Sigma ordered to halt release of generic antidepressant
On 3 June 2009, Justice Sundberg granted an interlocutory injunction in the latest patent stoush between a pharmaceutical innovator and a generic pharmaceutical company. The decision in Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [1] continues the recent trend towards granting interlocutory injunctions in pharmaceutical patent cases. For a discussion of that trend, and the broad principles relevant to urgent injunctive relief, see our previous article.
The decision contains some helpful analysis of the factors relevant to the grant of an injunction, and is notably different from recent interlocutory injunction cases such as Interpharma [2] in that Sigma had not applied to list the generic drug under the Pharmaceutical Benefits Scheme, and thus avoided the consequence of the price drop and attendant complications that have proved to be important in previous cases about interlocutory injunctions.
Wyeth owns a patent for an extended release formulation of venlafaxine hydrochloride, more commonly known as Australia’s best selling antidepressant, Efexor-XR.
Sigma registered a bioequivalent product, branded Evelexa-XR, on the Australian Register of Therapeutic Goods. It launched Evelexa-XR in May 2009.
Sigma brought proceedings, seeking to have Wyeth’s patent revoked. Wyeth cross-claimed, and sought an interlocutory injunction preventing Sigma from marketing, selling or exploiting its generic Evelexa-XR drug.
Justice Sundberg considered the 3 general principles governing the grant of an interlocutory injunction:
- whether there was a serious question to be tried; whether the party applying for the injunction (Wyeth) had made out a prima facie case in the sense that if the evidence remained the same, there is a probability that at trial it will be entitled to relief;
- whether damages would be an adequate remedy; and
- whether the balance of convenience was in Wyeth’s favour.
His Honour noted that the first and third of these inquiries are related, in that the strength of the case will often be an important factor when considering the balance of convenience.
Wyeth’s prima face case
Experts gave evidence that Sigma’s own product information documents disclosed that its Evelexa-XR drug uses the method claimed in the patent. Sigma conceded that there was a serious question to be tried on infringement, and the Judge considered that Wyeth’s prima facie case was “reasonably strong”.
Justice Sundberg acknowledged that the situation is complicated where, in the patent context, the party seeking interlocutory relief alleges infringement and the alleged infringer contends that the patent is invalid. His Honour had to determine what role Sigma’s case on invalidity should play in his assessment of Wyeth’s prima facie case. Justice Sundberg adopted the position from Interpharma, where it was said that the bottom-line question is whether the patentee has a serious question to be tried, or a probability of success. Because the focus is on the patentee’s prima facie case, the alleged infringer’s case about invalidity must be “sufficiently strong” if it is to qualify the conclusion that, overall, there is a serious question to be tried.
In attacking the validity of the patent, Sigma argued that the onus was on Wyeth to show that it was entitled to a priority date before the amendment of the patent specification and claims. The Court disagreed, finding that this was part of Sigma’s case on invalidity, and Sigma bore the onus of establishing a prima facie case for a priority date other than that claimed by Wyeth. In the event, it failed to do so.
Sigma did manage to establish a prima facie case that the invention lacked the requisite inventive step, in that it would have been obvious to a person skilled in the relevant art, in light of the common general knowledge as it existed in Australia before the priority date. The judge acknowledged an expert’s opinion that the claims do not provide anything new or surprising or an advance over what was known by skilled persons at the priority date.
Sigma was also found to have established a prima facie case that the ‘invention’ was not a manner of new manufacture. The expert contended that the invention consists merely of a method of achieving a desirable outcome by administering a formulation, the known characteristics of which were known to be useful for achieving that outcome.
Justice Sundberg did not accept Sigma’s argument that the patent was bad for lack of ‘fair basis’ of the claims. Similarly, Sigma was not able to make out a prima facie case on lack of novelty.
A critical implication of the Court’s decision was that, although Sigma succeeded in making out a prima facie case on invalidity in several respects, Justice Sundberg apparently did not consider that the case on invalidity was sufficiently strong so as to displace his finding that Wyeth had made out a prima facie case, and that there was a serious question to be tried.
