Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd

Federal Court of Australia|2013-04-04|Before: Jagot J

The parties are to file and serve proposed orders reflecting these reasons for judgment within seven days of the date of these orders.
The proceeding is to be listed on a date not less than seven days thereafter such date being determined in consultation with the parties. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 236 of 2012

ISSUES IN DISPUTE 1 This matter involves a patent for a pharmaceutical combination of ethinylestradiol and drospirenone (or DRSP) for use as a contraceptive, being Australian Patent No 780330 (the patent). 2 The applicants, who have the benefit of the patent and supply oral contraceptive products under the brand names Yasmin and Yaz in Australia, contend that the respondents' oral contraceptive product sold under the name Isabelle in Australia since February 2012, infringes the patent. The applicants seek injunctions restraining the infringement and damages. The respondents contend that the patent should be revoked on three grounds - lack of an inventive step, lack of a manner of manufacture, and that the claims in issue, being claims 3 and 11, are not fairly based on the specification.

GLOSSARY 3 The parties helpfully provided an agreed glossary of key terms used in the evidence and adopted for the purpose of these reasons for judgment. Those terms and their meanings are set out below: Absolute bioavailability A term used to compare the bioavailability of a test formulation by a specific route of administration to that of the drug when administered intravenously, i.e. when there is no barrier to absorption. Absolute bioavailability measures the amount of the drug that is absorbed into the systemic circulation and assesses the effect of the route of administration on drug absorption. Acid Labile API An API that is subject to chemical degradation in acidic conditions to some degree or other, also referred to as "acid sensitivity." Acidity is relative, for example a pH of 5 is less acidic than a pH of 1. Active Pharmaceutical Ingredient ("API") A substance in a drug formulation that is biologically active. Aulton Pharmaceutics: The Science of Dosage Form Design, Michael E. A, Edinburgh (1988). Binder A binder (such as PVP) is an excipient that is the "glue" that holds the constituent powders together to form granules and ensures that a tablet remains intact until swallowed. Bioavailability The extent and the rate of absorption of a drug into the blood stream. Bioequivalence study Comparison of the plasma concentration and time profiles of two formulations normally conducted in humans. Blister pack A form of packaging in which unit doses are enclosed inside a blister or bubble formed between two layers of packaging material. The two layers may or may not be the same composition. Bulkers or bulking agents An excipient designed to give a tablet "bulk" (also known as fillers) (e.g. microcrystalline cellulose and lactose NF). Buffering agent An excipient added to stabilise pH in the local environment of the tablet including sodium bicarbonate, sodium citrate and disodium hydrogen phosphate. C-17 epimerisation The inversion of the stereochemical configuration at the C17 position of a molecule without any change to other parts of the molecule. Capsule Capsules contain powders or solutions which are encapsulated by a polymer shell, usually gelatin. Capsules can be hard gelatin capsules which are used to encapsulate powders or soft gelatin capsules which can be used to encapsulate solutions and suspensions of drugs. Carrier A synonym for "excipient", sometimes specifically a bulking agent. Cmax The maximum plasma concentration of a drug after the onset of drug absorption. Coating excipients The purpose of the coating is partially cosmetic/aesthetic and can also be used to improve the friability (robustness) of a pharmaceutical product (see also: Enteric coatings). Daily dosage unit The term daily dosage units mean that one dosage unit should be administered daily, i.e. the frequency of dosage of the particular API (s) is once per day. Delayed release preparation or dosage form The most common example of which is enteric coated preparations which are formulated so that the API is not released in the stomach. Digoxin A drug used to treat various heart conditions that is practically insoluble in water. Dihydrospirorenone Or 1,2-dihydrospirorenone, a synonym for drospirenone. Direct compression A method of tablet preparation whereby tablets are prepared by compression of dry mixtures in a tableting machine. Disintegrant An excipient that promotes breakup of tablets when placed in an aqueous environment. Dissolution rate The rate that a drug dissolves in solution (either the API or the finished product). Dissolution test A test that measures the rate of dissolution