In a decision handed down on 13 April 20171, Australia’s Full Federal Court has confirmed that an application for listing a pharmaceutical product on the Pharmaceutical Benefits Scheme (PBS)2 does not constitute patent infringement. In upholding an earlier decision of a single judge3, the Full Federal Court affirmed that an application for PBS listing would not be an ‘offer to supply’ within the definition of ‘exploit’ in the Patents Act 1990, and would instead be no more than a preparatory step to enable exploitation at a later time.
Background of the case
The primary case4 found that Apotex’s generic pregabalin product, manufactured overseas and imported into Australia for sale, infringed Warner-Lambert’s Australian patent to pregabalin. Furthermore, it was determined that it was not the manufacture of the product which infringed the patent, but rather the importation and sale of products made by the patented method. The primary judge found that that importation of a patented product for these purposes would ‘exploit’ the invention, as defined by Schedule 1 of the Patents Act 1990:
‘exploit’ , in relation to an invention, includes:
(a) where the invention is a product–make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or
(b) where the invention is a method or process–use the method or process or do any act mentioned in paragraph (a) in respect of a product resulting from such use.
The issue to be dealt with on appeal arose from the grant of an injunction to prevent the sale of Apotex’s generic pregabalin product. The injunction was determined not to extend to applications for PBS registration3. The key issue was whether Apotex’s proposed application to list its generic versions of LYRICA on the PBS would infringe Warner-Lambert’s patent.
In its appeal, Warner-Lambert argued that the Court failed to correctly characterise Apotex’s proposed actions as ‘an offer’ within the meaning of ‘exploit’, as defined in the Patents Act 1990. In particular, it was argued that by applying for PBS listing Apotex had entered into a statutory bargain with the Minister for Health, ultimately to sell its generic product to pharmacies and wholesalers.
Further, Warner–Lambert argued it was irrelevant that the date that the PBS registration would come into force post-dated the patent, as the offer to supply the generic product was made by Apotex in the application for PBS registration, prior to expiry of the patent. Warner-Lambert proposed that such an act should be considered as one person taking advantage of an invention, and thus the exploitation of an invention protected by an Australian patent.
Apotex successfully argued that in making an application for a product to be listed on the PBS, an applicant is required to provide a guarantee that they are able to supply the product. However, such a guarantee does not mean that the applicant is offering to supply the product, as defined in the Patents Act 1990. As such, there should be no injunction preventing Apotex from applying to register its generic pregabalin product on the PBS.
The joint decision of the Full Federal Court upheld the decision of the primary judge, finding that an ‘offer’, as defined by ‘exploit’ in the Patents Act 1990, is not confined to its ‘contractual meaning’. Rather, this ‘offer’ is an assurance to the Minister that sufficient stock will be available to third parties, once the product becomes registered on the PBS.
Therefore, the primary judgement was upheld and Warner Lambert’s appeal was dismissed.
This decision clarifies an issue relevant to many generic pharmaceutical companies and suppliers. It confirms that applying for PBS listing alone does not constitute an offer to supply a pharmaceutical product and thus should not be considered an infringement of a patent holder’s rights. By applying to list a pharmaceutical product on the PBS, an applicant is making assurances that the product will be available once registration is granted. This is not considered an offer to supply that product.
It is not yet known whether there will be a further appeal against this decision. However, an appeal to Australia’s highest court, the High Court, would require special leave of that Court to proceed.
This article was written by Benjamin Cleary.
If you have any specific enquiries about the Pharmaceutical Benefits Scheme listing decision in Australia, please contact Debra Tulloch or Paul Jones.
- Warner-Lambert Company LLC v Apotex Pty Limited  FCAFC 58
- The Pharmaceutical Benefits Scheme includes a list of government subsidised pharmaceutical products and medicines available to all current Australian residents, and is part of the Australian Government’s broader National Medicines Policy. For further information about the Pharmaceutical Benefits Scheme please refer to: http://www.pbs.gov.au/pbs/home.
- Apotex Pty Ltd v Warner-Lambert Company LLC (No 3)  FCA 94.
- Apotex Pty Ltd v Warner-Lambert Company LLC (No 2)  FCA 1238.