Interlocutory Injunctions for Pharmaceutical Patent Infringement

Applications for interlocutory injunctions before Australian courts are generally governed by common standards. However, where the injunction is sought to prevent the infringement of an Australian pharmaceutical patent, additional factors outside the realm of patent law must be considered. These factors include the role of the Pharmaceutical Benefits Scheme ("PBS") in pharmaceutical pricing and the requirements of the Therapeutic Goods Act 1989 (Cth) ("the Act").

It is well established that in order to be granted an interlocutory injunction, an applicant must demonstrate:

1. that there is a serious question to be tried;
2. that it will suffer irreparable harm for which damages will not be adequate compensation, unless an injunction is granted; and
3. that the balance of convenience favours the granting of an injunction.

These principles generally govern the grant of interlocutory relief in patent cases. However, the application of these principles is complicated in the case of Australian pharmaceutical patents by the role that the PBS plays in pharmaceutical pricing. The Act imposes additional requirements that further regulate, and thus complicate, the application for an interlocutory injunction in the context of pharmaceutical patent infringement.

For a drug product to be marketed in Australia, its sponsor must apply for registration or listing on the Australian Register of Therapeutic Goods ("ARTG"). If the Australian Drug Evaluation Committee ("ADEC") recommends the drug for registration or listing on the ARTG, its sponsor can apply to the Pharmaceutical Benefits Advisory Committee ("PBAC") for listing on the PBS. The PBAC assesses the application and advises the Minister for Health and Ageing if the drug should be listed on the PBS. Finally, the Pharmaceutical Benefits Pricing Authority ("PBPA") negotiates with the manufacturer on the price at which the drug will be listed on the PBS and advises the Minister accordingly. If the drug is listed on the PBS, the Federal Government subsidises the medicine.

One important feature of the PBS listing process must be considered here. The first generic version of a drug within each reference class of drugs to be listed on the PBS on or after 1 August 2005 will trigger a 12.5% price reduction which will flow on to all other drugs within that class.

Two recent decisions highlight the need to consider the role of the PBS in pharmaceutical pricing when seeking an interlocutory injunction for alleged infringement of an Australian pharmaceutical patent.

The combined case Hexal Australia Pty Ltd v Roche Therapeutics Inc. and Roche Therapeutics Inc. v Alphapharm Pty Ltd [2005] FCA 1218 (5 August 2005) (collectively "Hexal") concerned Australian Patent No. 702,106 entitled "Use of carbazole compounds for the treatment of congestive heart failure" ("the '106 patent"). The preferred compound was said to be carvedilol. The '106 patent was owned by Roche Therapeutics Inc and F.Hoffmann-La Roche AG and exclusively licensed by Roche Products Australia Pty Ltd (collectively "Roche").

In the first proceedings, Hexal sought revocation of the '106 patent asserting that the claims of that patent were invalid. Roche filed a cross-claim alleging that Hexal intended to apply for listing of a generic product known as Carvehexal on the PBS, and that as part of such an application, Hexal would be forced to make assurances to engage in conduct that Roche alleged would infringe the '106 patent. In the second proceedings, Roche alleged that Alphapharm intended to apply for listing of a generic product known as Dilol on the PBS, and that as part of such an application, Alphapharm would be forced to make assurances to engage in conduct that Roche alleged would infringe the '106 patent.

Roche sought interlocutory relief to restrain Hexal and Alphapharm respectively from applying to list generic versions on the PBS and from infringing its patent. The Court declined to grant the requested injunctions.

In Pharmacia Italia S.p.A. v Interpharma Pty Ltd [2005] FCA 1675 (23 November 2005) ("Pharmacia Italia"), Pharmacia Italia S.p.A. was the registered proprietor of Australian Patent No. 598197 entitled "Injectable ready-to-use solutions containing an anti-tumour anthracycline glycoside" ("the '197 patent") and Pfizer Pty Ltd had an exclusive licence in Australia under that patent. Under that licence, Pfizer manufactures and sells ready-to-use solutions of doxorubicin hydrochloride and epirubicin hydrochloride.

Interpharma Pty Ltd intended to import into Australia and thereafter sell and distribute ready-to-use solutions containing doxorubicin hydrochloride and epirubicin hydrochloride manufactured in Austria by Ebewe Pharma GmbH. Interpharma had procured the listing of its solutions on the PBS, effective from 1 August 2005. In order to do so, it had provided the PBAC written assurances that a stock of the imported solutions would be available for supply on the date of the PBS listing. However, as of 9 November 2005, it had not yet imported a supply of those solutions. Thus, as of that day, no supply of the solutions was available for sale in Australia, and the solutions had not yet been listed on the PBS.

