Shifting the starting line: regulatory changes to impact Australian pharma patent disputes - Patent

Following a consultation process focused on increasing transparency in relation to medicines under evaluation, the Therapeutic Goods Administration (TGA) has announced that from June 2020, certain information about applications for new medicines will be published within one month after they have passed preliminary assessment. Also, from early 2021, innovative pharmaceutical companies will be notified when other companies make applications for generic or biosimilar versions of their pharmaceutical products.

This will bring forward the starting line for Australian pharmaceutical patent disputes and require innovators and generics / biosimilar companies to engage with each other at an early stage and develop their strategies in order to do so.

Current TGA regime and patent disputes

Typically, innovative pharmaceutical companies become aware of generic or biosimilar products when they receive regulatory approval (i.e. listing on the Australian Register of Therapeutic Goods (ARTG) maintained by the TGA). At that point, innovators must move quickly to prevent the imminent launch of generic or biosimilar products and the listing of those products under the Pharmaceutical Benefits Scheme (PBS) which would result in a 25% reduction in the subsidised price of the innovator's product. This means asserting the relevant patent and demanding assurances from the generic or biosimilar company not to launch or seek to list the product on the PBS.

If assurances are not forthcoming, the innovator must move quickly to obtain an urgent interlocutory injunction to restrain the generic or biosimilar launch and any PBS listing until the substantive patent infringement dispute can be heard and determined. The 'price' for obtaining an interlocutory injunction is an undertaking to compensate the respondent and any third parties adversely affected by the injunction (known as 'the usual undertaking as to damages').

Over the past ten years, innovative pharmaceutical companies have enjoyed success in obtaining interlocutory injunctions. As we have identified in a previous article, this was largely because the Court was persuaded of the difficulties for patentees to quantify any lost profits if the generic or biosimilar were permitted to launch – a view which is increasingly falling out of favour.

It is desirable to avoid the need for interlocutory injunctions and have disputes finally resolved before the proposed generic / biosimilar launch. Leaving to one side the time and cost involved in interlocutory injunction disputes, they delay the final determination of matters and expose each of the parties to significant risk. Innovators risk obtaining an interlocutory injunction, losing the case and having to face claims by the generic / biosimilar and third parties (including the Government) under the usual undertaking as to damages.

Generic / biosimilar companies face the risks of launching a product which is found later to be infringing or being prevented from launching a product that was ultimately non-infringing and having to make a complex claim for compensation under the usual undertaking.

TGA transparency reforms (February 2019)

In February 2019, the TGA published a consultation paper titled Whether the TGA should publish that a prescription medicine is under evaluation, and sought comments from interested parties on whether the TGA should disclose earlier that a prescription medicine is under evaluation.

These measures were said to be important from the patient's perspective as 'earlier knowledge about potential availability of treatments, should they be approved, may be considered as part of discussions about options for medical treatment and care with their healthcare practitioners'. In that context, the TGA raised the question as to whether proposed earlier publication should apply also to generic and biosimilar medicines. Although the consultation paper acknowledged that different public interest considerations applied, it did not consider the implications for patent disputes.

In April 2020, the TGA published the majority of the submissions received. There was overwhelming support for making all applications public, including generic or biosimilar applications. A number of these submissions, particularly those made by or on behalf of innovative pharmaceutical companies, identified that the increased transparency would allow additional time to resolve intellectual property disputes.

Enhanced measures and proposed options (April 2020)

On 8 April 2020, the Australian Government approved the implementation of enhanced transparency measures for prescription medicine, and the TGA has now published an outline of measures for earlier notification of both innovator and generic and biosimilar medicine applications.

In relation to generic and biosimilar applications, the TGA explained:

"Notification under the current system after entry of first generic medicines on the Register leaves little time for an innovator to appropriately consider whether its pharmaceutical patent is infringed by the generic medicine and consequently, to prepare for 'patent infringement'. The result has been that in certain cases an innovator applies to the Federal Court for an interlocutory injunction to restrain the marketing of the generic after entry onto the register, pending resolution of the dispute over the existence of a valid patent."

Accordingly, the TGA has proposed a non-public notification scheme whereby the generic/biosimilar applicant notifies the innovator of the existence of their application after an application for registration passes preliminary assessment (prior to the commencement of evaluation of the medicine).

The TGA has proposed two implementation options to give effect to this measure, one which requires notification only if the applicant identifies a relevant patent which has not expired, and one which requires notification in all circumstances. The TGA is seeking feedback on these options by 9 June 2020. It is proposed that the new notice scheme for generic and biosimilar applications would be implemented in early 2021.

Irrespective of which option is preferred, the proposed reform would fundamentally shift the starting line for pharmaceutical patent disputes.

Implications for innovators and generic / biosimilar pharma companies

Although the TGA's February 2019 consultation paper was not concerned with the implications of the proposed changes for pharmaceutical patent litigation, the following important considerations arise:

Earlier notification will lead innovators to engage with generic / biosimilar companies before ARTG listing in order to:
- obtain assurances that the generic / biosimilar will not launch / apply for PBS listing; or
- obtain information to determine whether the generic / biosimilar product infringes.
If the generic / biosimilar does not provide the information sought, the innovator will have more time to pursue that information by way of a court application for preliminary discovery.

It is questionable whether the proposed changes will avoid interlocutory injunctions or undertakings. Generic / biosimilar companies may not have finalised their commercial plans with respect to the product in question and may not be willing to commence patent revocation proceedings at that early stage. It has always been open to generic / biosimilar companies who are ready to engage in revocation proceedings to commence proceedings to 'clear the way' before filing and obtaining regulatory approval.
Generic / biosimilar companies who are not ready and willing to commence revocation proceedings will likely offer innovators an undertaking to notify patentees before they decide to seek PBS listing and launch and not to rely on delay in the context of any interlocutory injunction application.
Innovators may accept undertakings of that kind and possibly use the time available to obtain information about the generic / biosimilar product so that they are well armed should they need to commence infringement proceedings further down the track.
As identified in a number of the submissions made to the TGA, the additional time may provide a greater opportunity for patent disputes to be resolved before litigation. It will, as usual, be necessary for parties to ensure that any agreements are not anticompetitive.
It remains unclear whether the new process will apply to existing applications or only new applications when it is introduced in early 2021. If it applies to existing applications, it appears likely that there will be a wave of notifications to innovators of forthcoming applications. If it only applies prospectively, there may be a rush by generic / biosimilar companies to file applications before it is introduced.

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