Approximately 90% of new pharmaceutical substances in phase I clinical trials do not gain marketing approval.
The market entry cost for those that do is estimated to be between US $1-3 billion. A patentee gains no or little return on this investment until marketing approval is achieved, and delays reduce the effective patent term.
It is easy to see why patent term extension (PTE) is so important to companies developing and commercialising new pharmaceutical substances. The recent decision of a Delegate of the Commissioner of Patents, Ono Pharmaceutical Co., Ltd. et al [2020] APO 43 (Ono, available here), concerns PTE.
PTEs: what and why?
In Australia, PTEs aim to compensate a patentee for the delay between filing a patent application covering a pharmaceutical substance and receiving regulatory approval for marketing that pharmaceutical substance, i.e. when the pharmaceutical substance is included on the Australian Register of Therapeutic Goods (ARTG). PTE aims to provide an effective patent term that is approximately in line with that available in other fields of technology. In Australia, an effective patent term is estimated to be 15 years. PTE achieves this by extending the patent term by up to 5 years, thereby improving the return on investment. Importantly, as the delegate notes in Ono, PTEs are intended to encourage the development of new pharmaceutical substances.
Ono is not new law. Instead, Ono confirms precedent set by G. D. Searle [2008] APO 31 (Searle), an earlier decision by a Delegate of the Commissioner of Patents, and is consistent with Pfizer Corp v Commissioner of Patents (No 2) [2006] FCA 1176 (Pfizer). Ono and Searle considered a single patent covering two pharmaceutical substances, each falling within the scope of the claims but each having a different ARTG inclusion date, and which was the correct date for calculating PTE. Because the two pharmaceutical substances are covered by the same patent, the patent application filing date is the same. However, the ARTG inclusion dates were different. Therefore, the PTE calculated based on the later ARTG inclusion date would provide a longer patent term, which would be to Ono’s benefit.
Broader is not always better
In refusing the PTE request, at [45], the delegate concluded that:
As such, the application for an extension of term does not comply with requirements as the extension request, relying as it does on [the later regulatory approval], has not been made on the basis of the good on the ARTG with the first regulatory approval date…that falls within the scope of claim 3 of the patent…
In other words, the PTE must be requested and calculated based on the earliest pharmaceutical substance included on the ARTG and falling within the scope of the claims. Ono’s PTE application based on the pharmaceutical substance with the later ARTG inclusion date was refused because it did not satisfy this requirement.
Although not the focus of this article, it is important to note, as the delegate did at [31]-[33], that the PTE scheme makes no distinction as to the owner or sponsor of a pharmaceutical substance with the earliest inclusion on the ARTG. The earliest inclusion on the ARTG falling within the scope of the claims of the patent may be that of the patentee or of a third party.
Many patentees (and their patent attorneys) may have found Ono’s argument attractive. However, Ono’s arguments focussed on PTE policy in relation to the patentee, whereas the delegate viewed the balance of PTE policy between public and patentee benefits. Accordingly, the delegate focussed on PTE policy applying to new pharmaceutical substances being made to the public, irrespective of their source, while the narrower version proposed by Ono focussed on new pharmaceutical substances made by the patentee.
It is worth noting that the patent in question is a divisional patent. Its parent patent had PTE granted, because its claims only covered one pharmaceutical substance. Accordingly, the patentee has obtained some compensation for the delay in bringing its pharmaceutical substance to market.
Ono has appealed the delegate’s decision to the Federal Court of Australia to be heard by Beach J, and it will be interesting to see how the court interprets this aspect of PTE legislation. However, given the existing guidance of Pfizer, it seems unlikely that the appeal will succeed.
Key considerations
Ono reinforces several principles patentees should take into account when seeking patent coverage for pharmaceutical substances, including:
- PTE should be considered during examination, and certainly before the deadline for filing a divisional application
- advise your patent attorney as soon as possible when a patent covers a commercial embodiment of a pharmaceutical substance
- claim separate commercial embodiments of the patentee’s pharmaceutical substance in separate divisional applications
- where claims capture a third party, potentially competitor, commercial embodiment of a pharmaceutical substance, be aware that any PTE will be calculated from the earliest marketing approval date irrespective of the owner/sponsor
- if unintentional, it may be possible to narrow the scope of the claims
- if intentional, accept that any PTE may be shorter than that based on a claim covering only the patentee’s commercial embodiment of a pharmaceutical substance
- if possible, keep a divisional application pending