In September 2005, Pharmacia and Pfizer sought an injunction (1) restraining Interpharma from importing or offering to import the solutions and (2) requiring Interpharma to procure the withdrawal of the PBS listing. Interpharma sought revocation of the patent. The Court granted Pharmacia an injunction restraining the importing or offering to import, but declined to grant an injunction requiring Interpharma to procure the withdrawal of the PBS listing.

The PBS listing process does not play a significant role in determining whether there are serious questions to be tried on the issues of infringement and validity of the patent-in-suit or in assessing the balance of convenience.^[1] However, the PBS listing process provides an important consideration in the determination of whether irreparable harm will be caused by the grant or failure to grant interlocutory relief. That factor will be discussed below.

Irreparable harm - the irreversible reduction of the PBS price

As stated above, the first generic version of a drug to be listed on the PBS on or after 1 August 2005 will trigger a 12.5 % price reduction which will flow on to all other products within that drug's reference class. Although such a price reduction is automatically triggered by the first generic listing on or after 1 August 2005, there is no provision for that reduction to be reversed if the generic is delisted. Any attempt to reverse that reduction would almost certainly face considerable consumer resistance.

In denying Roche's application for interlocutory relief, the Hexal Court does not appear to have considered the role of the PBS in pharmaceutical pricing and the irreversible nature of the 12.5% price reduction. The Court held that Roche would not suffer irreparable harm that could not be adequately compensated by way of damages if the injunction were not granted. The Court relied on arguments by Hexal and Alphapharm that Roche's losses if the injunctions were not granted could be relatively easy quantified (and compensated) as Roche currently had 100% of the relevant market, while quantifying Hexal and Alphapharm's losses if the injunctions were granted would be far more difficult, as it would be impossible to predict the sales they would have made.

In the case of an irreversible price reduction triggered by the first PBS listing of a generic in that reference group on or after 1 August 2005, a simple account of profits would not provide redress. It would be impossible to predict what sales and profits Roche would have made. Thus, the possible harm is not as easily quantifiable as the Court concluded. Moreover, it is not clear that if Hexal and Alphapharm's products were subsequently delisted, that Roche's lost future profits as a result of the 12.5% price reduction would be recoverable as damages from Hexal and Alphapharm. The irreversible nature of the PBS price reduction should be a consideration in an assessment of whether the failure to grant an injunction will cause irreparable harm that cannot be compensated by way of damages.

In determining the form of any interlocutory injunction to be granted to restrain infringement of a pharmaceutical patent, the PBS listing process must again be considered.

As set out above, in Pharmacia Italia, Pharmacia and Pfizer sought an injunction (1) restraining Interpharma from infringing the '197 patent by importing or offering to import the generic solutions at issue; and (2) requiring Interpharma to procure the withdrawal of the PBS listing. The Court only granted the former relief. The reason for so limiting the relief lies within the specific features of the PBS. To be listed on the PBS, a product must be available for sale. By enjoining Interpharma from importing the generic solutions, no supply of that product was available and, as a result, it was not listed on the PBS. It was unnecessary to grant an order requiring Interpharma to procure withdrawal of the PBS listing.

The US Free Trade Agreement Implementation Act 2004 (Cth) introduced section 26D into the Act: This is a new section imposing additional requirements on a patentee seeking an interlocutory injunction to prevent or restrain the infringement of an Australian pharmaceutical patent. Section 26D states that a patentee may not apply for such an injunction unless she has first notified the Federal Attorney-General (or the Attorney-General of a State or Territory) in writing of the application. The Federal Attorney-General shall be deemed to be a party to any such proceedings unless the Attorney-General gives written notice to the prescribed court that he or she does not desire to be a party.

Furthermore, if an interlocutory injunction is granted but the patent infringement proceedings are subsequently dismissed or abandoned and the court declares that the proceedings brought by the patentee were baseless, vexatious or not reasonably pursued, the court may award the enjoined party compensation (including by way of an account of profits, which are not usually available in these circumstances), as well as make an award of damages to the Commonwealth, and/or any State or Territory, for costs incurred and damages suffered by it as a consequence of the grant of interlocutory relief.

The Act thus imposes a precondition to seeking an interlocutory injunction and a penalty if the proceedings in which the injunction was granted were not properly brought and are dismissed or abandoned, both of which are unique to an application to enjoin infringement of a pharmaceutical patent.

An application for an interlocutory injunction to enjoin infringement of an Australian pharmaceutical patent is governed by the same factors that generally govern the grant of such an injunction under Australian law. However, application of these factors is complicated by the role of the PBS in determining pharmaceutical prices in Australia. The Act further complicates an application for an interlocutory injunction to enjoin infringement of an Australian pharmaceutical patent by imposing a precondition on an application for such relief and imposing a potential penalty if an interlocutory injunction is granted; the proceedings in which it was granted are dismissed or abandoned; and the Court determines that they were not properly commenced or pursued.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.