Pharmaceutical patentees have an enviable record of succeeding in contested applications for interlocutory (preliminary or interim) injunctions restraining launch of generic and biosimilar medicines in Australia.

That might be about to change.

Much of the success pharmaceutical patentees have enjoyed in connection with obtaining interlocutory injunctions can be attributed, at least in part, to Australia’s Pharmaceutical Benefits Scheme (PBS).

The Commonwealth Government, through the PBS, subsidises the cost to eligible patients of certain pharmaceutical products in Australia. The PBS Schedule is a list of the pharmaceutical products available to be dispensed to patients through the PBS at a Commonwealth-subsidised price.

A mandatory price reduction is applied to existing PBS-listed products when the first generic or biosimilar is listed on the PBS Schedule, provided certain circumstances are met and any exceptions do not apply. The initial price reduction was 16%, but this has been increased to 25% since 1 October 2018. Listing of additional generics/biosimilars also triggers price disclosure obligations which can result in further decreases in the amount the Commonwealth will reimburse pharmacists for products they dispense.

Commonly a pharmaceutical patentee will submit in support of its application for an interlocutory injunction that the balance of convenience favours the grant of the injunction because if the generic or biosimilar is listed on the PBS Schedule, a potentially irreversible price reduction will result, and damages will be difficult or impossible to calculate.

However, in the recently published decision in Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2018] FCA 1556, Justice Jagot made the following concluding comment (at [1336] – the complete decision, if printed, is 344 pages long):

“It is difficult to imagine that when Sundberg J and then I granted the interlocutory injunctions in 2009 we anticipated that if those injunctions turned out to be wrongly granted, the resulting exercise would bear any resemblance to this one. Hindsight makes one thing certain. Knowing what has occurred, it could never have been concluded, for example, that insofar as relevant to the balance of convenience it would be easier for the generics to prove their loss if the interlocutory injunctions were wrongly granted than for Wyeth to prove its loss if the interlocutory injunctions were withheld and the method patent was valid.”

The decision concerns a claim for compensation pursuant to undertakings given as the price of the grant of interlocutory injunctions restraining infringement of a patent ultimately found to be invalid. The patent is referred to as the method patent. It relates to an anti-depressant known as venlafaxine. While the interlocutory injunctions granted in 2009 did not concern a threat of PBS listing, as is clear from the quote reproduced above, the grant of the interlocutory injunction was influenced, in part, by a finding that “if Sigma is not restrained […] quantification of Wyeth’s loss will become impossible” (Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2009] FCA 595 at [56]).

Justice Jagot’s comments above follow the observation recently made by Justice Burley in F. Hoffman-La Roche AG v Sandoz Pty Ltd [2018] FCA 874 (at [223]):

“On the other hand, on the assumption that an interim injunction is granted but Sandoz succeeds in invalidating the asserted patents, I also accept that Sandoz will face significant complexities in establishing its claim on the undertaking as to damages. There is force in [Sandoz’] submission that there are several unknown factors in the calculation of such damages that will require the consideration of competing hypothetical “counterfactuals” along the lines of those that have dogged the Venlafaxine and other similar cases.”

Justice Burley nonetheless granted Roche an interlocutory injunction restraining Sandoz from continuing to seek PBS listing of its Mabthera (rituximab) biosimilar pending final determination of infringement/revocation proceedings in respect of Roche’s method of treatment claims across four asserted patents.

It appears from these recent decisions that pharmaceutical patentees could well face a tougher challenge in contested applications for interlocutory injunctions restraining launch of generic and biosimilar medicines in Australia.