Australia: patent-term extension developments and challenges
This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight
Reports now show that by the end of this decade numerous top-earning pharmaceutical drugs will face expiry of the key compound (or active pharmaceutical ingredient (API)) patents currently protecting them. The position is no different in the Australian market. While other follow-on patents may remain in force longer, protecting specific indications, dosing regimens or formulations, expiry of an API patent is often a crucial milestone, signalling the potential for generic market entry, particularly where it is thought that challenges may successfully be made to remaining patent protection.
In this context, extensions of patent terms for pharmaceutical substances, granted in effect to compensate pharmaceutical patent holders for delays in exercising their monopoly due to lengthy regulatory requirements, are a key tool in postponing generic market formation. However patent term extensions are also open to challenge. Recent successful such challenges in Australia have opened the door to earlier generic launch of valuable pharmaceutical products, and reinvigorated interest more generally in patent term extension challenge.
Based on the approach taken by courts to date, we foresee further refinement by the courts of the patent term extension system to come, which will be of key importance to innovators and generics alike in assessing the patent landscape for pharmaceutical products in Australia.
The patent term extension regime in Australia
The Australian patent term extension (PTE) regime provides for extensions of up to five years beyond the standard 20-year term, for certain patents relating to pharmaceutical inventions. The PTE system is designed to compensate for delays in obtaining necessary market approvals, specifically registration of a therapeutic product on the Australian Register of Therapeutic Goods (ARTG). Until ARTG registration is obtained for such goods, a patentee has no practical ability to exploit a pharmaceutical product invention on the market in Australia. Obtaining this registration can be a lengthy process and, in effect, the PTE process compensates for delays encountered beyond five years. More specifically, where applicable a PTE can be obtained to extend the patent term for a period equal to the period beginning on the date of the patent and ending on the “earliest first regulatory approval date”, less five years, up to a maximum of five years.
The PTE regime in Australia is contained in the Patents Act 1990 (Cth) (the Patents Act). There are some important features of the PTE regime in Australia that differ in some respects from similar systems elsewhere (eg, United States patent term restorations, and supplementary protection certificates in Europe):
- PTEs are only available where one or more pharmaceutical substances per se are in substance disclosed in the patent specification and in substance fall within the scope of a claim, or in respect of pharmaceutical substances produced by a process involving the use of recombinant DNA technology.
- Once granted, a PTE operates with respect to the entire patent, not just in relation to the product forming the basis for the PTE. However the patent will not be infringed during the PTE period by exploitation of any form of the invention other than the relevant pharmaceutical substance per se (nor by any exploitation for non-therapeutic purposes). For example, method of treatment claims of an extended patent will not be enforceable during the PTE period.
- Given the rationale explained above, a PTE application is based on a specific ARTG registration for a product falling within the scope of the patent claims. A PTE may only be granted by reference to the first inclusion in the ARTG registration of goods containing the relevant pharmaceutical substance per se, and the application must be filed within six months of this registration. No further PTE can be obtained for later ARTG registrations for other products falling within the patent scope.
Recent developments – multiple products cause multiple issues
The Australian Patent Office receives and considers PTE applications. As such, the legal principles applicable to PTEs have been largely built up by the practice of the Office, subject to appeals, or later claims for revocation of a PTE. However, several recent Federal Court decisions have thrown the spotlight back on PTEs, in particular focusing on situations where multiple products the subject of ARTG registrations fall within the scope of a single patent. The commercial circumstances of these cases illustrate the potential significance of the validity of a PTE, in at least several cases leading to the introduction of at least one generic product on the Australian market.
The fact that a PTE leads to extension of an Australian patent in full (at least regarding claims covering pharmaceutical substances per se) gives rise to the potential for a PTE to protect multiple products where they fall within the scope of a single patent. In this context, the meaning of the “first inclusion in the ARTG registration of goods that contain, or consist of” the relevant pharmaceutical substance per se has been thrown into focus. In 2021, two legal questions arose in two separate cases relating to this issue. Judgments in each case in the Federal Court were appealed, culminating in two judgments of the Full Court of the Federal Court of Australia delivered on the same day in March 2022.
Commissioner of Patents v Ono Pharmaceutical Co, Ltd  FCAFC 39
Commissioner of Patents v Ono concerned the question of competitor products. Ono held a patent with a relevant date in 2006 for human monoclonal antibodies to programmed death 1 (PD-1) and methods for treating cancer using the anti-PD-1 antibodies alone or in combination with other immunotherapeutics. Merck’s KEYTRUDA (pembrolizumab) product was accepted to fall within the scope of claims of Ono’s patent and was ARTG-registered ahead of OPDIVO (nivolumab), a product marketed by Bristol-Myers Squibb, authorised by Ono. (Merck and Ono/BMS had settled patent infringement litigation over KEYTRUDA some years prior).
