Can a manufacturer apply for Pharmaceutical Benefits Scheme (PBS) approval for a generic drug before the patent has expired? Justice Nicholas held in February in Apotex Pty Ltd v Warner-Lambert Company LLC (No 3) [2017] FCA 94 that the answer was “Yes”, and his Honour’s decision was recently affirmed by the Full Federal Court in Warner-Lambert Company LLC v Apotex Pty Limited [2017] FCAFC 58. Although a pain for patentees, the decisions are a plus for generic manufacturers and patients pining for low-priced pills.

Case background

The case related to Pfizer’s Lyrica product and patents for pregabalin, a drug indicated for neuropathic pain. Generic manufacturer Apotex sought to take a running start by undertaking preparatory steps for sale of a generic version before Pfizer’s pregabalin patent expired on 16 July 2017, only for Pfizer to assert that Apotex was in fact about to trip the starting line.

Pfizer enjoyed some success in a judgment in October 2016 (Apotex Pty Ltd v Warner-Lambert Company LLC (No 2) [2016] FCA 1238). Nicholas J found that Pfizer was entitled to injunctive relief against Apotex to prevent Apotex from importing the generic products for the purpose of sale, as this would constitute an infringement Pfizer’s “Swiss-style” claims (that is, patent claims directed to the manufacture of a pharmaceutical product for the purpose of carrying out a medical treatment).

At issue in the recent cases was whether the injunction should also extend to preventing Apotex from applying for PBS approval before the patent’s expiry.

Offering products for sale

Apotex contended at first instance that offering products for sale in circumstances where the products would not be supplied until after the patent expired was not an infringement at all, citing the UK case of Gerber Garment Technology Inc v Lectra Systems Ltd [1995] RPC 383. Justice Nicholas declined to follow Gerber, concluding that regardless of the English position, the exclusive rights provided to the patent holder under section 13 of the Patents Act 1990 (Cth) included “the right to offer the invention for sale … even if no actual sale or delivery of the product occurs before patent expiry”.

However, drawing a relatively fine distinction, his Honour acknowledged that not every “expression of a willingness to sell will amount to an ‘offer to sell or otherwise dispose of’ a product”. A supplier that “acting in good faith merely states that it proposes to offer a product as soon as the relevant patent expires” would be stating an intention, not making an offer. Whether a company was “expressly or impliedly offering to sell or dispose” needed to be judged on the relevant circumstances, including the supplier’s subjective intention.

PBS listing

Applying this test, Nicholas J noted that Pfizer’s Swiss-style claims would be infringed if Apotex’s application to the PBS amounted to “offering to sell or otherwise dispose” of patented products. His Honour assumed that Apotex would, in making its application for PBS listing, represent “that it intends to make the products available to wholesalers or approved pharmacists during the guaranteed period” once the PBS determination was made. However, this fell on the right side of the line: it was an indication of an intention to sell the products rather than an offer to sell them.

Justice Nicholas also rejected the possibility that the act of applying for a PBS listing itself – regardless of whether it contained an offer to sell or otherwise dispose of the products – constituted infringement of the patent. His Honour observed that this action was not “taking advantage of the invention”; applying was a “mere preparatory step which may enable Apotex to exploit the invention … at a later point in time”.

Pfizer additionally claimed that its method of treatment claims for pregabalin would be infringed by Apotex’s PBS application. Justice Nicholas did not accept this argument either. Although a “supply” of the product to a person exploiting this method (such as a doctor) would constitute infringement under section 117 of the Patents Act if it took place before expiry, an offer of supply did not fall within the words of the section (even if there were such an offer of supply in Apotex’s PBS application).

Full Court appeal

Pfizer appealed to the Full Federal Court on the question of whether the PBS listing application constituted an “offer to sell”. The Full Court considered Pfizer’s argument that “by reason of the requirements of the statutory scheme for PBS listing”, Apotex “entered into a statutory bargain in which they offered to the relevant Minister to sell the products to wholesalers and pharmacists” after listing.

The Court, comprising Justices Jagot, Yates and Burley, rejected Pfizer’s position. In a joint judgment, their Honours held that Apotex had made an assurance of being “able to supply those third parties during the guaranteed period if requested to do so”, rather than any “offer” to the Minister to do so. This was not an assurance “which the Minister accepts or rejects” (though the application to which the assurance was a precondition might itself be accepted or rejected). Moreover, the guaranteed supply only operated from “the coming into force of a determination”, not the making of an application.

In the result, the injunction against Apotex leaves it free to make its PBS application on 1 May 2017.

The decisions over this painkiller may bring pangs to Pfizer, but are sure to palliate Apotex and other generics in the race to market that follows patent expiry.