On 18 August 2017, the Australian Full Federal Court (Besanko, Yates, and Beach JJ) handed down an interesting decision, at least for the biotechnology community. The Commissioner of Patents appealed an earlier decision of the Administrative Appeals Tribunal (the decision from which can be found here) , in order to take another look at whether the patent term extension provisions of Australian patent law extend to “Swiss type” claims. In other words, what is the proper construction of section 70(2)(b) of the Patents Act 1990 (Cth), which identifies one of the bases on which the Commissioner of Patents can extend the term of a standard patent directed to pharmaceutical substances?

The Respondent (the Patentee) in this case is AbbVie Biotechnology Ltd, a U.S. pharmaceutical company spun out of Abbot Laboratories in 2013. The commercial focus of AbbVie is to discover, develop, and market both biopharmaceuticals and small molecule drugs. Relevant to this case is AbbVie’s flagship drug – the antibody treatment adalimumab, which is currently sold under the trade name HUMIRA®.

The case concerns three of AbbVie’s patents: AU2012261708 (the ‘708 patent),

… Or did it?! Could the patents stay alive for longer in Australia under the provisions for patent term extension for pharmaceutical products?

It takes many years of basic research, clinical trials, and regulatory approvals to take a new drug candidate from the research laboratory bench to the clinic. In many cases, the lion’s share of a patent term has already expired by the time a new drug navigates the red tape and makes it to market. In order to compensate the patent owner – Australian law includes provisions for extending the term of patents disclosing pharmaceutical inventions (for a maximum of five years).

Section 70(2) of the Australian Patents Act states the circumstances under which a pharmaceutical invention may be eligible for such an extension of patent term:

Specifically, either or both of the following conditions must be satisfied:

(a) one or more pharmaceutical substances per se must in substance be disclosed in the complete specification of the patent and in substance fall within the scope of the claim or claims of that specification;

(b) one or more pharmaceutical substances when produced by a process that involves the use of recombinant DNA technology, must in substance be disclosed in the complete specification of the patent and in substance fall within the scope of the claim or claims of that specification. (emphasis added)

When it comes to the Extension of Patent Term, Boehringer Ingelheim International v Commissioner of Patents [2000] FCA 1918 is one of the go-to cases. It was suggested that a pharmaceutical substance could be the subject of three types of claims: (1) a new and inventive product alone; (2) a known product prepared by a new and inventive process; and (3) a known product used in a new and inventive method of treatment. In this decision, it was stated that “only the first type of claim to a pharmaceutical product is to be subject to extension rights.” This mirrors the objective in introducing this legislation – to foster primary research and development of inventive substances, and not the way they are made or used. However, there is one exception set out in section 70(2)(b) – “it is only when the new process answers the particular description in s 70(2)(b) (recombinant DNA process) that it can be the subject of an extension. […] This being an area particularly worthy of assistance for research and development.

In other words, it is well established that the extension of patent term available for pharmaceutical inventions is reserved for product claims, and not new processes or methods. That is, unless the pharmaceutical product is produced by a process that involves recombinant DNA technology.

Notably, although the present case solely considers the ambit of section 70(2), there are other criteria set out in the Patents Act which must be met for an extension to be allowable, which can briefly be summerised as:

Section 70(3)At least one claimed substance: - must be included in the Australian Register of Therapeutic Goods; AND - have a first regulatory approval date at least five years from the date of the patent.
Section 70(4)The term of the patent must not have been extended previously.
Section 71(1)The Extension of Term application must be in the approved form; AND accompanied by the required documents and information.
Section 71(2)The Extension of Term application must be made during the term of the patent and within six months after: - date of patent grant; or - date of first inclusion in Australian Register of Therapeutic Goods (whichever is later).

The Pharmaceutical Substance Must Itself Be Claimed.

As discussed, the matter claimed must be the pharmaceutical substance or substances so produced, and not any other method or process involving those substances. This appears to be the only sensible way to construe the Australian statute; section 70(2)(a) and (b) would otherwise be in direct contradiction with one another.

The Court drew reference to the emphasis in the Parliamentary Explanatory Memorandum published with the Intellectual Property Laws Amendment Bill 1997 (which introduced these provisions). The Memorandum explained that the extension of term provision is relevant only for patents directed to new and inventive substances – not those claiming the method or process by which they are produced (other than those involving recombinant DNA technology). In fact, it explicitly states that new methods of treatment are not intended to be part of the extension of term regime.

