Having regard to the recent decision of Commonwealth of Australia v Sanofi (formerly Sanofi-Aventis) 2023 FCAFC 97, pharmaceutical originator patentees seeking to prevent the entry of a generic drug into the Australian market through a preliminary injunction, need to be aware that the Australian Government has a right to seek “market-size damages” from the originator patentee as the price for that preliminary injunction.
In Commonwealth of Australia v Sanofi (formerly Sanofi-Aventis) 2023 FCAFC 97, the Full Federal Court of Australia held that the Australian Government was not (in this case) entitled to compensatory damages to recover its drug subsidies paid under the Australian Pharmaceutical Benefits Scheme (PBS) to the originator patentee, when a preliminary injunction had delayed the entry of the generic drug into the Australian market.
In 2007, Sanofi was successful in the award of a preliminary injunction, preventing the generic company (Apotex) from entering the Australian market with its generic version of the clopidogrel drug. In 2009, Sanofi’s patent for Plavix® (clopidogrel) was ultimately revoked for invalidity by the Full Federal Court of Australia.
Under the PBS system, when a supplier’s generic drug is PBS listed, this triggers a variety of reductions in the extent of the PBS subsidy, including an automatic 12.5% reduction in the listed price of the drug. That is, upon the PBS listing of the generic drug, the Australian Government is obliged to pay less financial subsidy to the originator patentee.
The Australian Government was seeking to recover PBS subsidies of AU$325 million paid (plus interest) paid to Sanofi for the period between the granting of the preliminary injunction in 2007 (restraining the entry of the generic drug in the Australian market) until the invalidation in 2009 of Sanofi’s patent by the Full Federal Court of Australia.
One factor in this case, leading to the Australian Government being unsuccessful in obtaining an award of damages from the originator patentee, was that the Australian Government did not clearly establish on the evidence, that Apotex would have sought a PBS listing of its generic version of the clopidogrel drug even if the preliminary injunction had not been granted.
If Apotex did not have the intention to list on the PBS (that is, not launch its generic drug at risk) then there would have been no reduction in the PBS subsidy paid by the Australian Government to the originator patentee, and therefore no loss to recover.
This case is relevant to the price that an originator patentee must pay in order to obtain a preliminary injunction. The Australian Government (a third party affected by the grant of the preliminary injunction) may seek payment of that price by way of the usual undertaking as to damages given by the originator patentee. If the Australian Government can establish a clear intention by a generic company to list on the PBS before the granting of a preliminary injunction, then the Australian Government could be entitled to an award of damages as part of any undertaking as to damages given by an originator patentee.
Although the decision was favourable for the originator patentee, this case was factually dense with a long litigation history. Please do not hesitate to contact us at www.adriantrioli.com should you wish to discuss this decision in further detail or require any assistance protecting or enforcing your pharmaceutic patent rights in Australia or New Zealand.
Disclaimer: For general information purposes only.