Full Federal Court curtails term extensions for patents to pharmaceutical formulations

In Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161 (Otsuka v Sun Pharma), the Full Federal Court of Australia decided that Otsuka's patent to controlled release aripiprazole formulations is not eligible for a patent term extension (PTE). Although the decision concerns a specific pharmaceutical formulation, it has potential consequences on formulation patents more broadly.

The Full Court found that the definition of 'pharmaceutical substance' in Australia's Patents Act is confined to an active pharmaceutical ingredient (API) and does not include formulations. The decision marks a significant departure from several first instance decisions of the Federal Court and the long standing practice of the Australian Patent Office to allow PTEs for formulation patents.

Key takeaways

• Patents claiming formulations comprising an API and excipients may no longer be eligible for a PTE
• Existing PTEs granted on the basis of a pharmaceutical formulation may be vulnerable to challenge
• The Full Court's decision may be appealed to the High Court of Australia.

Criteria for patent term extensions

Australia's Patents Act provides an extension of up to five years beyond the standard 20-year term for certain pharmaceutical patents, provided the following criteria are met:

1. one or more pharmaceutical substances per se  (or one or more pharmaceutical substances when produced by a process that involves the use of recombinant DNA technology) is in substance disclosed in the patent specification and in substance falls within the scope of the claims,
2. goods containing, or consisting of, the substance must be included in the Australian Register of Therapeutic Goods (ARTG),
3. the period beginning on the effective filing date of the patent and ending on the first regulatory approval date of the pharmaceutical substance must be more than five years, and
4. the term of the patent must not have been previously extended.

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:

1. a chemical interaction, or physico-chemical interaction, with a human physiological system; or
2. 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.

Background

Otsuka Pharmaceutical Co., Ltd (Otsuka) is the patentee of an Australian Patent No. 2004285448, entitled 'Controlled release sterile injectable aripiprazole formulation and method'.

The Patent claims controlled release aripiprazole formulations and its standard 20-year term expired on 18 October 2024. Otsuka obtained a PTE based on the ARTG listing of Abilify Maintena, and the Patent's term was extended to 25 July 2029.

Sun Pharma commenced proceedings to challenge the validity of the PTE. Otsuka cross-claimed for threatened infringement of its patent.

The primary judge found that a 'pharmaceutical substance' can include a formulation comprising an API and excipients. The primary judge also found that process features or limitations by result in claims serve to further define the pharmaceutical substance, but do not convert such claims into those for a delivery method or a form of administration, which would fall outside the scope of the definition of 'pharmaceutical substance'.

However, the primary judge also held that the PTE was invalid because the relevant claims lacked clarity and support. Otsuka appealed to the Full Federal Court.

Definition of 'pharmaceutical substance' is limited to active substances

The Full Court overturned the primary judge's decision, finding that a 'pharmaceutical substance' as defined in the Patents Act is confined to active substances and excludes formulations.

As noted above, a pharmaceutical substance, as defined in the Patents Act, must involve (a) a chemical or physico‑chemical interaction with a human physiological system, or (b) action on an infectious agent, toxin, or poison in the human body.

The Full Court considers that only an active ingredient would be capable of "interacting with" a human physiological system in specified ways, or "acting on" certain harmful presences. In examining the legislative history of the PTE regime, the Court found that Parliament's intention was for the definition of 'pharmaceutical substance' to be limited to APIs.

The Full Court also noted that the legislative purpose of the PTE regime is to compensate patentees for delays encountered when seeking regulatory approval for new and inventive substances, but not for improvements in delivery systems or dosage forms, which, the Court found, do not face the same regulatory delays. 

Implications

Although Otsuka v Sun Pharma concerns a specific pharmaceutical formulation, it has potential consequences on patents to pharmaceutical formulations more broadly. The decision clearly narrows the range of patents that are eligible for a PTE, and renders many PTEs granted on the basis of pharmaceutical formulations vulnerable to challenge.

However, the decision does not necessarily spell the end of PTEs for all 'formulation patents'. The decision leaves room for patentees to argue that claims defining particular formulations are in substance directed to a pharmaceutical substance per se within the meaning of the Patents Act.

Case specific arguments could be made, for example, in circumstances where the components in a formulation act together with the API to achieve a chemical or physico‑chemical interaction with a human physiological system. It also remains to be seen whether this decision will be appealed to the High Court, Australia's highest appellate court.

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