As a result of Australia's Free Trade Agreement commitments, extensions of patent term (EoTs) are offered for up to five years for original pharmaceutical substances per se or pharmaceutical substances produced as a result of recombinant DNA technology.
The extension of term is intended to compensate for the lengthy regulatory delays in allowing original pharmaceuticals to get to market, and to encourage pharmaceutical R&D in Australia.
The Productivity Commission (PC) in its 2016 report into Australia's IP arrangements considered that the policy case for extensions of term is not sufficient, and has not been borne out by experience. The PC found that EoTs do not appear to encourage R&D, and have a limited effect on return on investment for bringing pharmaceuticals to Australia, while costing the government a considerable amount through the PBS.The PC recommended that EoTs be substantially curtailed. The government noted this recommendation, and considered that further consultation and development of options was necessary.