Balancing Innovation and Public Health: Navigating the Intersection of Patent Law and Pharmaceutical Regulation

Intellectual property, and patent rights in particular, play an essential role in the commercialisation of pharmaceutical products.   Robust and comprehensive patent protection is essential for attracting investment in pharmaceutical research, a sector renowned for its high rates of failure.  The standard 20-year patent monopoly (the exclusive right to exclude others), is critical for incentivising invention disclosure and compensating for significant financial investment in the research journey. 

Outside of the patent system, pharmaceutical products in Australia are regulated by the Therapeutic Goods Administration (TGA).  All therapeutic goods, including generic versions of medicines, must be entered on the Australian Register of Therapeutic Goods (ARTG) before they can be marketed.  This includes all prescription and non-prescription products, over the counter products and even sunscreens. 

Pharmaceutical products may also be listed with the Pharmaceutical Benefits Scheme (PBS).  The PBS, managed by the Department of Health, heavily subsidises the cost of medicines to ensure access for all Australians.  Both innovator and generic medicines are supported by the PBS system. 

Whilst the patent system and regulatory processes operate independently, there are several points along the commercialisation pathway for pharmaceuticals where these regimes intersect. Understanding the relationship between patent rights and pharmaceutical regulation is imperative to a successful commercialisation journey.  Several important points of intersection are discussed below:

Patent Term Extensions

Under the Australian patent term extension (PTE) regime, an eligible pharmaceutical patent may be extended by up to 5 years beyond its original 20-year life time. The regime is designed to compensate for the delays encountered by the applicant/sponsor during the product registration process before the TGA.

To qualify for a PTE, the patent specification must include a claim directed to the ‘pharmaceutical substance per se’ and the goods containing or consisting of the ‘pharmaceutical substance per se’ must be included on the ARTG.  The relevant ARTG entry must relate to therapeutic goods approved for supply in Australia.  In addition, the patentee must apply for the PTE within six months of the latter of either a) the patent grant date or b) the first ARTG inclusion date of the relevant goods.

Patent Infringement Exemption

There are a number of steps a generic pharmaceutical company needs to take in preparation for launch of a generic product. These include manufacturing, testing and obtaining registration of the product with the TGA, and can take many years to accomplish. 

 Under Australian patent law, there is a ‘spring boarding’ exemption which allows  a generic company to undertake these steps, before a patent expires, in order to facilitate entry into  the market . That is, the rights of the patentee are not infringed by a generic pharmaceutical company exploiting an invention claimed in a patent if the exploitation is solely for the purpose of obtaining registration on the ARTG. This exemption is reflected in s119A of the Patents Act 1990:

• the rights of a patentee of a pharmaceutical patent are not infringed by a person exploiting an invention claimed in the patent if the exploitation is solely for:
• purposes connected with obtaining the inclusion in the Australian Register of Therapeutic Goods of goods that:
  • are intended for therapeutic use; and
  • are not medical devices, or therapeutic devices, as defined in the Therapeutic Goods Act 1989; or
  • purposes connected with obtaining similar regulatory approval under a law of a foreign country or of a part of a foreign country.

However, despite this infringement exemption, it is common practice in Australia for innovators to issue a Letter of Demand in relation to a new generic listing, shortly after publication of the generic product registration.

Data Exclusivity

Five years of data exclusivity is provided to any information filed by a pharmaceutical innovator in support of an application to register a product. That is, the data utilised in registering the product (whether that product is a small molecule or a biopharmaceutical) in Australia is deemed ‘prohibited information’ under the Australian Therapeutic Goods Act 1968 and cannot be used to register a generic version of that product for a period of five years. 

However, unlike the situation in Europe, for example, the data exclusivity in Australia does not prevent the filing of a generic application with the TGA.  In addition, use of the ‘prohibited information’ is only applicable whilst that information remains confidential.  Thus, any publication of such information means that the published information can be used to support a generic application for registration in Australia.  For example, a great deal of information on pharmaceutical prescription products is published on the United States FDA website and the European Medicines Agency (EMA) website.  In most cases registration of the product occurs in the USA and Europe before Australia.  Once this information is published, it is no longer ‘prohibited information’ in Australia. 

Therefore, under certain conditions, it may be possible for a generic company to circumvent the 5-year data exclusivity barrier to generic market entry in Australia and register a generic pharmaceutical utilising a ‘literature-based’ submission route.  However, the process is both complex and expensive.  Accordingly, the exercise may only be justified where the drug is a sufficiently valuable product, and the patent landscape justifies it. 

