The Federal Court has ordered Pharmacor to provide preliminary discovery to GlaxoSmithKline Australia of evidence regarding Osteomol 665, a competitor of GSK’s Panadol Osteo, including documents lodged in support of Pharmacor’s application for Therapeutic Goods Administration approval of Ostemol 665. The Court granted the application on the basis that it would allow GSK to determine whether to bring proceedings against Pharmacor under the Australian Consumer Law.
GlaxoSmithKline (GSK) has marketed and supplied a “modified release” paracetamol product, Panadol Osteo, in Australia since 2005. Panadol Osteo provides rapid pain relief, which is sustained for up to 8 hours after administration, due to specific properties affecting its paracetamol release rate (Properties), which are protected by a patent (Patent). At the time of the judgment, Panadol Osteo was the only Medicare-subsidised “modified release” oral paracetamol product included on the Schedule of Pharmaceutical Benefits (PBS).
On 20 August 2014, two “modified release” paracetamol products (Pharmacor Products), both sponsored by Pharmacor, were approved for supply in Australia by the TGA, on the basis that they were “bioequivalent” to Panadol Osteo. Shortly thereafter, Pharmacor applied to the Pharmaceutical Evaluation Branch of the Department of Health (PEB) to have the Pharmacor Products listed on the PBS as a “new brand” of Panadol Osteo. The PEB will only approve a product as a “new brand” where it is advised by the TGA that the products are equivalent.
Following Pharmacor’s application to the PEB, GSK became concerned that Pharmacor could be infringing the Patent or, alternatively, contravening the ACL. However, it did not have sufficient evidence to assess whether its concerns were justified, and so applied to the Federal Court for a preliminary discovery order, seeking to compel Pharmacor to furnish evidence prior to the commencement of formal proceedings.
Federal Court Rule 7.23
In order for the Court to order Pharmacor to make preliminary discovery, GSK had to establish that it:
- reasonably believed it may have a claim
- did not have sufficient information to decide whether to commence proceedings, having made reasonable enquiries
- reasonably believed that Pharmacor had, or was likely to have, control of evidence directly relevant to the question of whether it had a claim
- reasonably believed that inspecting the evidence would assist GSK in determining whether to commence proceedings.
GSK’s potential claims
The main issue in contention was whether GSK reasonably believed it may have a claim. In this regard, GSK argued that either:
- the Properties of the Pharmacor Products were the same as Panadol Osteo, meaning that Pharmacor was infringing the Patent
- the Properties of the Pharmacor Products differed from Panadol Osteo, and the products were not bioequivalent, meaning that Pharmacor’s representations to the TGA and the PEB regarding bioequivalence were misleading or deceptive, in breach of sections 18 and 29 of the ACL
- the Properties of the Pharmacor Products differed from Panadol Osteo and, although the products were bioequivalent, they did not have an identical therapeutic performance, such that Pharmacor’s anticipated promotion of the Pharmacor Products to pharmacists and consumers as “bioequivalent”, “interchangeable”, “substitutable” or “as good as” Panadol Osteo, would be misleading or deceptive, in breach of sections 18 and 29 of the ACL.
The parties agreed that the Properties of the Pharmacor Products differed from those of Panadol Osteo and, as such, that the Pharmacor Products did not infringe the Patent. GSK contended, therefore, that it necessarily had a reasonable belief it may have claims against Phamacor under the ACL.
Pharmacor’s “representations” to the TGA and the PEB
Justice Beach held that GSK could not reasonably believe it had a claim against Pharmacor on the basis that Pharmacor represented to the TGA and the PEB that the Pharmacor Products were bioequivalent to Panadol Osteo. His Honour found that the TGA had formed its own opinion of the bioequivalence of the products, based on complete and accurate information it had been provided by Pharmacor. Further, it was the TGA, as opposed to Pharmacor, which advised the PEB that the products were bioequivalent. His Honour also noted that, even if Pharmacor had made misleading statements to the TGA or the PEB (e.g. by providing the TGA with incomplete or inaccurate information), statements made to regulatory bodies in the exercise of their regulatory functions are not in “trade or commerce”, and so are outside the scope of the ACL.
Pharmacor’s intended promotion of the Pharmacor Products to consumers and pharmacists
However, Justice Beach did find that GSK reasonably believed it may have claim under the ACL in relation to Pharmacor’s intended promotion of the Pharmacor Products to pharmacists and consumers.
Pharmacor’s evidence was that it intended to promote the Pharmacor Products as “approved by the TGA as bioequivalent to Panadol Osteo” and “listed on the PBS as interchangeable or substitutable for Panadol Osteo” (Statements). Although the literal truth of the Statements was not challenged, His Honour found that they were “halftruths”, which potentially represented to the reasonable consumer that the Pharmacor Products were therapeutically identical Panadol Osteo. More particularly, His Honour held that the Statements were likely to be interpreted by the reasonable consumer as meaning that the Pharmacor Products were entirely interchangeable and substitutable with Panadol Osteo, and provided identical benefits without discrimination. This was enhanced, rather than mitigated, by the reference to the TGA. Further, His Honour accepted that, on their PBS listing, pharmacists were likely to treat the Pharmacor Products as the same as Panadol Osteo for all relevant purposes, and would be likely to supply and promote them to consumers accordingly.
Justice Beach held that there was sufficient evidence for GSK to reasonably believe that the therapeutic performance of the Pharmacor Products was not identical to Panadol Osteo. In particular, His Honour:
- noted that Pharmacor admitted that the Pharmacor Products had different Properties to Panadol Osteo
- viewed the TGA’s concept of “bioequivalence” as imprecise, fluid and not necessarily reflective of the in vivo performance of drugs
- accepted GSK’s submission that bioequivalence testing generally does not require a comparison of the properties of products that affect the time to onset, or duration, of pain relief, and that these factors significantly alter the performance of “modified release” paracetamol products
- noted that the low level of similarity between the properties required to establish bioequivalence means that bioequivalent products may still have quite different properties
- noted that there is debate as to whether bioequivalence is the same as therapeutic equivalence.
His Honour found that GSK did not have sufficient material regarding this potential claim to decide whether to commence proceedings. GSK’s inquiries, which included requests to Pharmacor, the TGA and the Department of Health, were considered to be reasonable, and the evidence was both likely to be in Pharmacor’s control and directly relevant to the question of whether GSK should issue proceedings. His Honour therefore ordered that Pharmacor make preliminary discovery to GSK, to allow it to determine whether to commence proceedings under the ACL.
- Preliminary discovery will only be ordered where the applicant shows that its potential claim has some merit. Further, if a party already has sufficient evidence to support a cause of action, preliminary discovery will generally not be ordered.
- Statements which are literally true may nevertheless be misleading and deceptive by what they represent to the reasonable consumer.
- Submissions to regulatory bodies are generally not considered to be in “trade or commerce”, and so fall outside the scope of the ACL.
- Although Pharmacor was ordered to make preliminary discovery, it was also given the opportunity to revise its marketing strategy prior to launching the Pharmacor Products, and thus avoid a potential breach of the ACL.