of a drug under a standard set of equipment and conditions, such as in the United States Pharmacopeia (USP). Dosage form The pharmaceutical form in which an active pharmaceutical ingredient is presented in a suitable form for therapeutic administration, such as a tablet or cream. DRSP Means drospirenone. Dry granulation Also known as "slugging", involves the compression of a mixture into large and crude tablets that are subsequently ground (milled) into granules of a suitable size range for compression or where the mixture is squeezed between rollers to form a friable sheet that is milled into granules of a suitable size range for compression. Elimination phase The time period beyond Cmax during which a drug is eliminated through the processes of metabolism and excretion. Enteric Coating An acid resistant tablet coating designed to delay the release of the API in a tablet until the formulation passes from the acidic environment of the stomach to the less acidic environment of the small intestine. Enteric coats are used to protect an acid labile API, or if the API is an irritant to the gastric mucosa. Epimer The molecular product of epimerisation. Epimerisation The inversion of the stereochemistry of one sterically defined carbon atom centre in a molecule that contains more than one such centre. Erythromycin An acid labile macrolide antibiotic. Estrogen A type of steroidal endogenous hormone. Ethinylestradiol (EE) An estrogen commonly used in combined oral contraceptives. Excipient A non-active ingredient in a pharmaceutical product (also called adjuvants). Extended Release preparation or dosage form Prolonged or extended release preparations are designed so that release of the API is prolonged and is not immediate. Formulation The list of ingredients used in the manufacture of a dosage form and a statement of the quantity of each ingredient in a defined weight, volume, unit or batch. Formulator A member of the R&D team. GAST American Home Products Patent WO 98/04269. Gastric Residence Time The amount of time that contents (e.g. a drug) resides in the stomach. Gastrointestinal permeability The ability of an API to cross the human gut wall to be absorbed. Also referred to in shorthand as 'permeability'. Gastrointestinal tract ("GI Tract") The human GI tract comprises the oesophagus, stomach, duodenum, jejunum, small intestine, transverse colon, large intestine or colon, ascending colon, ileum and descending colon. Gestagen A hormone with progestational activity (see: progestogen, below). Granulation A method of tablet preparation in which an API is combined with other ingredients to form granules (relatively large particles) that have a diameter in the order of millimetres. High Performance Liquid Chromatography ("HPLC") HPLC is a process used to separate, identify and quantify individual compounds in a sample. Immediate release preparation or dosage form A dosage form which is designed to release an API upon ingestion with no means of slowing or delaying release and with minimum delay after ingestion. In vitro tests Pharmaceutical tests performed in a laboratory test tube as opposed to in a living body. In vivo tests Pharmaceutical tests performed in a living body, including animals. Individually removable A packaging system such that every dosage form or pharmaceutical preparation is able to be removed from the packaging individually without affecting the remainder of the dosage units or preparations in the packaging system. Isomer Each of two or more compounds with the same chemical formula but a different structural formula (i.e. spatial arrangement of atoms in the molecule). Isomerization Is the reaction by which a molecule changes into its isomer. Krause I Krause W & Jakobs U "Determination of plasma levels of spirorenone, a new aldosterone antagonist, and one of its metabolites by High Performance Liquid Chromatography (1982) 230(1) J Chromatog 37-45. Krause II Krause W & Kuhne G "Isolation & Identification of spirorenone metabolites from the monkey (Macaca fascicularis) (1982) 40(1) Steroids 81-90. Krause III Krause W et al., "Pharmacokinetics of a new aldosterone antagonist, spirorenone, in healthy volunteers after single and repeated daily doses" (1983) 25(2) European Journal of Clinical Pharmacology 231-236. Krause IV Krause W et al., "Determination of canrenone, the major metabolite of spironolactone, in plasma and urine by High Performance Liquid Chromatography" (1983) 277 J Chromatog 191-199. Low dose formulation A low dose formulation is generally understood to be a formulation with less than around 5mg of API. Lubricant An excipient which is designed to prevent the formulation from sticking to the tableting tool on compression during manufacture. Macrocrystalline A term used to describe an API that is in a crystalline form but is not microcrystalline. Micronization The process of