Product Registration on the ARTG – the Patent Certificate

As part of the registration process, a sponsor seeking to list a new generic product for example (that is, a therapeutic good that relies on the safety or efficacy of an already approved product) must also provide a Certificate in relation to any existing patent rights. Under section 26B of the Therapeutic Goods Act 1989, the sponsor must certify either to the effect that:

• it believes on reasonable grounds that therapeutic good would not infringe a valid claim of a granted patent; or
• it proposes to market the therapeutic good after the end of the term of the patent and that it has provided the patentee with notice of the application for inclusion on the ARTG

Particular attention should be paid to the language used here – a ‘belief’ that the goods would not infringe a ‘valid claim’.  In other words, if the generic applicant has reason to believe that the patent claims are not valid (and therefore not infringed), they have satisfied the requirement, even if the patent remains live and validity of the patent has not been challenged.

Copyright Infringement Exemption

A generic pharmaceutical company is permitted to use an originator’s Product Information document that has been previously approved by the TGA, without infringing the copyright in the original Product Information sheet. This exemption was introduced in Australia in 2011 and is reflected in s 44BA of the Therapeutic Goods Legislation Amendment (Copyright) Act 2011. 

This exemption allows for the supply, reproduction, publication, communication and adaptation of production information pertaining to therapeutic goods without infringing copyright in the original product information (where that product was approved under the Therapeutic Goods Act 1989) where it is done “in relation to the safe and effective use of the medicine.” It is important to note that this exemption only applies to documents of restricted medicines (prescription and pharmacist only medicines) where the ‘copying’ is done in relation to the safe and effective use of the medicine.  The exemption also applies irrespective of when the Product Information sheet was approved by the TGA. As such, Product Information sheets published before the amendment to the Therapeutic Goods Act may still be copied within the scope of the exemption.

And what about listing with the PBS?

The PBS supports both innovator and generic pharmaceutical products.  An application to list a new brand of an existing pharmaceutical product (a generic product) with the PBS must include a statement from the TGA showing that the generic product is equivalent to, and interchangeable with, the currently listed brand. 

Whilst the act of seeking PBS listing is not in itself an act of patent infringement, an application for PBS listing of a pharmaceutical product must guarantee that the product will be made available to wholesalers or approved pharmacists from the date on which the product is listed on the PBS. This assurance of supply is provided when the application is submitted, in the form of a signed declaration.  It has been argued that the provision of such a declaration may establish an ‘offer to sell’ and therefore constitute patent infringement, should there be a relevant patent in force and the proposed date of supply occurs before patent expiry.  This was the main question for determination in the Full Federal Court case in Warner-Lambert Company LLC v Apotex Pty Limited [2017] FCAFC 58 (Warner-Lambert) concerning pregabalin.

In decision in Warner-Lambert confirmed that applying for PBS listing alone does not constitute an ‘offer to supply’ a pharmaceutical product and thus should not be considered an infringement of a patent holder’s rights.  By applying to list a pharmaceutical product on the PBS, an applicant is simply making assurances that the product ‘will be available’ once listing is granted.  Availability alone is not considered an ‘offer to supply’ that product.

In relation to the signed declaration, it was found that provision of such a declaration did not constitute an ‘offer to sell’. The assurance to supply was found instead to be merely a pre-condition to the Minister of Health making a determination on the application.

The assurance is provided before the applicant knows the outcome of the application and is therefore no more than a guarantee that stock will be available to meet demand if the generic product is able to be listed on the PBS. That does not amount to an offer to supply and therefore does not constitute patent infringement.

However, as above, despite the finding that listing on the PBS is not an act of patent infringement, making an application for PBS listing may still (and generally does) justify the grant of a preliminary injunction in favour of the patentee on the basis of threatened acts of infringement. 

Conclusion

The commercialisation of pharmaceutical products in Australia occurs within a complex legal and regulatory environment, encompassing patent rights, therapeutic goods regulation and government reimbursement mechanisms, each playing their own distinct yet interconnected role.  Although these frameworks operate according to different policy objectives, they intersect at critical points throughout the lifetime of a pharmaceutical product from development and regulatory approval through to market entry and generic competition.

Successfully navigating these interfaces requires a clear understanding of both intellectual property rights and pharmaceutical regulation. For innovators and generic manufacturers alike strategic management of these interactions is fundamental to maximising commercial opportunities, managing legal risk, and ensuring that innovative and affordable medicines reach Australian patients in a timely and sustainable manner.If you have any questions about any of the issues discussed above, please get in touch with our MBIP patent attorneys.  You can find our details and our online enquiry form on our contact us page.

For related reading, consider our recent article series on Medical Device Regulations and IP Strategy.