Merck Sharp & Dohme Corp. v Sandoz Pty Ltd

[2021] FCA 947

Patents – validity of extension of term of patent – where two pharmaceutical substances claimed and extension based on the one with later regulatory approval

The extension of term provisions of the Patents Act 1990 (Cth), which allow for up to five-year extensions of term for claims to “pharmaceutical substances per se”, have bedevilled many a Judge.  The practical outcome of the curial interpretation of those provisions often counts in many millions of dollars for the parties and, ultimately, the public.  This case is no different. 

The object of the extension of term provisions is to allow for an extension of the monopoly to a pharmaceutical patent where there has been, as is often the case, a delay in obtaining regulatory approval from the Therapeutic Goods Administration to market (and thus exploit) the substance in Australia.  But the right only arises where the time from the filing of the patent application to the grant of first regulatory approval has been at least five years (and the extension can only be for a maximum of five years).

Merck is the owner of a patent relating to the treatment or prevention of diabetes which it applied for on 5 July 2002 (the date of the patent).  The patent discloses and claims two separate pharmaceutical substances: sitagliptin, alone; and sitagliptin in combination with metformin. 

Sitagliptin, sold under the brand name Januvia, is an anti-diabetic medication used to treat type two diabetes.  Sitagliptin in combination with metformin is sold under the brand Janumet.  In Australia, Januvia was first given regulatory marketing approval and entered in the Australian Register of Therapeutic Goods on 16 November 2006 and Janumet was first given that approval on 27 November 2008.  Worldwide, they have reportedly earned Merck between US$5.3 and US$6.1 billion.  We assume that the monopoly over their exploitation in Australia is of considerable benefit to Merck.

Without delving into the complexities of her Honour’s statutory construction, Jagot J concluded that, where a patent claims more than one pharmaceutical substance, pursuant to section 77(1) of the Patents Act, the calculation of the extension of term is made by reference to the first regulatory approval of any of those substances being made, which may not necessarily be the date of regulatory approval of the pharmaceutical substance which the patentee nominated in its request for an extension of term, or which satisfied section 70(3) of the Act. 

Accordingly, while Merck had properly made its application for an extension of term pursuant to section 71 based on Janumet, the Commissioner of Patents had incorrectly calculated the extension of term to Merck’s Patent pursuant to section 77 based on Janumet rather than Januvia.  Justice Jagot ordered, pursuant to section 196 of the Act, that the Register of Patents be rectified to record the calculation of the extension of term as zero. 

Justice Jagot observed, with apparent approval, Sandoz’s contention that, if the result were otherwise, Merck would have received “a monopoly over sitagliptin for more than 20 years in circumstances where it never suffered an unacceptable delay in its capacity to exploit sitagliptin”: [87].  This is because an extension is granted in relation to the patent, not any particular claim or any particular pharmaceutical substance falling within the patent.  However, on the other side of the coin, we note that Merck has lost the ability to extend the monopoly of its patent claims to the combination pharmaceutical substance for which apparently it did suffer a delay in obtaining regulatory approval. 

One statutory solution to this tension would be to amend the Patents Act to allow for extensions of term for each pharmaceutical substance claimed, but to calculate the extension and limit the exclusive rights to the corresponding claims for each pharmaceutical substance.  A problem akin to this is already addressed by section 78(b) of the Act which provides that the exclusive rights of the patentee of a patent, which has had its term extended, are only infringed by a person exploiting “a pharmaceutical substance per se that … in substance falls within the scope of the claim or claims of that specification”.  This means that claims in the same patent to, for example, methods of treatment using the pharmaceutical substance cannot be infringed during the extension of term because they are not to the pharmaceutical substance per se.  A suitable amendment to section 78 might further provide that only the claims to the pharmaceutical substance that supported the relevant extension of term might be infringed during the extension.

We consider one way Merck might have avoided this problem would have been for it to have divided out or applied for a different patent for each potential pharmaceutical substance claimed (if that is possible).  Indeed, that solution might  still be available by way of seeking an extension of time within which to file such a divisional application and then file a patent extension term application based on Janumet.  Given the Lundbeck saga, one should not rule that possibility out emphatically and, while the route may be tortuous, given the money involved, it must be on the cards.

The decision is under appeal.

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