reducing the particle size of a drug substance (API) providing a much higher surface area for dissolution. MIMS The MIMS annual published June 1999. Exhibit J in the proceedings. Naltrexone An opioid receptor antagonist used primarily in the management of alcohol dependence. New Chemical Entity A molecule that has not yet been marketed as a medicine. Nickisch Nickish et al., "Acid-catalysed rearrangements of 15Β, 16Β-methylene-17Α-pregnene-21, 17 carbolactone derivatives" (1986) 27(45) Tetrahedron Letters 5463-5466. Exhibit N in the proceedings. Oelkers 1991 Oelkers et al., "Dihydrospirorenone, a new progestogen with antimineralocorticoid activity: effects on ovulation, electrolyte excretion and the renin-aldosterone system in normal women" (1991) 78(4) Journal of Endocrinology and Metabolism 837-842. Oelkers 1995 Oelkers et al., "Effects of a new oral contraceptive containing an antimineralocorticoid, progestogen, drospirenone, on the _ennin-aldosterone system, body weight, blood pressure, glucose intolerance and liquid metabolism" (1995) 80(6) Journal of Endocrinology and Metabolism 1816-1821. Oral dosage form An oral dosage form is designed to be administered to the patient via the mouth including tablets, capsules, pills, solutions, suspensions and emulsions. Oral contraceptive Abbreviated to "OC". pH pH measures the acidity and basicity of a solution. The lower the pH value, the more acidic it is, the higher the pH value, the more basic (or "alkaline") it is. A pH value of 7 indicates a neutral solution (neither acid nor base). Pharmaceutical composition Is composed of an API and excipients. Pharmaceutical development The whole development process for a new medicine beginning with fundamental research and leading to a marketed product. Pharmaceutical development studies Studies carried out during the pharmaceutical development process including studies of the physicochemical properties of an API, assay development, stability of the API and of compressed tablets of varying formulations, compatibility of the API with common tablet excipients, powder flow and compression properties, and dissolution rate of test formulations (see also: preformulation studies, below). Pharmacodynamic studies Studies using clinical markers to assess the clinical effectiveness of a formulation. Volunteers are often administered with the formulation at different dosage levels, starting at the lowest and increasing towards the highest dose in the target range to assess the minimum dose required for clinical effectiveness. Pharmacokinetics The study of the rate of the processes involved in absorption, metabolism, distribution and excretion of a drug. Phase I clinical trials Trials involving a small number of healthy volunteers (usually between 5 and 15 individuals) and include pharmacodynamic studies (defined above) and pharmacokinetic studies. Phase II clinical trials Studies in which a formulation is administered to a large group of patients (typically several hundred patients) to determine whether the drug has a therapeutic effect against the targeted indication, at what dosage levels and tolerance to the medication (determining side-effects). Phase III clinical trials Studies in which a formulation is administered to a large population of patients (typically several thousand patients) to establish the safety of the drug and also the efficacy against existing medicines (if available). Phase IV clinical trials Trials conducted after a product is approved and on the market to determine long-term risks, benefits and optimal use, or to test the product in different populations (such as children). Physicochemical properties The physical and chemical properties of an API including:  solubility in water;  stability under the influence of moisture, acid, base light and heat;  crystalinity; and  lipophillicity(ability to dissolve in fats and oils) Pibrant Pilbrant A. and Cederberg C., "Development of an oral formulation of omeprazole", (1985) 20(108) Scandanvian Journal of Gastroentorology 113-120. Polymorph The same chemical compound can often arrange itself into a different crystalline form or "polymorph" resulting in different properties. For example, depending on its structure, pure carbon can exist as graphite or diamond. Complex organic molecules can also exist in different crystal forms which give them different properties, including solubility. The fact that drugs can exist in different crystalline forms with different properties means that one cannot definitively predict the properties of a drug from its chemical structure. Preformulation The stage of drug development during which the physical pharmacist characterises the physico-chemical properties of the drug substance in question which are considered important in the formulation of a stable, effective and safe dosage form. Such parameters as crystal size and