Today, the High Court of Australia – Australia’s highest appellate court – granted special leave to appeal the Full Federal Court’s decision in Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161 (Otsuka v Sun Pharma).
Pharmaceutical innovators will be buoyed by this development, as Otsuka v Sun Pharma significantly curtails patent term extensions (PTEs) for patents to pharmaceutical formulations. Our summary of the Full Court’s decision is available here.
At issue before the High Court will be Otsuka’s patent to controlled-release injectable formulations of aripiprazole and its eligibility for a PTE based on the regulatory approval of Abilify Maintena.
But the High Court’s decision is likely to have broader implications for current and future PTEs for patents covering pharmaceutical formulations.
Background
Australia’s Patents Act provides an extension of up to five years beyond the standard 20-year term for patents that in substance
- disclose and claim a pharmaceutical substance per se or
- a pharmaceutical substance when produced by a process that involves the use of recombinant DNA technology, provided goods containing, or consisting of the substance are included in the Australian Register of Therapeutic Goods (i.e., have been granted marketing approval in Australia).
The Patents Act defines a ‘pharmaceutical substance’ as:
a substance (including a mixture or compound of substances) for therapeutic use whose application (or one of whose applications) involves:
- a chemical interaction, or physico-chemical interaction, with a human physiological system; or
- action on an infectious agent, or on a toxin or other poison, in a human body;
but does not include a substance that is solely for use in in vitro diagnosis or in vitro testing.
The Australian Patent Office has long taken the view that this definition encompasses pharmaceutical formulations comprising an active and excipients and that patents claiming pharmaceutical formulations are, therefore, eligible for a PTE. This position has been supported by several first instance decisions of the Federal Court.
However, in Otsuka v Sun Pharma, the Full Court held that a “pharmaceutical substance” as defined in the Patents Act is confined to active substances and excludes formulations.
The Full Court considered that only an active ingredient is capable of interacting with a human physiological system (or acting on an infectious agent, toxin or poison) in the manner contemplated by the statutory definition of “pharmaceutical substance”.
Turning to the legislative history of the PTE regime, the Full Court concluded that this also supported the view that Parliament intended the definition of “pharmaceutical substance” to be limited to active pharmaceutical ingredients.
In the view of the Full Court, this interpretation is consistent with the legislative purpose of the PTE regime, which serves to compensate patentees for delays encountered when seeking regulatory approval for new and inventive substances.
The Full Court suggested that improvements in delivery systems or dosage forms (i.e., new formulations) do not face the same regulatory delays.
Consequently, the PTE granted on Otsuka’s controlled-release formulation patent was found to be invalid.
Consequences of Otsuka’s High Court Appeal
Although Otsuka v Sun Pharma concerns a specific pharmaceutical formulation, the case has potential consequences for patents to pharmaceutical formulations more broadly.
The Full Court’s decision, if upheld by the High Court, will significantly narrow the range of patents that are eligible for a PTE under Australian law, and render many PTEs granted on the basis of pharmaceutical formulations vulnerable to challenge.
While the precise timing will depend on the Court’s workload and the availability of the parties’ counsel, a decision of the High Court could be expected within the next 12 months.
Until then, there will be a degree of uncertainty surrounding the PTE eligibility of patents to pharmaceutical formulations in Australia. IP Australia has said it will pause processing PTE applications which may relate to formulations. That pause may now be extended until the matter is resolved by the High Court.
We are closely monitoring developments and will provide updates as they arise.
How we can help
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