Patents versus generics in a changing legal landscape

The legislative regime 
Case law 
The regulatory regime

The Australian pharmaceutical market, like many others around the world, is a battleground for patentees and generic manufacturers. Both must operate within the same legal boundaries and IP regime. On the one hand, there should be incentives and rewards for originator companies that undertake the lengthy and expensive process of getting a new pharmaceutical onto the market. However, there must also be room for generic manufacturers to offer their cheaper alternatives to the public in a timely manner.

The legislative regime
In the context of intellectual property, so-called ‘springboarding’ is a process that allows a drug manufacturer to seek and obtain regulatory approval for its generic version of a patented drug while the patent is still in force. This allows manufacturers to launch their bioequivalent version onto the market as soon as the patent has expired. Without springboarding provisions, any use of the subject matter of the patent while it is still in force would constitute patent infringement.

Changes to the springboarding provisions in Australian patent law were implemented in mid-2006. There is now a general exemption to patent infringement for springboarding activities conducted at any time during the life of the patent (rather than in the period following the grant of an extension). Further, the exemption applies to pharmaceutical patents that claim a pharmaceutical substance, use, method or product, rather than only to the pharmaceutical per se.

The legislation was amended to encourage the retention and subsequent growth of a low-cost pharmaceutical research and development industry in Australia. The Australian government rigorously controls the prices of drugs in the marketplace and actively seeks to provide the lowest-cost alternative in preference to brand-name products. Further, the previous springboarding provisions meant that in order for a generic company to enter the market shortly after patent expiry, the majority of work required to obtain regulatory approval needed to occur offshore.

This change in legislation has altered and will continue to alter the competitive landscape in Australia for pharmaceutical originators. However, the amendments do retain a five-year period of data exclusivity for clinical data submitted to regulatory authorities. This means that generic competitors cannot to use safety and efficacy test data and information available from the date of marketing approval for that pharmaceutical without the consent of the originator. There are no equivalent springboarding provisions for this data exclusivity period.

Case law
The increasingly competitive landscape and the relatively low cost of litigation in Australia mean that more and more pharmaceutical and generic companies are challenging each other through the court system.

Ranbaxy Australia Pty Ltd v Warner-Lambert Company LLC ((No 2) [2006] FCA 1787), issued in late 2006, established that a claim directed to compounds of a structural formula with a number of variable substitutions (and which thus has chiral centres) encompasses both the individual enantiomers as well as mixtures of them. The case considered two patents directed to LIPITOR®, which is used to lower the level of cholesterol in the blood and thus reduce the incidence of cardiovascular disease. LIPITOR® is the most widely prescribed cholesterol-inhibiting drug in Australia.

The second patent was directed to the RR enantiomer of one of the compounds of the earlier patent. While it was challenged on the basis that it was not a patentable invention, it withstood this challenge. The court decided that a number of important choices and selections would need to be made to progress from the racemate to a particular enantiomer. However, the patent was found invalid on the basis of false suggestion or misrepresentation, as the experimental data submitted as part of the patent specification was not a fair representation of the material available to Warner-Lambert. Further, the whole of the data available to the patentee did not provide a sound basis for the representations that were made to IP Australia. The patent was also found to lack utility as the compounds claimed were not capable of achieving the promised results.

The regulatory regime
In addition to this case, there have been recent attempts to reform the regulatory regime for pharmaceuticals in Australia. This has been delayed by New Zealand’s rejection of proposed legislation to enact the Australian and New Zealand Therapeutic Products Authority. It is hoped that a trans-Tasman therapeutic products authority would help create a world-class regulatory agency and ensure that New Zealanders do not face major delays in acquiring new prescription medicines that are available elsewhere in the world.

Both the Australian and New Zealand governments remain committed to creating a joint regulatory regime. However, the New Zealand political situation means that it is unlikely to overcome the perceived inappropriateness of imposing a pharmaceutical model of regulation on complementary medicines in New Zealand in the short term. It is hoped that the failure to implement the joint regulatory authority will not slow down much-needed regulation on both sides of the Tasman.