shape, pH solubility profile, pH stability profile, polymorphism, partitioning effect, drug permeability and dissolution behaviour are evaluated. During this evaluation possible interactions with various inert ingredients intended for use in the final dosage form are also considered. Preformulation studies A series of standard in vitro tests designed to provide a comprehensive understanding of the physical and chemical properties of a drug. Progestogens A group of steroid hormones which includes drospirenone. Also known as gestagens. Progesterone A steroid hormone involved in the female menstrual cycle. Relative bioavailability Where the bioavailability of a test formulation is compared to another formulation of the same dose and route of administration of the drug using AUC values. Remington The Science and Practice of Pharmacy, 20th Edition (2000). Residence Time See: Gastric Residence Time. Solubility An intrinsic property of a drug that reflects how much of the drug can dissolve in a given volume of liquid under given conditions (such as temperature). Spraying In order to achieve suitable homogeneity in formulations where the drug is a small proportion of the total weight of the solid dosage form, the drug can be sprayed onto an inert carrier or filler. Spironolactone (SPR) Spironolactone is a potassium-sparing diuretic and an aldosterone antagonist. Spirorenone Spirorenone is an aldosterone antagonist with more than 5 times the potency of spironolactone. It metabolises to form drospirenone. Surfactants, use of A surfactant and other polymers may be used in a pharmaceutical formulation to improve the dissolution of a poorly soluble drug. These additives aid in "wetting" the drug surface by the gastro-intestinal fluid, so that there is more surface area available for dissolution. Tablet A tablet is a solid dosage form manufactured by compression or moulding. Tmax The time taken for a drug to reach Cmax (the time to maximum concentration) USP United States Pharmacopoeia.

THE PATENT 4 Relevant parts of the patent, referred to throughout these reasons for judgment, include the following: FIELD OF THE INVENTION The present invention relates to a pharmaceutical composition comprising drospirenone and ethinylestradiol, a method of providing dissolution of drospirenone, methods of inhibiting ovulation by administration of drospirenone and the use of drospirenone and ethinylestradiol for inhibiting ovulation. … …(drospirenone) is known from DE 26 52 761 in which its use as a diuretic compound is disclosed. In DE 30 22 337, the gestagen-like activity of the compound and its consequent utility as a contraceptive agent is described at dosage levels of 0.5-50 mg of drospirenone per day. It is also noted that the mechanism of action of the compound is very similar to that of the natural corpus luteum hormone progesterone, and that it does not give rise to increased blood pressure for which reason it may be administrated to women who have or are at risk of developing increased blood pressure. It is further described that drospirenone may be administered together with ethinylestradiol in amount of 0.03-0.05 mg per day. DE 30 51 166 discloses the use of the drospirenone for the treatment of gynaecological irregularities and for contraception at a dosage level of 0.5-50 mg per day. EP 398 460 discloses the use of drospirenone for the treatment of androgen-induced disorders, aldosterone-induced disorders and hormonal irregularities as well as for contraception at dosage levels of 0.5-50 mg, preferably 1-10 mg per day. Ethinylestradiol may be co-administered at a level of 0.02-0.04 mg per day. US 5,756,490 discloses pharmaceutical combination preparations comprising 23 or 24 dosage units containing a combination of a gestagen and an estrogen and 4-10 dosage units containing estrogen alone. Drospirenone is mentioned as a possible, but not preferred, gestagenic compound and ethinylestradiol is mentioned as a possible, but not preferred, estrogenic compound. Any discussion of documents, acts, materials, devices, articles or the like which has been included in the present specification is solely for the purpose of providing a context for the present invention. It is not to be taken as an admission that any or all of these matters form part of the prior art base or were common general knowledge in the field relevant to the present invention as it existed in Australia before the priority date of each claim of this application. SUMMARY OF THE INVENTION In the course of research leading to the present invention, it has surprisingly been found that a hitherto undisclosed minimum dosage level of drospirenone is required for reliable contraceptive activity. Similarly, a preferred maximum dosage has been identified at which unpleasant side effects, in particular excessive diuresis, may substantially be avoided. Accordingly, in