15 July 2025
Many Australians may not realise that pharmaceutical products — including packaged medicines, wound care items, and blood products — are among Australia’s top exports to the United States. In 2024, these exports reached around US$1.35 billion, a figure that has steadily grown over the past decade (pandemic years aside). At the same time, Australia imported even more — about US$2.38 billion worth of pharmaceutical products from the US.
So what’s the issue here? It’s not just about trade volumes — it’s about how patents and regulatory systems impact market access, costs, and competition.
The Tension Between Access and Protection
The US government has long criticised Australia’s approach to making medicines affordable. At the heart of this criticism is the Pharmaceutical Benefits Scheme (PBS) — a system that subsidises many medicines to keep prices low for Australians.
Every year, the US Trade Representative (USTR) publishes a report (known as the Special 301 Report) reviewing how well other countries protect and enforce intellectual property (IP). For nearly two decades, this report has raised concerns about Australia's handling of pharmaceutical patents.
Some of the main complaints include:
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Concerns about early generic competition before patents expire.
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Delays in the approval process for new medicines.
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Questions around how Australia notifies patent holders when a competitor seeks to enter the market.
These issues tie back to the Australia–US Free Trade Agreement (AUSFTA) and specifically to a clause called Article 17.10.4(b).
What Is Article 17.10.4(b)?
This part of the AUSFTA says that if a pharmaceutical product is under patent, Australia should not approve a generic version unless the patent has expired or the patent owner agrees. It’s meant to protect patent holders from premature competition.
Australia’s response to this requirement is built into the Therapeutic Goods Act 1989, under a section called s26B.
How s26B Works in Practice
Section 26B requires companies that apply to register a therapeutic product (like a medicine) to provide a certificate. That certificate must confirm one of two things:
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They believe their product does not infringe any valid patents; or
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If it does, and they plan to launch before the patent ends, they have notified the patent holder.
Importantly, if this certificate is false or misleading, there’s a significant penalty — currently A$330,000.
However, the issue isn’t whether s26B exists — it’s about when in the process this certificate is required. Right now, it happens very late in the regulatory approval timeline. That means patent holders might get very little notice before a generic competitor is approved and ready to launch.
In some cases, the application for regulatory approval and the request for PBS listing (subsidy) can be made at the same time — leaving even less time for patent holders to react.
Could This Lead to Trade Tensions or Tariffs?
Probably not. While the US continues to flag these concerns, Australia’s leadership has made it clear that affordable access to high-quality medicines won’t be sacrificed in trade negotiations.
Changes to s26B might be possible to improve the balance between protecting patents and allowing competition — but a full overhaul or adoption of a US-style “Orange Book” system seems unlikely.
What This Means for Business
Whether you’re a patent holder trying to defend your market share or a company looking to launch a competing product, your IP strategy matters more than ever.
Understanding the requirements under s26B, and how and when you may be notified of a competitor’s move, is essential to protecting your position or making a smooth market entry.
IP Solved has deep experience helping clients:
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Strengthen and enforce patent protection
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Navigate Australia’s complex regulatory and legal landscape
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Develop proactive strategies to meet s26B requirements and respond to competitor actions
With strong global networks, particularly in the US, and a comprehensive understanding of the Australian IP system, IP Solved can support pharmaceutical companies looking to protect their innovations or confidently enter the market.
