16 February, 2017
Spruson

Australia Update: When is applying for listing on the Pharmaceutical Benefits Scheme not an infringement?

Australia Update: When is applying for listing on the Pharmaceutical Benefits Scheme not an infringement?
Apotex Pty Ltd v Warner-Lambert Company LLC (No 3) [2017] FCA 94 (15 February 2017)

In the most recent judgement in the Australian Lyrica® litigation, Nicholas J has delivered an interesting decision regarding whether applying for Pharmaceutical Benefits Scheme (PBS) listing constitutes infringement of a patent.

 

Quick summary

  • Preliminary injunctions are often granted in Australia to prevent the listing of a potentially infringing product on the Pharmaceutical Benefits Scheme (PBS).
  • This judgement considers the situation where the application for PBS listing occurs before patent expiry, but the product will be listed on the PBS after expiry.
  • Applying for PBS listing in this case is found not to be an ‘offer to supply’ and thus not an infringement.
 

Bringing a drug to market in Australia

Typically, there are two stages to selling a drug in Australia. The first is approval by the Therapeutic Goods Administration (TGA), the national regulatory body. The Patents Act 1990 contains springboarding provisions which expressly set out that seeking regulatory approval is not an infringement of a patent.

The second stage is listing on the PBS. The PBS is a federal subsidy scheme for medicines. The majority of (but not all) drugs sold in Australia are sold through the PBS. PBS listing is not automatic and must be applied for by the person intending to sell the drug in Australia.

Importantly, when applying for PBS listing, the person must guarantee to supply the drug from the date that the drug is listed on the PBS (but not from the application date). Additionally, in certain circumstances, where only a single brand of a drug is PBS listed (e.g., put simply, the on-patent, originator drug), the listing of a second brand of that drug (e.g., put simply, the first generic) may trigger a statutory, irreversible 16% price drop for the first listed brand.

As a result, Australian courts have generally readily granted preliminary injunctions to prevent generics applying for PBS listing where the originator drug is under patent.

 

Background to the proceedings

In October 2016, the Federal Court upheld the validity of all the claims of Patent No. 714980 in a challenge brought by Apotex Pty Ltd. The claims are directed to methods of treating pain using compounds including pregabalin. The patent also contains corresponding Swiss-style claims. It was also found that the patentee, Warner Lambert LLC, and related Pfizer entities (collectively ‘Pfizer’) are entitled to injunctive relief against Apotex for threatened infringement. The patent will expire on 16 July 2017.

The present judgement considers, amongst other matters, the form of injunctive relief to which Pfizer is entitled. Pfizer submitted that applying for PBS listing constitutes an infringement of the patent and sought an injunction to prevent Apotex from doing so before the expiry of the patent.

 

The judgement

In the specific circumstances of the present case, while Apotex wished to apply for PBS listing during the patent term, Apotex’s products would only become listed on the PBS after the patent had expired.

Although the Court considered that offering to supply a patented product before expiry, with the actual sale occurring after expiry, was an infringement under the Patents Act 1990, it was decided that applying for PBS listing fell short of being an offer to supply. Even though in applying for the PBS listing (before expiry) Apotex would have had to guarantee supply from the time for listing (after expiry), Nicholas J appeared to consider that the purpose of the PBS listing application was not to offer to supply the infringing product.

It was concluded that:

All that Apotex proposes to do by applying for a PBS listing is to engage with the statutory scheme that may enable it to offer the products for sale at subsidised prices once the Patent has expired…Such an application would be a mere preparatory step which may enable Apotex to exploit the invention by offering to supply the products at subsidised prices at a later point in time. In an appropriate case the taking of that step may justify the grant of quia timet relief restraining threatened acts of infringement…but it is not itself an act of infringement.

This judgement also underlines the different ways in which method of treatment and Swiss-style claims are infringed under Australian law. An offer to supply a product cannot infringe a method of treatment claim, it may only be infringed by actual supply or, of course, by performing the method. Swiss-style claims, however, are understood to be directed to a method of manufacture. An offer to supply the product of a patented method of manufacture is an infringement of that patent, as a result of the definition of ‘exploit’ in the Patents Act 1990. Thus, if the application for PBS listing had been found to constitute an offer to supply the infringing products, only the Swiss-style claims would have been infringed.

 

Significance

The present judgement is, to the best of our knowledge, the first to state that applying for PBS listing does not constitute an infringement of claims which could otherwise have been infringed by the application. However, the circumstances of this case are quite specific and it is not clear what effect, if any, this decision will have for patentees seeking injunctions where the PBS listing would occur during the term of the patent.  Two points are worthwhile to note in that regard.

Firstly, Nicholas J has emphasised the difference between the present situation and the granting of interlocutory relief, where it may be ‘reasonably arguable’ that the balance of convenience lies in favour of granting an injunction. In the present situation, where final relief was sought, Pfizer was required (and, in the view of the Court, failed) to make a stronger case.

Secondly, a curious statement is made suggesting that if a person applies for PBS listing of a patented drug, although making the application is not an infringement of the patent, the Minister of Health (or his or her delegate) will nevertheless be ‘unlikely’ to make a determination to list the drug on the PBS, if the supply of the drug by that person will be in violation of an injunction. However, making the determination is of course ultimately at the Minister’s discretion.

The decision may be appealed, and we will monitor any future developments with great interest.


Latest Tweets

Follow @sprusons on twitter.