19 April 2017 | Jane Owen Partner, Rochelle Schuenker

Late last week, the Full Federal Court of Australia confirmed that the mere act of filing a Pharmaceutical Benefits Scheme (PBS) application for a generic pharmaceutical product is not, of itself, an act of infringement provided that the generic product will not be made available for sale to wholesalers or pharmacists until after the relevant patent has expired: Warner-Lambert Company LLC v Apotex Pty Limited [2017] FCAFC 58. This decision clears any uncertainty for generics proposing to apply to list on the PBS prior to patent expiry for post patent launch.

Warner Lambert & Pfizer appealed the 2016 decision of Nicholas J, Apotex Pty Ltd v Warner-Lambert Company LLC (No 3) [2017] FCA 94 that an application by the respondents for the listing of their generic pregabalin product, (Generic Pregabalin)) on the Australian Pharmaceutical Benefits Scheme (PBS) did not infringe Warner Lambert's patent (Australian standard patent 714980) directed to the use of pregabalin to treat pain (the Patent)).

Full Federal Court – the issue 

The present appeal turned on the Full Federal Court considering Nicholas J's characterisation of a patentee’s exclusive rights and the meaning of “exploit” under the Patents Act 1990 (Cth) (the Patents Act). 

"Exploit" is defined in the Patent Act to mean: 

(a) where the invention is a product–make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or
(b) where the invention is a method or process–use the method or process or do any act mentioned in paragraph (a) in respect of a product resulting from such use.

Full Federal Court – the appellants' case 

Warner Lambert & Pfizer claimed Nicholas J was in error in concluding that the respondents' proposed actions fell short of offering to sell or otherwise dispose of the products and therefore did not amount to patent infringement, arguing that:

  • The definition of "exploit" in the Patents Act provides that the patentee alone may exploit the invention during the term of the patent; and
  • Any act which enables another party to take advantage of the invention for commercial or economic benefit is liable to be found to have exploited the invention; and
  • The offer to supply the Generic Pregabilin is made on the making of the PBS application, and therefore applying for a PBS listing during the term of the Patent gives a "a springboard for PBS listing", which is a commercial or economic benefit and therefore amounts to patent infringement. 

Full Federal Court – the respondents' case

The generic parties argued that a PBS application requires an applicant to provide a guarantee of supply and, upon the listing of the product (but not before), the applicant will be subject to the guaranteed supply provisions in Div 3C of Pt 7 of the National Health Act 1953 (Cth). 

It follows that these statutory guaranteed supply provisions operate from the coming into force of the determination of the PBS application, which will be after the expiry of the term of the Patent and therefore an application cannot amount to exploitation of the Patent within the meaning of the definition of “exploit” in the Patents Act.

Full Federal Court – the decision

The Full Federal Court agreed with the respondents and the conclusion of Nicholas J in Apotex No 3 stating [at 15]:

"It may be accepted, as the primary judge did at [31], that “offer” in the definition of “exploit” is not confined to its contractual meaning.  It takes its ordinary meaning whether that be “to present or tender for acceptance or refusal” (Oxford English Dictionary Online item 4) or to “propose or express one’s readiness (to do something) if the person assents” (Oxford English Dictionary Online item 3).  It cannot be denied that on making an application the respondents will be required to present or propose or express their commitment to ensure that they will be able to supply their products during the guaranteed period.  But in our view this is not an offer to the Minister to supply the products to a third party." 

The practical effects of the decision

This decision of the Full Federal Court confirms the recent trend for courts to acknowledge that generic parties may seek to apply to list on the PBS during a patent term without risk of infringement (eg Nicholas J's comments in Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd [2015] FCA 848).

The decision will change the entitlement of patentees to seek orders in preliminary injunctions restraining generic parties from making PBS applications during the patent term.  Of course while any injunction is in force, any such application would need to be withdrawn if the listing is to occur while the patent is still in force.