The Commissioner presented in oral submissions that it is unnecessary for section 70(2)(b) to refer to “one or more pharmaceutical substances per se” (emphasis added) – because the substances described therein are already characterised by the fact that they must be produced by the process of recombinant DNA technology. The Court affirmed that “each provision’s [section 70(2)(a) and 70(2)(b)] concern is with pharmaceutical substances, not additional or other matter concerning or involving the use of pharmaceutical substances.

The Swiss Type Claim

Swiss type claims are those directed to the manufacture of a composition for use in treating a particular disease or condition. The traditional function of such claims is to encompass the manufacture of a defined pharmaceutical product in those jurisdictions (including Europe, China, and New Zealand) that prohibit claims to methods of medical treatment.

These claims are typically drafted in the following format:

In Australia, Swiss type claims are considered to be directly infringed by the unauthorised third party manufacturer of the defined medicament.

Are Swiss Type Claims Eligible for Patent Term Extensions?

The AbbVie patents considered by the Full Federal Court contain Swiss type claims directed to the use of adalimumab (HUMIRA®) for the treatment of ulcerative colitis (the ‘708 patent), Crohn’s disease (the ‘420 patent), and rheumatoid spondylitis (the ‘402 patent).

The Court emphasised that Swiss type claims are not claims directed to pharmaceutical substances. Rather, they are method or process claims that require two features to be satisfied in order to infringe. First, the defined substance (“Compound X”) must be used to create a medicament. Second, there is a particular purpose or indication (“Disease Y”) for which the medicament is to be used. The Full Federal Court were clear in their determination that the scope of Swiss type claims is fundamentally different to the scope of claims addressed by section 70(2) of the Patents Act.

Being a pharmaceutical substance produced by a process that involves recombinant DNA technology, AbbVie would have certainly hoped that adalimumab is eligible for an extension of patent term under section 70(2)(b). The Federal Court, however, dismissed such construction. It was instead found that the claims of the AbbVie patents are not directed to adalimumab produced by recombinant DNA technology. Rather, the inventions described within the AbbVie patents are directed to new uses of adalimumab. Specifically, that adalimumab can be formulated in a medicament to treat ulcerative colitis, Crohn’s disease, and rheumatoid spondylitis.

Accordingly, to successfully operate of the extension of term provisions, it is clearly insufficient to merely show that the pharmaceutical substance is produced by a process involving recombinant DNA technology. Despite the lack of the expression “per se” in the wording of section 70(2)(b), there is still an implicit requirement that the pharmaceutical composition must, in substance, fall within the scope of the specification claims.

Thus, the claims of the AbbVie patents are not eligible for any extension of patent term under Australian patent law, as the claims defined “an entirely different scope” to the pharmaceutical compositions themselves.

Commercial Implications of Patent Extension Ineligibility.

Although this decision may appear to drill down on a minor or irrelevant area of Australian law, it would be ill-informed to consider it void of commercial relevance. With sales of HUMIRA® making up around 65% of AbbVie‘s total revenue, we can be sure that there was plenty riding on the Decision (if not specifically in the circumstances of this situation – the precedent set for the future). Between 2012 and 2016 HUMIRA® topped the world’s list of best-selling pharmaceutical products; last year global sales of the immunotherapy reached over $16 billion (and over $14 billion in 2015).

For the last couple of years, Indian pharmaceutical companies have already emerged with biosimilar versions of the blockbuster drug – with a significantly cheaper price-tag attached. For example, Cadila Healthcare Ltd has launched Exemptia, at $200 per treatment (as opposed to the $4370 price tag attached to HUMIRA®), and Torrent Pharmaceuticals Limited has launched Adfrar.

Obtaining patent term extension in Australia would have allowed AbbVie to continue exploiting its incredibly lucrative monopoly, and shut out the biosimilars for a while longer. Unfortunately, however, this decision by the Full Federal Court will open the gates to biosimilars, including the Indian equivalents described above. We can expect that AbbVie will significantly lower the price of HUMIRA® to remain competitive in future (to the detriment of their bottom line).

What Patent Strategy Tips To Take Away?

The key take-home message from this decision is to ensure that the product itself is claimed when filing a patent application directed to a new method of producing a known pharmaceutical substance (specifically, involving DNA recombination technology). At the very least, this may be done as a “product by process” claim. Even better, is if a physical aspect to the known substance changes when produced by recombinantly. The altered molecule could certainly form the basis of patent with a much stronger ability to extend its term (providing the other extension criteria are met).

To discuss your situation and how the Australian legislation governing patent term extension applies (or even to discuss the Australian provisions generally), contact the biotechnology team at Innofy.