Discovering the boundaries of discovery – Otsuka denied additional application

Date: 27 April 2021
Court:  Federal Court of Australia
Judge: Yates J

Background

In March 2012, Otsuka Pharmaceutical Co., Ltd and Bristol Myer Squibb Company (together Otsuka/BMS) were granted an interlocutory injunction preventing Generic Health Pty Ltd (GH) from entering the market with generic aripiprazole products for treating schizophrenia. As a condition of the injunction, Otsuka/ BMS were required to give the usual ‘undertaking as to damages’, that they would meet any damages suffered as a result of the injunction, if GH were ultimately found not to be infringing a valid claim. GH had originally applied to have its aripiprazole products listed on the Pharmaceutical Benefits Scheme (PBS) with effect from 1 April 2012, but withdrew its application as a result of the injunction. In June 2015, the Federal Court found the claims of the relevant patent invalid and revoked them,¹ and the invalidity findings were upheld by the Full Court.²

In mid-2017 and following the appeal decision, GH filed a claim for damages suffered as a result of the injunction, and specifically, its inability to obtain PBS listing of, or sell, its aripiprazole products. In mid- 2018, the Commonwealth also filed an application for compensation in the order of $110 million for losses arising from the delay of the automatic price drop that entry of GH’s PBS-listed aripiprazole products would have triggered, had GH not been injuncted.

Key Issues

This decision concerns an application for discovery of documents from the Commonwealth which Otsuka/ BMS claimed were relevant to the question of whether GH would have launched its products, had the injunction not been granted. A first set of discovery orders against the Commonwealth was made in September 2019 and related to documents relevant to (i) whether GH had really intended to maintain its application to list aripiprazole products on the PBS, and (ii) whether GH’s possible inability to supply aripiprazole products on the PBS listing date would have stopped the Government from approving its listing. This discovery over a period of many months had already come at a cost to the Commonwealth of over 1,300 personnel hours.

In its second discovery application, Otsuka/BMS sought to expand the categories of discovery to, among other things, documents evidencing the Government’s approach when any supplier of a PBS-listed product triggering a price drop was unable to supply its product on the day of PBS listing, and information about the PBS expenditure effect of entry into the market of any non-aripiprazole treatments for schizophrenia.

Outcome

Yates J refused to make orders for all additional discovery categories sought.

In the first instance, his Honour observed that Otsuka/ BMS should have requested the broader discovery categories in its initial application, to avoid overlap, costs and delays in the Commonwealth locating and producing relevant documents. Additionally, his Honour pointed to the several sets of discovery orders that were in force against GH, noting that some of the documents now requested by Otsuka/BMS from the Commonwealth would also be covered by those orders. His Honour took a dim view of the relevance of discovery in relation to the activities and behaviours of third parties, and also noted that Otsuka/BMS had failed to lay a factual foundation for the claim that market entry of other products indicated for treatment of schizophrenia would affect PBS expenditure on aripiprazole.

Implications

This ruling is a reminder of the importance of considering the breadth of a request for discovery as early as possible in proceedings, and certainly at the time that a first discovery request is made.

More generally, Otsuka/BMS’ broad-ranging discovery requests are indicative of the intense scrutiny in previous damages inquiries of the likely commercial motivations and risk appetite of generic companies when faced with the prospect of launching a product ‘at risk’ (that is, in circumstances where damages will be payable if they are found to be infringing a patent), such as Commonwealth v Sanofi (No 5).³ It remains to be seen whether the discovery obtained in this case will help show that GH would not have launched, even if no injunction had been granted.

1. [2015] FCA 634
2. [2016] FCAFC 111
3. [2020] FCA 543