The Patent Office recently issued a timely reminder that Australia's patent term extension (PTE) provisions operate independently of the issue of product ownership in Ono Pharmaceutical Co., Ltd. et al [2020] APO 43 (Ono Pharmaceutical). In this case, the Patent Office found that the relevant product on which the PTE application should have been based was a third party product falling within the scope of the claims, which had an earlier regulatory approval date than the patentee's product. This decision re-affirmed that PTE applications must be based on the first product to gain regulatory approval that falls within the scope of the claims, regardless of the identity of the sponsor.

As this position differs from other jurisdictions, such as the U.S. and Europe, it can be a costly pitfall for unsuspecting pharmaceutical patentees in Australia. However, the patentee's have applied to the Federal Court for Judicial Review of the decision, so we will keep you updated if this position changes in the future.

The statutory framework

Australia's PTE regime as defined under the Patents Act 1990 (Cth) (the Act) provides pharmaceutical patentees with the opportunity to obtain extensions of term of up to 5 years where one or more of the following is in substance disclosed in the specification and falls within the scope of one or more of the claims:

(a) a pharmaceutical substance per se; or

(b) a pharmaceutical substance when produced by a process that involves the use of recombinant DNA technology.

Further, goods containing (or consisting of) the relevant substance must be included in the Australian Register of Therapeutic Goods (ARTG) and more than 5 years must have elapsed since the first regulatory approval date of such goods.

Patentees have a limited window of opportunity to file a PTE application, being 6 months from the date of grant of the patent or 6 months from the date of first inclusion of goods containing the relevant pharmaceutical substance in the ARTG, whichever is later.

In accordance with Section 77 of the Act, the term of any extension granted will be equal to the period beginning on the date of the patent and ending on the "earliest first regulatory approval date" of a relevant pharmaceutical substance, reduced (but not below zero) by 5 years.

Meaning of "earliest first regulatory approval date"

The Patent Office previously considered circumstances in which a third party product containing a relevant pharmaceutical substance was included in the ARTG prior to the patentee's own product in G.D. Searle [2008] APO 31 (Searle). In that case, the Delegate concluded that the PTE application must be based on the earliest included goods in the ARTG, regardless of who owned that product.

The finding in Searle relied on the Federal Court's interpretation of Section 77 of the Act in Pfizer Corp v Commissioner of Patents (No 2) [2006] FCA 1176 at [34]; (2006) 69 IPR 525 (Pfizer No 2) at 530 as follows:

Section 77 refers to the 'earliest first regulatory approval date' (emphasis added). This recognises that the patent may cover more than one pharmaceutical substance and provides that the term of the extension is based on the earliest of the approval dates that apply to the patent.

While the Court in Pfizer No 2 did not speak specifically to the circumstance in which the patent covered an earlier third party product, the Delegate in Searle considered that the Court was clear on the point that PTE must be based on the earliest inclusion of goods containing a relevant pharmaceutical substance, regardless of the identity of the sponsor.

Relevantly, the earlier product may contain the same pharmaceutical substance as the patentee's product or a different pharmaceutical substance falling within the scope of the claims. In either case, this earlier product should form the basis for the PTE application.

Alternative PTE applications

In Ono Pharmaceutical, the relevant patent, AU 2011203119, was filed on 2 May 2006. The patentees, Ono Pharmaceutical Co., Ltd. and E. R. Squibb & Sons, L.L.C., filed two alternative applications for PTE based on two alternative interpretations of the Act:

(1) An application based on the ARTG listing of the product OPDIVO (the patentees' product) on 11 January 2016, which, if granted, would give an extended expiry date of 11 January 2031 (the OPDIVO Application); or

(2) An application based on the ARTG listing of KEYTRUDA (sponsored by Merck Sharp & Dohme) on the ARTG on 16 April 2015, which, if granted, would give an extended expiry date of 16 April 2030 (the KEYTRUDA Application). The KEYRUDA Application was accompanied by an application for extension of time, as more than 6 months had elapsed since this product was approved.

OPDIVO and KEYTRUDA are both multi-billion dollar a year competing cancer therapeutics. Clearly, the patentee's preferred option was the OPDIVO Application, as it would provide a longer patent term by approximately 9 months - an extremely valuable few months of extra monopoly when billions of dollars a year are at stake.

Incidentally, Merck is a licensee of the relevant patent (and other OPDIVO patents worldwide) as part of a settlement agreement to end worldwide patent infringement litigation against it in 2017.

"Manifest absurdity" argument

The patentee presented a host of reasons as to why it would be "manifestly absurd or unreasonable" if the Act were to be construed so as to require option (2). These arguments centred around the burden that would be placed on patentees and the Commissioner to monitor regulatory approvals of third parties and the risk that a PTE would be granted incorrectly and jeopardise the "purity" of the Register.

The patentee also pointed to extraneous materials, including the Explanatory Memorandum and the Second Reading Speech by Parliament of the legislation introducing the current PTE provisions, which make it clear that that the PTE provisions are intended to compensate the patentee for the additional time, expense and difficulty in developing and commercialising a new drug. Thus, according to the patentee, to base a PTE application on a third party product would be contrary to the beneficial and remedial nature of the PTE provisions.

The decision

In Ono Pharmaceutical, the Delegate saw no reason to depart from the decision in Searle. While there is a risk that incorrect information may be recorded on the Register, the Delegate was satisfied that the Act adequately contemplated this by providing the Commissioner with the power to correct errors in the Register.

Further, the Delegate considered there was a considerable risk that if the PTE provisions were to be construed so as to require option (2), it could have the effect of disincentivizing the development of new drugs, which is contrary to the intention of the PTE provisions. For example, if the window within which to apply for PTE were not limited as the Delegate found in Searle, a patentee could obtain a longer patent term for an old product by "sitting on its hands" until a new window of opportunity arose (e.g., by delaying inclusion of its product on the ARTG).

Application for Judicial Review

Rather than conceding to option (2) and pursuing the extension of time to rely on KEYTRUDA as the basis for PTE, the patentee's have opted to challenge the Patent Office decision by applying to the Federal Court for Judicial Review. While it may be some time before this matter is ultimately resolved, we will be sure to keep you updated of any developments as they arise.

Missed the deadline to apply for PTE?

If the deadline to file a PTE application has been missed in Australia due to an error or omission, including a lack of awareness of an earlier third party product being included on the ARTG or that this product is the relevant product for PTE, all may not be lost. The Commissioner has the discretionary power to grant an extension of time to file a PTE application where the deadline was missed due to an error or omission. The key to enlivening the extension of time provisions is to act without delay once the error or omission has been identified.

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.