Biosimilars Deals 2021

Date: 16 February 2021
Forum: Australian Patent Office
Delegate: Kevin Restrick

Background

Under Australian law, business methods are not patent eligible because they are not considered to be a “manner of manufacture”. However, inventions that may resemble business methods, but that rely in both a technical intervention and a technical innovation to solve a problem may meet the requirements for patentability. Australian Patent Application 2018204629 (Application), in the name of Amazon Technologies, was the subject of a hearing after the Application and its parent application, failed to reach acceptance following six examination reports in which objections for manner of manufacture had been raised.

The claimed invention of the Application related to the field of computer resource virtualization and allowed various computing resources to be efficiently and securely shared by multiple customers. Prior to the hearing, the Examiner had maintained that the claimed invention did not involve any technical invention or ingenuity and that the technical aspects of the invention were achieved using generic computer functionalities.

Key Issues

In making his assessment, the Delegate carefully considered the substance of the invention based on the principles set out by the Delegate in Aristocrat Technologies Australia Pty Ltd.¹

Specifically, the Delegate focused on identifying the problem to be solved, whether said problem was technical in nature, and whether the solution relied on a technical improvement to known computing technology.

The Delegate determined that the problem sought to be overcome was the efficient use of fixed computing resources when the client has unpredictable demands. The solution lay in the computing resources provider offering a level of service for the customer with what in essence was a ‘payment plan’ or a ‘service level agreement’, where the customer was provided with a guaranteed minimum level of service as well as “burst performance” should they have accumulated sufficient resource credits from previous time periods.

When considering any technical processes involved in the solution provided, the Delegate noted that the invention was not reliant on any optimised algorithm, artificial intelligence or advanced critical path analysis function and found that there was no improvement in computing hardware or architecture.

In contrast, the applicant argued that the problem of “how to” provide the solution was actually a technical problem, and that the solution “brought together a combination of new and known elements to form a working combination that had not previously been achieved, involving the use of computers in a way foreign to their normal use”.

Outcome

The Delegate considered that the problem to be solved by the invention was something that is a “core tenet” of business, namely, avoiding underutilised assets, reinforcing the notion that the problem to be solved was a business problem. He also found that the solution was defined by established business rules.

The Delegate also considered that the applicant’s arguments with regard to the proposed technical effect of the invention would only apply in a very particular and niche situation, and he regarded most other scenarios where the invention might be applied as not achieving a useful result.

The Delegate added that on the rare occasions the useful result was achieved, this was largely dependent on a business decision being made by the customer.

As such the invention related to a business problem rather than a technical problem, and the substance of the invention amounted to “nothing more than a scheme for scheduling work and is therefore not for a manner of manufacture”. In terms of how the work was scheduled, the Delegate stated that there is “no technical innovation in how tasks are scheduled; they are scheduled based on business rules only”.

Implications

This decision is a reminder to patent applicants that it may not be sufficient to merely claim a technical effect achieved by an invention in limited scenarios, and that it is also important to establish that the problem to be solved is a technical one. While there may be cases where an invention is patentable by virtue of a business problem being solved with a technical solution,² it is preferable that both the problem and solution be technical in nature.

1. [2016] APO 49
2. See, for example, Advanced New Technologies Co., Ltd [2021] APO 29

As discussed in Part 1 of this blog series, TGA has invited submissions by 23 March 2021 on its consultation paper released last Thursday designed to facilitate indication “repurposing”.  In particular, TGA has sought submissions on the potential obstacles and incentives to “repurposing” medicines.

All of the proposals made by the TGA could have significant consequences for branded and generic/biosimilar pharmaceutical companies in Australia, which we discuss here.

The TGA proposals appear to arise from a desire not to be left behind in the global race to identify, endorse and approve medicines for the treatment of COVID-19.  TGA suggests that the problem of indication “repurposing” was recognised by the recent House of Representatives Standing Committee on Health, Age Care and Sport open inquiry into the approval processes for new drugs and novel medical technologies (HoR New Drugs Inquiry).  The HoR New Drugs Inquiry opened in August 2020 and closed in November 2020 but has not resulted in a report to date.

It is worth commenting at the outset that the Terms of Reference of the HoR New Drugs Inquiry do not appear to relate to the current TGA proposals – the focus of the former being “new drugs and emerging novel medical technologies”, whereas the latter is focussed on “indication repurposing”.  Unfortunately, the TGA proposals do not appear to be capable of achieving the outcomes sought by the TGA or the HoR New Drugs Inquiry.

Option 1 streamlined regulatory regime: resulting in delayed competition?

TGA Option 1 proposes a streamlined regulatory regime for “repurposed” medicines through initiatives such as fee relief, streamlined reimbursement evaluation, and regulatory exclusivity periods for new indications.

TGA has provided no information about how any such new indication exclusivity could work in Australia.  We are concerned that a new indication exclusivity will create an incentive for companies to delay applying for new indications, in an attempt to “stage gate” and maximise the proposed new regulatory exclusivities.  Thus, the benefit to the public in the broadened “on label” indications would appear to be subverted by the ability of the sponsor to obtain additional exclusivities, thereby delaying competition for longer.  In essence, this proposal may enable sponsors to extend their regulatory exclusivity period, and receive government assistance/support for doing so.

