[Ip-health] The IPKat Guest Post: Australian government fails to recoup clopidogrel costs from Sanofi

James Love james.love at keionline.org
Thu May 7 07:13:15 PDT 2020


Report on Australian efforts to discourage companies from gaming the patent
system to block generics.

Jamie

-----------------------
* The outcome of this case and the length of time (and no doubt the amount
of money) it has taken the parties to get to this point, raises some stark
questions about whether the present system for resolving pharmaceutical
patent disputes achieves the Government’s policy objectives of enabling
patents to be tested or encouraging generic market entry at the earliest
opportunity. Both this case, and the recent venlafaxine case, reinforce the
difficulty and complexity of claiming on an undertaking as to damages in a
case concerning pharmaceuticals.

* Given that interlocutory injunctions may now be harder for patent owners
to obtain and the fact there is substantial damages exposure for a generic
company wishing to enter the market, it is clear that an expedited pathway
to resolve these disputes is called for. One step down this path is to make
patent owners aware of applications for marketing authorisation of a
generic or biosimilar product much earlier, so that the inevitable
litigation can get underway. That seems the likely outcome of a current
legislative consultation, intended to become law early next year."

http://ipkitten.blogspot.com/2020/05/guestpost-australian-government-fails.html

Australian government fails to recoup clopidogrel costs from Sanofi

 Annsley Merelle Ward Thursday, May 07, 2020

In a long-awaited judgment that will affect applications in Australia for
interlocutory injunctions to restrain launch of pharmaceutical products, as
well as claims for compensation following wrongful exclusion of generic or
biosimilar pharmaceuticals from the market, the Federal Court of Australia
dismissed a claim made by the Commonwealth government for compensation from
Sanofi (Commonwealth of Australia v Sanofi (formerly Sanofi-Aventis) (No 5)
[2020] FCA 543, available here).

The AmeriKat has turned to trusty Kat friend, Matt Swinn (King & Wood
Mallesons) for a dive into this much-awaited decision and what this means
for patent owners in Australia.  Over to Matt:

"The Commonwealth sought to recover part of its expenditure on Sanofi’s
drug Plavix (clopidogrel) under the Pharmaceutical Benefits Scheme (PBS),
being the additional amount it said it paid to subsidise the cost of the
drug to patients during the period when Apotex was restrained from entering
the market with its generic version of clopidogrel. As is usual, in return
for an interlocutory restraint by the Court and pending a decision about
the validity and infringement of its patent, Sanofi was required to provide
an undertaking that it would compensate any person adversely affected by
the interlocutory injunction (interlocutory injunction decision here). The
relevant patent was upheld in part in the first instance judgment but
revoked on appeal. Special leave to appeal to the High Court of Australia
was refused.

This paved the way for claims for compensation by any person adversely
affected by operation of the interlocutory order. Apotex made a claim,
which was ultimately settled. The terms of the settlement have not been
made public save that a provision preventing Apotex from assisting any
other party in a claim was held to be unenforceable because it had a
tendency to interfere with the administration of justice.

The Commonwealth also made a claim for compensation. A threshold question
of whether certain statutory provisions in the Therapeutic Goods Act 1989
(Cth) established an exhaustive statutory code limiting the Commonwealth’s
right to recover under the undertaking given by Sanofi was referred as a
stated case directly to Full Court of the Federal Court of Australia, which
held that it did not.

In this latest decision, the Commonwealth’s claim failed because it did not
establish that:

had Apotex not been restrained, Apotex would have supplied its generic
clopidogrel products ‘at risk’ and applied to list the products on the PBS;
and

the Commonwealth’s loss flowed directly from the interlocutory injunction
granted against Apotex.

On the first point, there was insufficient evidence to establish that
Apotex would have decided to launch at risk based on the contemporaneous
records and evidence of the Australian Managing Director of Apotex. A key
factor in the Court’s assessment was that the Commonwealth did not lead any
evidence from Dr Sherman, the global CEO and Chairman of Apotex at the time
and the ultimate decision maker about whether to proceed with an at-risk
launch. As a result of this absence, the Court drew a negative inference
that Dr Sherman’s evidence would not have assisted the Commonwealth’s case.
This deficiency was not capable of being overcome by reliance on certain
email correspondence from Dr Sherman in the lead up to the hearing of the
interlocutory application. In view of the very considerable damages
exposure that an at-risk launch would create, the Court was not prepared to
infer that Dr Sherman would have authorised a PBS listing.

On the second point, the Commonwealth was a person adversely affected but
its loss did not flow directly from the order granting the interlocutory
injunction. The order only restrained Apotex from acts constituting an
exploitation of Sanofi’s patent (including importation, manufacture and
supply of the clopidogrel products) but did not in terms restrain Apotex
from applying for PBS listing for the clopidogrel products. It is the PBS
listing of the first generic that usually triggers a statutory reduction in
the government subsidised price for prescription medicines so the
Commonwealth’s claim hinged on this causative link. Although the Court
accepted that the practical effect of the interlocutory order prevented
Apotex from applying for PBS listing, the order did not directly affect the
legal rights and obligations of the Commonwealth.

The decision is the latest, and most significant, chapter in a long line of
Federal Court judgments since the introduction of the mandatory price
reduction scheme applicable when the first generic lists, under the
National Health Act (NHA) in 2007. It will impact the decision-making of
innovator and generic/biosimilar pharmaceutical companies in relation to
the launch of a generic or biosimilar product, and the decision-making of
courts in future applications for interlocutory injunctions.

The outcome of this case and the length of time (and no doubt the amount of
money) it has taken the parties to get to this point, raises some stark
questions about whether the present system for resolving pharmaceutical
patent disputes achieves the Government’s policy objectives of enabling
patents to be tested or encouraging generic market entry at the earliest
opportunity. Both this case, and the recent venlafaxine case, reinforce the
difficulty and complexity of claiming on an undertaking as to damages in a
case concerning pharmaceuticals.

Given that interlocutory injunctions may now be harder for patent owners to
obtain and the fact there is substantial damages exposure for a generic
company wishing to enter the market, it is clear that an expedited pathway
to resolve these disputes is called for. One step down this path is to make
patent owners aware of applications for marketing authorisation of a
generic or biosimilar product much earlier, so that the inevitable
litigation can get underway. That seems the likely outcome of a current
legislative consultation, intended to become law early next year."


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