Ono sought primarily to rely on the ARTG registration of OPDIVO for the purposes of applying for a PTE, on the basis that its ARTG registration was the first inclusion on the ARTG of a product falling within the scope of the claim marketed by it (or with its consent). However, the Commissioner of Patents took the view (in line with the Patent Office’s general practice) that it was the first inclusion on the ARTG of any product falling within the scope of the claims, including products marketed by a competitor, which must form the basis for a PTE application. The application must be filed within six months of that ARTG registration, and the PTE term is to be calculated by reference to the registration of the competitor product. To cover this possible outcome, Ono had also applied (late) for a PTE based on KEYTRUDA, including seeking an extension of time to make its PTE application on this basis. At first instance in the Federal Court, the judge agreed with Ono that competitor products were not to be counted for PTE purposes. However, overturning the first instance decision, the Full Court held that the PTE provisions in the Patents Act make no distinction between products marketed by a competitor and those marketed by or with the consent of a patentee.
While this decision is firmly based in the express wording of the Patents Act, clearly the rationale for the grant of a PTE falls down when it is based on the registration of a competitor product. Conceivably, a patentee could obtain extension of a patent that it has never itself commercially exploited. The current position also places a substantial burden on a patentee to monitor the ARTG for competitor products and act promptly to obtain PTEs where appropriate. These were matters considered by the first instance judge in taking the opposite approach. However, on its face, the Patents Act is clear on this point, and it is likely that legislative change would be required if that is to change.
Merck Sharp & Dohme Corp v Sandoz Pty Ltd  FCAFC 40
The second Full Court judgment given in Merck v Sandoz, involved two products both registered by Merck – JANUVIA (sitagliptin alone) and JANUMET (sitagliptin and metformin combination). Both of these products fell within the claims of Merck’s relevant patent. JANUVIA was ARTG registered within five years of the relevant patent date, meaning it was not entitled to any PTE. JANUMET was registered after the five-year period, and Merck applied and was granted a PTE based on ARTG registration of this product.
In infringement proceedings brought by Merck against Sandoz, Sandoz gave undertakings not to launch during the original patent term, but refused to do so for the PTE period. Ultimately, Sandoz successfully challenged the PTE on the basis that it was not based on the first ARTG-registered product – JANUMET was the first ARTG-registered product entitled to a PTE, but it was not the first inclusion in the ARTG of a pharmaceutical substance per se falling within the scope of the claims. The Full Court (affirming the first instance decision) found that on a reasonable reading of the relevant provisions, there was no ‘exclusion’ for products registered within the five-year period. This outcome meant that Merck was not entitled to any PTE on the patent, bearing in mind that had a PTE been granted, the patent would also have been extended in relation to JANUVIA, which clearly was not entitled to a PTE in its own right.
Other PTE issues still to come
The two cases discussed above have renewed interest in the revocation of PTEs as a strategy for early generic market entry. It is not known how many other PTEs have been granted in the circumstances of the Merck case, which would now be open to revocation. The Merck litigation, determined within just over 12 months (including appeal) from issue, demonstrated that PTE challenge can be relatively quick and inexpensive. In addition, during the course of the Merck litigation, a request for rectification of the Patent Register was sought by a party through their solicitors in respect of a patent covering Bayer’s YASMIN oral contraceptive product. The Patents Office found the case indistinguishable from Merck and that the PTE should be removed on that basis. Following the Full Court’s decision in Merck, Bayer discontinued its appeal in the Federal Court of the Patent Office’s decision.
Further to ‘multiple product’ situations, there is scope for challenge to PTEs going forwards based on the definition of a pharmaceutical substance per se. In Biogen International GmbH v Pharmacor Pty Ltd  FCA 1591, Biogen sought an interlocutory injunction to prevent Pharmacor launching its dimethyl fumerate products. In defence of the interlocutory injunction application Pharmacor argued that a PTE granted on the basis of a claim very similar to an EPC2000 claim (“substance X for use in the treatment of disease Y”) was invalid as the claim was not to a pharmaceutical substance per se. In Australia, EPC2000 claims have generally been treated by the Patent Office as product claims, unlimited by the specified use, subject only to the requirement that the claimed product be suitable for that use. At the interim stage, the judge held that there was a “sufficiently strong prospect” that the PTE was invalid, which was likely sufficient to conclude that no injunction should be granted. Taking into account all factors, no injunction was granted. The litigation has subsequently settled so that this issue was not finally determined, and may well be raised again in the future.
Moreover generic companies may well look closely at other PTEs based on claims that may be characterised as formulation claims, some of which have been found entitled to PTE protection in Australia in the past. As ‘second-line’ patents continue to come to the fore on expiry of API patents, it is likely that PTEs based on these claims will be closely scrutinised for validity.
The unusual number of PTE issues considered by the Australian courts in recent years has put PTEs front of mind for validity challenges and increased confidence in potential such challenges. Patent holders are well advised to review the strength of PTEs on any key patents covering important commercial products and consider defences that could be employed if a challenge is brought, noting that such a challenge could potentially brought in expedited proceedings that limit the time for response.
Going forward, patent applicants should be particularly careful with patent claims that cover more than one commercial product. One consideration is whether a divisional filing strategy should be employed to file separate divisional applications for any additional products. This could potentially avoid the Merck v Sandoz problem as each individual divisional application will be entitled to a PTE based on the first regulatory approval for a product within its scope.
In light of Commissioner v Ono it is also important to ensure that regulatory approvals for competitor products are appropriately monitored and relied upon, where necessary, for the purposes of a PTE application.
Further developments in the Australian case law in this area will be watched with interest.