Navigating the therapeutics market in Australia: the role of intellectual property

In Australia, clinical trials contribute around A$1 billion to the economy annually, two-thirds of which is from international investment. More than 1,000 clinical trials commence annually.

Companies conducting clinical trials in Australia benefit from:

• a rapid clinical-trial approval system;
• an ethnically diverse population;
• world-class research and medical personnel, as well as key opinion leaders;
• clinical-trial protocols that are immediately globally transferable;
• a well-funded and robust healthcare infrastructure; and
• R&D tax incentives.

Australia is a sophisticated market for therapeutics and a favourable country in which to patent. Despite many changes in law and practice in recent years, patenting is relatively low in cost and quick to grant.

Australian Patent Office standards

Key patentability issues exist around subject matter eligibility and support and enablement.

For many years, patent ineligible subject matter (Section 18) has included laws of nature, abstract ideas and mathematical algorithms. Cases including Myriad, Research Affiliates and RPL Central have added isolated naturally occurring nucleic acid molecules, cDNA, RNA and the implementation of methods by a computer or the Internet to this list. The position of Australian courts regarding implementation by computer or online is possibly the most hard-line approach in the patent world and has potentially significant implications for the application of machine learning and artificial intelligence to personalised medicine and diagnostics. For now, claims for diagnostic methods for the practical application of a natural phenomenon remain patent eligible. In a case closely resembling the US dispute between Sequenom Inc and Ariosa Diagnostics Inc on diagnostics subject matter, the validity of the Australian equivalent of the Sequenom patent was upheld by a single judge of the Federal Court. The decision has been appealed.

The shift in requirements for support (Section 40(3)) and enablement (Section 40(2A)) since 2013 has not yet manifested in decisions of a similarly high threshold as seen in Europe. Nevertheless, in a decision by the Australian Patent Office concerning a patent owned by Evolva SA, a two-step test familiar to Europeans has become standard practice for both requirements, considering:

• whether it is ‘plausible’ that the invention can be worked across the full scope of the claim; and
• whether the invention can be performed across the full scope of the claim without ‘undue burden’.

Importantly, ‘plausibility’ is determined by the person skilled in the art based on their technical knowledge. The challenge in therapeutics is the need to file a patent application quickly to secure rights balanced against the requirement for data that supports the broadest rights obtainable. Experience has shown that while a patent specification need not disclose exhaustive amounts of data to enable every variant or derivative of the drug, if the applicant can address the two-part test, either through argument or inventor declarations, they may successfully obtain broader rights than those strictly exemplified in the technical results.

In a decision involving a Pfizer patent derived from a clinical trial, it was determined that patent prior art in Australia includes ethics approval documents and patient information consent forms, but these documents are not necessarily novelty-destroying if the claims contain another level of detail than the public disclosures. Inventive step can often also be successfully addressed, since the Australian person skilled in the art is not omniscient.

The Australian Patent Office participates in the Global Patent Prosecution Highway programme. An accepted Australian patent application can be leveraged to achieve a quick grant in countries, but can, vice versa, be achieved based on patent allowance in other Global Patent Prosecution Highway participating offices.

Patent term extension is generous

Australia offers patent term extension (PTE) for patents that claim pharmaceutical substances to compensate the patentee for loss of effective term due to the need to obtain regulatory approval before the pharmaceutical substance can be sold. A maximum patent term of 25 years can be obtained.

PTE can represent significant revenue for a patentee since the extension occurs after regulatory approval when a pharmaceutical product is generating income. Notably, PTE is available only for pharmaceutical substances for human use. It is important to observe that patents that relate solely to uses of pharmaceutical substances including second and subsequent medical indications or their manufacture are ineligible.

Early consideration of a PTE strategy is critical, for example, during examination of a patent, and then again before requesting any extension. Important points include the following:

• PTE must be based on the first regulatory approval for a pharmaceutical substance;
• only one PTE may be granted per patent;
• more than one patent may be extended on the basis of a single regulatory approval; and
• once the PTE is granted, all claims in the patent are extended, although non-human and non-therapeutic uses are exceptions to infringement during the extension.

Since PTE must be based on the first regulatory approval of a pharmaceutical substance and only one PTE may be granted per patent, if a patent covers more than one potential clinical candidate, a divisional patent strategy should be considered to ensure that PTE is available for second or further clinical candidates.

The most recent developments in the law of PTE have concerned exactly what constitutes a pharmaceutical substance. Where regulatory approval relates to a pharmaceutical substance per se or a formulation containing that pharmaceutical substance, for example, a single regulatory approval may be used to extend patents directed to the pharmaceutical substance, but also subsequent patents directed to specific formulations that are commercialised. It is therefore important to consider filing subsequent patents to formulations as they are developed for specific therapies.

On receipt of a request for PTE, the Australian Patent Office will consider whether the claims are prima facie valid. If the claims are clearly invalid, the request will not be progressed; instead formal re-examination will be commenced. For example, patents may include claims directed to isolated nucleic acids that are substantially identical to naturally occurring nucleic acids. Since Myriad, because this is no longer patentable subject matter, it must be deleted before the PTE request can proceed. Experience also shows that the Australian Patent Office may consider the scope of corresponding patents in other territories and commence re-examination if they find those patents relevantly narrower. During re-examination the PTE request is not invalidated, only placed on hold.

It is also imperative that claims are reviewed to avoid unintended claim construction. For example, in a recent case, the structure of a dependent claim required independent claim 1 to be interpreted as defining a kit of parts, rendering that patent ineligible for PTE. Deletion of the dependent claim before requesting PTE may have avoided this outcome.

Post-acceptance amendments must be sought with sufficient time to ensure that they are allowed before the deadline for requesting PTE. The amendment procedure may take six months in the absence of opposition, and longer if opposed.

The above discussion is equally relevant to generic and biosimilar companies, because applied conversely it provides points relevant to the challenge of a PTE request.

IP implications in marketing therapeutics in Australia

An important characteristic of the Australian market for therapeutics is the Pharmaceutical Benefits Scheme (PBS). This programme enables therapeutics to be provided to Australians at heavily subsidised prices negotiated by the Australian federal government. Implications of the scheme for patentees are as follows:

• Obtaining a listing on the PBS requires the party listing to guarantee supply. An application to list a generic therapeutic on the PBS before patent expiry but which guarantees supply after the patent term has concluded is not patent infringement; however, this will depend on the facts. If the date by which guaranteed supply is required pre-dates the patent grant, there will be patent infringement.
• Interlocutory injunctions were previously granted where an application for PBS listing has been made because it was found that the compulsory price drop for the patentee swung the balance of convenience in their favour. Even if the patent withstands the usually associated revocation action, reinstatement of price is difficult. However, more recently, the tide has turned against patentees based on the fact that loss of market share (and therefore revenue) is easier to calculate for the purposes of determining damages for an originator patentee than for a generic.
• Where a patent is revoked and the associated therapeutic has been listed on the PBS, the federal government has more recently demanded repayment of PBS subsidies going back many years.

Comment

Subsequent to a series of changes to patent law and practice over the past 15 years, Australian patents have become considerably more robust, but remain an extremely cost-effective tool in an environment that is an excellent clinical test bed for new therapeutics. However, the market retains some unique characteristics, particularly in the post-grant environment, and therefore warrants employment of local expertise.