Novartis AG v Hospira Pty Limited [2012] FCA 1055

Novartis AG v Hospira Pty Limited (No 2) [2012] FCA 1113

The Federal Court has recently made orders restraining Hospira from promoting, supplying and obtaining PBS listing of products containing zoledronic acid until its final determination of Novartis’ allegations of patent infringement and Hospira’s cross-claims for invalidity. Interestingly, for the purposes of the interlocutory dispute, Hospira conceded that Novartis had a prima facie case of patent infringement, but contended that the strength of its own case of invalidity was such that Novartis' likelihood of success did not justify the grant of an interlocutory injunction. Justice Yates did not accept Hospira’s contentions, ultimately finding that the overall balance of convenience and justice favoured the grant of interlocutory relief. Justice Yates’ decision serves as yet another illustration of the difficulties pharmaceutical companies have in entering a market in which a competing product has patent protection and is listed under the PBS.

Novartis' "zoledronic acid" patents and commercial embodiments

Novartis AG is the owner of two Australian patents which relevantly include claims to methods of treating various malignancy related bone disorders1 and osteoporosis2 involving the use of zoledronic acid (a third generation bisphosphonate which inhibits bone resorption) (together, the method of treatment claims).

Novartis Pharmaceuticals Australia Pty Limited is the exclusive licensee of each of the patents, and exploits them by marketing and supplying ZOMETA® (a concentrated injection vial indicated for the treatment of malignancy related bone conditions) and ACLASTA® (a intravenous infusion solution indicated for osteoporosis and other related conditions) in Australia.

Both products are listed under the Australian Pharmaceutical Benefits Scheme (PBS).

Hospira's threatened infringement of the patents

In February 2012, Hospira Pty Limited (Hospira) informed Novartis that it intended to launch two oncology products and an osteoporosis product containing zoledronic acid after 20 November 2012. In connection with its proposed launch, Hospira had secured registration on the Australian Register of Therapeutic Goods (ARTG) and applied for, but not yet obtained, PBS listing for one of the oncology products, and had applied to register the other two zoledronic acid products on the ARTG.

Novartis sought interlocutory orders to force Hospira to withdraw its PBS application and to restrain it from taking any further steps to launch products containing zoledronic acid in Australia, arguing that Hospira’s conduct constituted threatened infringement of the method of treatment claims of its osteoporosis and bone disorder patents.

General legal principles governing the grant of interlocutory injunctive relief

Justice Yates confirmed that to succeed on its application for interlocutory relief, Novartis was required to establish:

  • a prima facie case, serious issue to be tried, or triable issue; and
  • that the balance of convenience favoured the grant of an injunction in the sense that it would do more harm to Novartis not to have the injunction than it would do to Hospira to be enjoined.

Hospira concedes that Novartis has prima facie case of infringement

Hospira did not dispute that Novartis had a prima facie case of threatened contributory infringement pursuant to section 117 of the Patents Act for the purposes of Novartis' application for interlocutory relief. Justice Yates observed that Hospira's "concession was justified and appropriate" in the circumstances.

The balance of convenience: Hospira's case on invalidity

Whilst conceding that Novartis had a prima facie case, Hospira contended that the strength of its own case of invalidity was such that there was not a sufficient likelihood of success to justify the grant of injunctive relief in the circumstances.

In support of its invalidity case, Hospira argued that the method of treatment claims were not new or inventive.

Was the invention claimed in the method of treatment claims new?

Central to Hospira's attack on the bone disorder patent's lack of novelty was its argument that the relevant claims of the patent were not "fairly based" on the matter disclosed in a UK patent application from which the bone disorder patent claimed priority. Justice Yates accepted that if Hospira's argument was successful, the priority date of the bone disorder patent would be deferred to a date after the publication of the ZOMETA® Product Information sheet – a prior art document which arguably disclosed all of the features of the asserted claims of the bone disorder patent.

Whilst Justice Yates refrained from expressing a concluded opinion on the issue, his Honour was satisfied that there "is a strongly arguable case"4  that the priority document contained a real and reasonably clear disclosure of the invention, such that the bone disorder patent could legitimately claim priority from the document, with the effect that the ZOMETA® Product Information sheet would not be relevant for novelty purposes.

Justice Yates was also not persuaded that, on the evidence before him, other prior art publications relied upon by Hospira anticipated the method of treatment claims in issue.

Was the invention claimed in the method of treatment claims "inventive"?

Whilst his Honour acknowledged that the present state of the evidence in relation to the question of inventive step "clearly disclose[d] a substantial legal and factual dispute between the parties which is inconclusive"5, his Honour was not persuaded that Hospira's inventive step arguments meant that Novartis' prima facie case of infringement was weak.6

The balance of convenience: other relevant considerations

Novartis argued that other considerations that should be weighed in its favour on the balance of convenience included:

  • ZOMETA® and ACLASTA® had an established position in the Australian market, whereas Hospira's oncology and osteoporosis products had not yet been launched;
  • Hospira sought to launch its products with its "eyes wide open" as to the consequences (i.e. it knew of Novartis' patent rights);
  • Novartis would suffer significant, unquantifiable and irreversible damage if Hospira entered the market, as, amongst other things, the entry would:
    • trigger a compulsory statutory and likely irreversible 16% reduction to the price of ZOMETA® and ACLASTA® and the operation of the PBS's mandatory price disclosure regime; and
    • force Novartis to further reduce the price of ZOMETA® and ACLASTA® in order to compete with the Hospira products. Any such reductions could reduce Novarts’ brand equity and would have to be disclosed to the PBS under its compulsory price disclosure regime, which could cause the PBS to irreversibly set the reimbursement price at an even lower level.

Justice Yates was of the view that these considerations outweighed those proffered by Hospira (including the loss of its "first mover advantage" and the apparent difficulties that would be experienced in connection with calculating its loss of sales), and was accordingly satisfied that "overall, the balance of convenience and justice weighed in favour of the granting of interlocutory injunctive relief".7

Interlocutory orders made against Hospira

On 12 October, Justice Yates gave effect to the above findings by making orders, which, amongst other things, prevent Hospira from taking steps to obtain listing under the PBS of any pharmaceutical products containing zoledronic acid as an active ingredient.

Notably, Hospira asked Justice Yates to make an order that would allow it to file applications for PBS listing but requiring it to withdraw it, if need be, in time to prevent the actual listing, so that it could have the benefit of a pending application should it be found at the final hearing that Novartis was not entitled to final injunctive relief.

In rejecting the proposal, Justice Yates explained that such an order would expose Novartis “to the risk of an irreversible statutory price reduction” for its own PBS listed products, which was precisely what Novartis had sought to avoid by prosecuting its application for interlocutory relief.8

Lessons for pharmaceutical patent litigants

Justice Yates’ decision illustrates the difficulties generic pharmaceutical companies face in entering a market in which a competing product has patent protection and is listed under the PBS.9 Indeed, a number of cases over the last 12 months have resulted in Australian courts holding that the likely irreversible and unquantifiable damage to the value of a PBS listed product upon the listing of a bioequivalent drug warrants steps being taken to prevent such loss until patent infringement and invalidity claims are finally heard and determined.

Sponsors seeking to launch generic or biosimilar versions of PBS listed patent-protected drugs should consider trying to “clear the way” (by, for example, seeking revocation of relevant patents) prior to taking any steps which would accord the pharmaceutical patentee with a clear and imminent threat of patent infringement, entitling it to seek interlocutory injunctive relief.