-LEGISLATIVE MEANS
21. The Department notes that it considered two
non-legislative options for change: industry agreements and non-statutory
guidance to clarify the current legislation. Following a formal
consultation, it concluded that the non-legislative options were
not a viable way of achieving the policy objective.[15]
22. We agree that the proposed reforms are only
possible through legislation.
E: HAS AN EFFECT WHICH IS PROPORTIONATE
TO THE POLICY OBJECTIVE
23. The Explanatory Document provides information
relevant to this test between paragraphs 3.12-3.13. In the light
of this and the further information supplied by the Department
at the request of the Committee, which is annexed to this Report,
we agree that the effect is proportionate to the policy objective.
F: STRIKES A FAIR BALANCE BETWEEN
THE PUBLIC INTEREST AND THE INTERESTS OF ANY PERSON ADVERSELY
AFFECTED BY IT
24. In the light of the information at paragraphs
3.14-3.20 of the Explanatory Document, we agree that this requirement
has been met.
G: DOES NOT REMOVE ANY NECESSARY
PROTECTION
25. The Department states that the provisions
in the draft Order are in keeping with the existing exceptions
to patent infringement, as they clarify that certain specific
acts relating to clinical trials and Health Technology Assessment
fall within the existing research exception.[16]
The Department indicates that the provisions do not remove any
necessary protection as a third party would still require a licence
from the patent holder in order to use a patented product for
commercial activities.[17]
26. The Department also notes that most EU Member
States exempt clinical trials from patent infringement.[18]
In the light of this and the further information supplied by the
Department at the request of the Committee,[19]
which is annexed to this Report, we are satisfied that the draft
Order would not remove any necessary protection.
H: DOES NOT PREVENT ANY PERSON FROM
CONTINUING TO EXERCISE ANY RIGHT OR FREEDOM WHICH THAT PERSON
MIGHT REASONABLY EXPECT TO CONTINUE TO EXERCISE
27. The Explanatory Document includes information
relevant to this test at paragraph 3.24. In particular, it states
that although patentees currently have the right in UK law to
prevent another party using their product in a trial, a company
wishing to eliminate this risk may do so by running the trial
abroad, and therefore no practical benefit flows from this right.
The Department notes that eleven of twelve formal consultation
responses agreed with that assessment. On the basis of this information,
we are satisfied that the draft Order does not raise any issues
in respect of this test.
I: IS NOT OF CONSTITUTIONAL SIGNIFICANCE
28. The Explanatory Document includes information
relevant to this test at paragraph 3.25. The Department confirms
that the proposals are not of constitutional significance.
J: MAKES THE LAW MORE ACCESSIBLE
OR MORE EASILY UNDERSTOOD (IN THE CASE OF PROVISIONS RESTATING
ENACTMENTS)
29. The draft Order does not raise any issues
in respect of this test.
K: HAS BEEN THE SUBJECT OF, AND
TAKES APPROPRIATE ACCOUNT OF, ADEQUATE CONSULTATION
30. The Intellectual Property office ran an informal
consultation for 8 weeks between 6 June 2011 and 31 July 2011,
asking stakeholders for views on whether the current legislation
struck the right balance between the rights granted to a patent
holder and the needs of pharmaceutical companies to carry out
clinical and field trials. Following this consultation, the Government
acknowledged that there was evidence of a need to amend UK patent
law in this area and committed to run a formal consultation.[20]
31. The formal consultation ran for 8 weeks from
24 October 2012 to 19 December 2012. A total of twenty responses
were received: 6 from the intellectual property profession (of
which 4 came from professional bodies) 2 from research and development
pharmaceutical industries; 3 from trade bodies representing the
pharmaceutical and biotechnology industry; 2 from technology transfer
organisations; one from a trade body representing the generics
industry; a charitable organisation; a licensing organisation;
a company employee; a Devolved Administration; a biological content
manufacturing organisation and an active pharmaceutical ingredient
manufacturer.[21] Nineteen
of the twenty responses agreed that the 1977 Act should be changed
to exempt from patent infringement activities which are carried
out when preparing or running clinical or field trials using new
drugs.[22] Fifteen out
of sixteen responses wanted to see the exemption cover activities
carried out to gain regulatory approval of new drugs.[23]
Ten out of sixteen responses wanted to see the exemption extended
to studies required for health technology assessments.[24]
32. In the light of this information (and the
further information supplied by the Department at the request
of the Committee)[25]
we are satisfied that the consultation requirement has been met.
L: GIVES RISE TO AN ISSUE UNDER
SUCH CRITERIA FOR CONSIDERATION OF STATUTORY INSTRUMENTS LAID
DOWN IN PARAGRAPH (1) OF STANDING ORDER NO. 151 (STATUTORY INSTRUMENTS
(JOINT COMMITTEE)) AS ARE RELEVANT
33. The draft Order does not raise any issues
in respect of this test.
M: APPEARS TO BE INCOMPATIBLE WITH
ANY OBLIGATION RESULTING FROM MEMBERSHIP OF THE EUROPEAN UNION
34. The draft Order does not raise any issues
in respect of this test.
- We conclude that the draft Order meets the
required preconditions and tests.
12 Explanatory Document, paragraph 3.4 Back
13
Annex, Q 7 Back
14
Annex, Q 8 Back
15
Explanatory Document, paragraph 3.9, and Government Response to
formal consultation, page 18 Back
16
Explanatory Document, paragraph 3.22 Back
17
Ibid. Back
18
Explanatory Document, paragraph 3.23 Back
19
Annex, Q2 Back
20
See Explanatory Document, para 2.4-2.8 Back
21
See Explanatory Document, para 2.11 Back
22
See Explanatory Document, paragraph 2.12 Back
23
Ibid. Back
24
Ibid. Back
25
See Annex Back
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