The TGA’s early notice scheme for patentees: not yet safe or effective

Earlier this year, we reported on proposals by Australia’s Therapeutic Goods Administration (TGA) to: 

• release certain information about applications for the registration of new medicines shortly after preliminary assessment; and 
  
  
• require generic or biosimilar pharmaceutical companies to notify innovator companies when making applications to register generic or biosimilar pharmaceutical products.

On 9 October 2020, the TGA announced that the Federal Government has given approval for both measures to be implemented. The first measure (publication of new medicines) will commence from January 2021. Legislative changes to implement the second measure (the notice scheme for generic / biosimilar companies) will be introduced to Parliament in “late 2020”. The TGA has previously indicated that the second measure would be implemented in “early 2021”.

However the second measure has changed substantially from the version proposed by the TGA earlier this year. While the TGA’s revised proposal will provide patentees with early notice of applications for first generic or biosimilar products, the proposal does not provide innovators or generic / biosimilar companies with commercial certainty, and is unlikely to meet the needs of either side.

The TGA’s consultation process

Following an initial period of consultation early in 2019, in April 2020 the TGA released an outline of proposed measures for earlier notification of medicine applications and sought feedback on the two proposed options relating to the second measure by June 2020. The proposed measures were as follows:

Measure 1. The TGA will publish details of applications for new prescription medicines and new indications for existing medicines which have been accepted for evaluation within one month of those applications being preliminarily accepted; and

Measure 2:. The TGA implement one of the following options for notification of applications to register a generic or biosimilar medicine:

• Option 1 – a requirement that where the generic or biosimilar applicant proposes to rely on evidence or information submitted by an innovator in relation to an application for a medicine claimed by an extant patent, it confidentially notify the patentee that its application has passed preliminary assessment; or
  
  
• Option 2 – a requirement that the a generic or biosimilar applicant notify an innovator that its application has passed preliminary assessment where it proposes to use that innovator’s information in support of its application, in all circumstances and regardless of whether a patent is in force.

The approach adopted by the TGA

Surprisingly, on 9 October 2020, the TGA announced that neither of the proposed Options 1 and 2 for notification to innovators on which it had sought further comment would be adopted as Measure 2.

Instead, the TGA intends to implement a requirement that only the first applicant for a generic or biosimilar will need to notify the patentee of a relevant patent when their application is accepted by the TGA. All other applications by subsequent generic / biosimilar applicants will be subject to the notification scheme, whereby the generic or biosimilar applicant certifies to the TGA that it believes on reasonable grounds it will not infringe a valid patent (or less usually that a patent has been granted and the applicant proposes to market the therapeutic good before the end of the term of the patent).

The TGA has explained:

“This change is intended to provide greater opportunity for early negotiation and resolution of disputes on potential patent infringements and invalidity before inclusion of generic and biosimilar medicines on the Pharmaceutic Benefits Scheme (PBS). It should reduce the need for protracted and costly litigation.”

The PBS listing of a first generic or biosimilar product triggers an automatic 25% reduction in the price at which the medicine (including the patentee’s reference product) is reimbursed. This ‘price drop’ has been recognised by the Federal Court as a significant consideration in favour of granting interlocutory injunctions to restrain the launch of first generic / biosimilar products. While it appears that the TGA is seeking to ensure that patentees have early notice of applications for products that would trigger a PBS price drop, it appears that the notice requirement extends to all first generic / biosimilar products even if the price drop would not be triggered (e.g. because the product is not PBS-listed or the price drop has been triggered for the class of medicines more generally).

Mixed views

The TGA has not published any of the submissions from this second round of consultation. It has acknowledged that it received 22 submissions and indicated that ‘views were mixed regarding earlier notification of generic / biosimilar medicine applications to the innovator’.

This is unsurprising given it represents a significant change for patentees as well as generic pharmaceutical companies. Patentees will have earlier notice of potential generic launch events and will need to act fast in order to avoid the risk of losing the ability to obtain an interlocutory injunction to prevent a launch. Generic / biosimilar companies will need to carefully consider their obligation to notify patentees and be prepared to respond to demands from patentees for assurances as to the timing of any launch and information about the proposed product.

Implications

According to the TGA, this new approach will ‘provide greater opportunity for early negotiation and resolution of disputes on potential patent infringements and invalidity before inclusion of generic and biosimilar medicines on the Pharmaceutic Benefits Scheme (PBS)'.  

While the new approach will shift the starting line for pharmaceutical patent disputes earlier in some cases and provide an opportunity for some disputes to be resolved, it is unlikely to meet the needs of innovator or generic / biosimilar companies.

First, the TGA’s proposed approach does not provide transparency as to which patents are relevant to particular therapeutic products (as does the ‘Orange Book’ system used in the US). This leaves some uncertainty for both patentees and generic / biosimilar companies with respect to the operation of the notice scheme.

Secondly, the limited application of the notice scheme to first generic / biosimilar applicants will not avoid a considerable number of interlocutory injunction disputes. For example, in circumstances where a first generic applicant gives notice and then consents to an interlocutory injunction or where there is an ‘authorised’ (i.e. licensed) generic product on the Australian Register of Therapeutic Goods (ARTG), the patentee will only receive notice of a second generic / biosimilar product upon listing. In those scenarios, the innovator will need to move quickly for an interlocutory injunction (in the usual way) and the parties and the Court will continue to be faced with familiar risks that are associated with that course.

Unfortunately, the TGA’s proposal does not provide the necessary certainty for either innovator or generic / biosimilar companies. Further, it remains unclear whether the changes will apply to existing applications or only new applications when it is introduced.

We will continue to monitor the TGA’s proposal and provide a further update when the proposed legislative changes are introduced to Parliament.