Irreparable Harm (Damages an inadequate remedy)
Sigma argued that the only relevant damage to be considered was that which would be suffered by the US patentee, rather than Wyeth Australia, because Wyeth Australia was only a party for the purposes of giving the usual undertaking as to damages. It also argued that the damage to Wyeth could be calculated by reference to a reduced royalty paid by a manufacturing company on the sale of Efexor-XR products to Wyeth Australia. According to Sigma, the loss of market share and other damage suffered by Wyeth Australia was not relevant.
Justice Sundberg disagreed, on the analysis that because Wyeth Australia was a wholly owned subsidiary of Wyeth, any losses it suffered would in fact flow through to the parent company. Those flow-through losses would be very difficult to quantify.
It was noted that the losses suffered by Wyeth would be even greater if other generic companies entered the market. If that occurred, the loss caused to Wyeth from Sigma’s conduct would become impossibly to quantify. The Court thought other generics could be emboldened and might enter the market if it did not grant the injunction.
The Court reviewed undertakings offered by Sigma to retain records and proceeds of its sales of the generic drug. Although those undertakings may have allowed Wyeth to quantify its lost sales, they did not address the quantum of damage that would be done to Wyeth from price erosion, assuming it would be forced to make sales at a discount from its former monopoly prices.
Justice Sundberg ultimately found that Wyeth would be likely to suffer irreparable harm, for which damages would not be adequate compensation, if no injunction was granted.
It is noteworthy that unlike many of the recent cases, Sigma had not applied for its drug to be listed under the Pharmaceutical Benefits Scheme. The first listing of a generic drug on the PBS generally gives rise to an immediate and potentially irreversible price drop for the original innovator product, and is often pointed to as a source of irreparable harm to the innovator. No doubt this was a strategic move on Sigma’s part, aimed at the argument that damages would be an adequate remedy. Here the Court still found a likelihood of irreparable harm, even in the absence of the impact on pricing from PBS listing.
Balance of Convenience
Sigma launched its product on 1 May 2009. It had not yet made any deliveries of its Evelexa-XR drug. There was no evidence it had assumed any contractual obligations to do so. Sigma was not in any way assisted by the unfortunate fact that it had apparently not become aware of the existence of the patent until March 2009.
Wyeth, on the other hand, had an established trade in its Efexor-XR drug. It was far more likely to suffer from a disturbance to the status quo.
Wyeth also pressed a public interest point about patient confusion – that vulnerable people (including those with mental health issues) should not be subject to the confusion of switching back from Sigma’s generic drug in the event that Wyeth was ultimately successful at trial.
Justice Sundberg found that the balance of convenience favoured the grant of interlocutory relief, and ordered Sigma not to market, take orders for, sell, supply, offer to supply or otherwise exploit Evelexa-XR in Australia.
Key Points
The case continues the recent trend towards granting interlocutory injunctions to stop generic drug makers from entering the market and disturbing the status quo, until it has a full trial about the patent and the generic drug. The message coming from the Federal Court in recent times has been: if you want to take on a patent, revoke first, launch later.
The judgment differs importantly from some of the other recent interlocutory injunction cases, because Sigma had not applied to list the generic drug under the PBS. Listing a bioequivalent generic under the PBS can cause a potentially irreversible drop in the price of the original drug. The innovator pharmaceutical company normally points to this as a source of irreparable damage, and petitions the court to prevent it from occurring by granting an injunction. Sigma strategically refrained from applying for listing of its anti-depressant under the PBS, but ultimately that did not stop the court injuncting it.
The decision leaves open the question of just what impact a finding that there is a prima facie case for invalidity will have. In what circumstances will the potential invalidity of the patent outweigh a reasonably strong infringement case?
Scott Sloan, Partner &Stephen Cartwright, Lawyer
For more information please contact:
Scott Sloan| Partner | T: 61 2 8233 9554
E: scott.sloan@dibbsbarker.com
Helen Kavadias | Associate | T: 61 2 8233 9567
E: helen.kavadias@dibbsbarker.com
Footnotes
- Sigma Pharmaceuticals (Australia) Pty Ltd (ACN 004 118 594) v Wyeth [2009] FCA 595.
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Interpharma Pty Ltd v Commissioner of Patents [2008] FCA 1498