Importantly, Option 1 will not:

• incentivise sponsors to seek additional indications as there is no evidence that an exclusivity period on a second medical use would prevent others supplying the medicine in Australia for off-label use;
• address the larger issue of drug availability in Australia, which was the key aim of the HoR New Drugs Inquiry; or
• redress the largest cost associated with TGA registration, which arises from conducting clinical trials.

Option 2: supported access to data re AU use of medicines on and off label: TGA substantiating patent infringement under s117?

Option 2 would provide public access to AU medicines usage data, “facilitated” by TGA.  This proposal does not appear to consider the “real world” nature of such information.  Some such information is of considerable commercial value, which underpins pharma big data, the very business that TGA would depend on to source the information relating to market breakdown and use by indication.  It seems odd to suggest that TGA could engage a commercial pharma big data company to provide (on an open source basis) information about the use of medicines on and off-label in Australia.  Option 2 appears ill-conceived at best.

Alarmingly, Option 2 may hand to sponsors (apparently for free) evidence sufficient to establish infringement under s117 of the Patents Act against generic/biosimilar companies and other competitors.  Currently, detailed evidence in patent litigation is required to establish market dynamics and market information relating to off-label use in order to establish infringement under s117, but the Option 2 proposal could remove this requirement, and place in the hands of the patentee everything they need to establish infringement under s117.

Interestingly, the information the TGA would seek to make public is already known to the sponsor.  Other than exposing competitors to potential patent infringement suits under s117, this option can not affect repurposing of medicines in Australia.  Public disclosure of such information would not help a generic company or a patient advocacy group to prepare a dossier, or establish that a pharmaceutical is safe and efficacious.  Rather, it would only help a sponsor to establish a monopoly market for a patented indication of which the sponsor is already well aware.

Option 3: Pursue registration and PBAC review of supplemental indications without sponsor involvement

Option 3 appears to be directed toward allowing (non-originator and non-generic) third parties with no experience in preparing a dossier to spearhead an application for a new indication.

TGA may take this initiative itself, a mechanism it refers to as “self generated assessment”, which will result in a new indication being deemed to be approved.  In a self generated assessment, where the medicine is already “generic”, TGA proposes that any such new indication be added to generic and sponsor labels.  TGA ignores the fact that a sophisticated originator and its competitors will have patents covering all proposed and hypothetical uses of a commercially successful product.  For the TGA to suggest it will unilaterally add indications to a product label ignores the reality of the patent landscape that sits behind every potential use of every product, and may force sponsors and generics alike, into patent infringement.  To redress this, originators and generics alike may propose that the government provides a compulsory license to any patent that covers the new indication that TGA has unilaterally added to its label.  It seems incongruent for TGA to force a sponsor (generic or originator) to add an indication to its label, without providing a means to avoid exposure due to patent infringement.

One significant feature of Option 3 is that a sponsor may be “compelled” (at risk of penalty) to make an application and then “obliged” to provide evidence in support of it, all the while remaining responsible for post-market requirements (including pharmacovigilance).  It is also apparent that the sponsor which has been so “compelled” and “obliged” will remain liable for all patient wellbeing consequences of the use of that medicine for the new method of treatment that it was forced to add to the label.

Option 3 could create very significant patent infringement and product liability issues for generic and originator sponsors in Australia.

TGA proposals appear myopic

The TGA proposals appear myopic and are incapable of achieving the HoR New Drugs Inquiry’s goals.

Overall there is more in the TGA proposal for originators than generic/biosimilar companies.

Originators would benefit commercially from an extension to regulatory periods.  Originators are expected to use the TGA proposal as an opportunity to seek longer data exclusivity periods in Australia per se, including for new indications for second medical uses.

Longer data exclusivity periods will delay generic/biosimilar market entry, increasing the cost for patients and the government for longer.

Generic/biosimilar companies would see some benefit if they could take advantage of exclusivity periods for new indications.  However, in view of the extensive patent coverage of methods of treatment for medicines, which generally increases as a medicament ages, generic companies will face liability for infringement of these patents unless a compulsory license is granted commensurate with the new indication.  Without a commensurate compulsory license for method-of-treatment patents, generic companies will not be able to engage with the Options prosed by TGA.

These proposed TGA changes are unprecedented, and will – if not repurposed – have enormous consequences for all stakeholders within the pharmaceutical industry.

Under Australian law, patent infringement proceedings may be started in the Australian Federal Court only by a patentee or an exclusive licensee.[1]  When it comes to determining the identity of the patentee or exclusive licensee, the Court will look to the particulars as recorded in the Register of Patents (‘the Register’).[2] 

Therefore, if you are an exclusive licensee, but have not taken the step of recording your exclusive license on the Register through the Australian Patent Office, the Register will not reflect that you hold those exclusive licence rights.  In such a case, you may be stuck in a “No Standing” zone: without leave of the Court,[3] your licence will be inadmissible, and you will have no standing to sue. 

Although it is not mandatory to record an exclusive licence on the Register, doing so before commencing litigation to enforce a patent is strongly advisable.  The process of recording an exclusive licence is straightforward, requiring an electronic copy of the licence agreement to be submitted to the Australian Patent Office accompanied by a request for its recordal in the Register against one or more patents.

Recording your exclusive licence early, and before litigation is on the horizon, can allow you to move immediately against an infringer without being delayed or distracted by first having to update the Register.

[1] Patents Act 1990 (Cth) s 120(1).

[2] Ibid s 195(1).

[3] Ibid s 196(1).