Hildegarde Naughton (Fine Gael) | Oireachtas source

I welcome the Minister of State to the House. This Bill has two main elements. I welcome the broadening of the Bolar-type exemption for pharmaceutical research and development and the minor legislative changes to allow to us to give effect in Irish legislation to the Singapore treaty on the law of trademarks. I will confine my remarks to the first element, namely, pharma research exemptions.

Ireland is the leading location for the pharmaceutical industry in Europe. For such a comparatively small country, we punch well above our weight. Any contribution to maintaining our competitiveness in this area is very much to be welcomed. As well as our indigenous pharma industry, there are over 120 international pharma companies in Ireland, and eight out of the ten largest pharma companies in the world have a presence here. In fact, approximately six out of ten of the world's top selling drugs are now produced in Ireland.

When we joined the Common Market, fewer than 2,000 people were employed in the industry here, and now approximately 25,000 people are employed directly, with an equivalent number employed in providing services. An interesting statistic is that, as far back as 2008, two out of every five pharmaceutical jobs created in Europe were in Ireland, which illustrates the importance of this Bill.

In expert terms, and using the broader pharmacon measure, pharmaceuticals amount to approximately half of all our exports annually. The figures fluctuate a little year by year, but exports are always around the 50% mark. It is worth noting that when we think of pharmaceuticals we more often than not call to mind the manufacture of drugs for human consumption. However, veterinary medicine, or the research into and production of products to use on animals, is also a major part of the industry in Ireland.

It is said that Ireland is probably the largest net exporter of pharmaceuticals in the world and it is estimated that the replacement value of the sector in the economy would broach €40 billion.

The amendment of the Patents Act 1992 is, therefore, welcome. It is imperative that research into new products be encouraged and fostered. The Minister of State is to be commended on his proposal to end a lacuna in Irish legislation.
In broad terms, the purpose of the legislation is to prevent companies that are based here from being put at a competitive disadvantage. At present, in this jurisdiction, it is unclear whether someone intending to market a generic drug or biosimilar product would be subject to an action for patent infringement if the research into that proposed product was carried out during the patent of the original product. A patent, with extension, can last 25 years.
In order to get what is termed market authorisation - in other words, permission to sell a product - the manufacturer must present detailed data, obtained through research and testing, to the competent authorities. If such research is risking patent infringement, it is clear that research and development is restricted and the lead-in time to the introduction of new generic medicines is lengthened.
The original Directive 2004/27/EC was given a literal interpretation in our legislation, as happened also in the UK. Germany and others in the European Union gave the directive a more liberal interpretation, and, I note, have not fallen foul of the European Commission. In any event, as the laws of the European Union give very limited competence to the EU on matters relating to intellectual property and, in particular, patent infringement, I cannot see an issue here. The amendment will therefore allow research to be completed more quickly as companies will not have to wait for existing patents to expire. This will have the knock-on effect of allowing generic drugs to come to the market more quickly.
I commend the Minister of State on his consultation with the wider industry and the IDA and on taking action to address those difficulties. It is only proper that we do not place companies based here at a disadvantage when remedial action can be taken. Will the Minister of State confirm to the House that this amendment would allow such research to be carried out here even if the finished product were to be ultimately marketed abroad or even outside the European Union?
In a related way, I voice my support for the Cabinet's decision to do away with the so-called double Irish tax arrangement. Given our reliance on inward investment, is the Minister of State satisfied that the elimination of the double Irish has improved our lot in reputational terms while not damaging us in the eyes of investors? It would seem that it has, but I would like to the views of the Minister of State on that issue.
We also have the issue of tax inversion. Earlier this year, we saw pharma giant AbbVie's $53 billion acquisition of Shire, which has its headquarters in Dublin. This was described as the largest tax inversion deal in US financial history. This new entity is seemingly to be tax resident in the UK, so this is not actually an Irish issue in the long term, but it illustrates a point. While it obviously makes economic sense for multinationals to organise their business in such a way as to minimise their tax liability, it can cause disquiet. It is easy to say that if the US insists on taxing corporations at about 22%, the solution is in its own hands in terms of reducing its own tax rate. However, the world does not work that way. The US has far more economic muscle to flex. What is the Minister of State's sense of the attitude of the US, and does he think it might cause difficulties in regard to the transatlantic trade and investment partnership, TTIP, talks? I understand Commissioner Malmströmis in Washington this week to discuss a fresh start to those negotiations.
Again, I commend the Minister of State on his decision that the present Bolar-type exemption was too restrictive and his move to broaden it.