a first aspect, the present invention relates to a pharmaceutical composition comprising, as a first active agent, … (drospirenone) in an amount corresponding to a daily dosage, on administration of the composition, of from about 2 mg to about 4 mg, and, as a second active agent. … (ethinylestradiol) in an amount corresponding to a daily dosage of from about 0.01 mg to about 0.05 mg, together with one or more pharmaceutically acceptable carriers or excipients. Apart form the active substances themselves, it is envisaged that an ester or prodrug of drospirenone may be employed in the present composition, e.g. an oxyiminopregnane carbolactone as disclosed in WO 98/24801. Likewise, it is envisaged that esters or ethers of ethinylestradiol may be included in the composition. In a further aspect, the invention relates to a method of inhibiting ovulation in a mammal, in particular a human, comprising administering, to said mammal, drospirenone in an amount in the range of from about 2 mg to about 4 mg of per day, together with ethinylestradiol in an amount of from about 0.01 mg to about 0.05 mg per day, said amounts being effective to inhibit ovulation in said mammal. In a still further aspect, the invention relates to the use of drospirenone combined with ethinylestradiol for preparing a pharmaceutical preparation for the inhibition of ovulation in a mammal, in particular a human, the composition comprising an amount of drospirenone corresponding to a daily dosage, on administration of the composition, of from about 2 mg to about 4 mg, and comprising an amount of ethinylestradiol corresponding to a daily dosage, on administration of the composition, of from about 0.01 to about 0.05 mg. Throughout this specification the word "comprise", or variations such as "comprises" or "comprising", will be understood to imply the inclusion of a stated element, integer or step, or group of elements, integers or steps, but not the exclusion of any other element, integer or step, or group of elements, integers or steps. … DETAILED DISCLOSURE OF THE INVENTION Drospirenone, which may be prepared substantially as described in, e.g., US 4, 129, 564 or WO 98/06738, is a sparingly soluble substance in water and aqueous buffers at various pH values. Furthermore, drospirenone is rearranged to an inactive isomer under acid conditions and hydrolysed under alkaline conditions. To ensure good bioavailability of the compound, it is therefore advantageously provided in a form that promotes rapid dissolution thereof. It has surprisingly been found that when drospirenone is provided in micronized form (so that particles of the active substance have a surface area of more than 10,000 cm2/g, and the following particle size distribution as determined under the microscope: not more than 2 particles in a given batch with a diameter of more than 30 µm, and preferably ≤ 20 particles with a diameter of ≥ 10 µm and ≤ 30 µm) in a pharmaceutical composition, rapid dissolution of the active compound from the composition occurs in vitro ("rapid dissolution" is defined as the dissolution of at least 70% over about 30 minutes, in particular at least 80% over about 20 minutes, of drospirenone from a tablet preparation containing 3 mg of drospirenone in 900 ml of water at 37ºC determined by the USP XXIII Paddle Method using a USP dissolution test apparatus 2 at 50 rpm). Instead of providing the drospirenone in micronized form, it is possible to dissolve it in a suitable solvent, e.g. methanol or ethyl acetate, and spray it onto the surface of inert carrier particles followed by incorporation of the particles containing drospirenone on their surface in the composition. Without wishing to be limited to any particular theory, it appears that the in vitro dissolution rate of drospirenone is connected to the dissolution rate in vivo resulting in rapid absorption of drospirenone in vivo on oral administration of the compound. This is an advantage because isomerization of the compound in the gastric environment and/or hydrolysis in the intestine is substantially reduced, leading to a high bioavailability of the compound. With respect to ethinylestradiol which is also a sparingly soluble substance, though less sensitive to degradation than drospirenone under conditions prevailing in the gastrointestinal tract, it is also an advantage to provide it in micronized form or sprayed from a solution, e.g. in ethanol, onto the surface of inert carrier particles. This has the added advantage of facilitating a more homogenous distribution of the ethinylestradiol throughout the composition which might otherwise be difficult to obtain because ethinylestradiol is incorporated in extremely small amounts. When ethinylestradiol is provided in micronized form, it preferably has the following particle size distribution as determined under the microscope: 100% of the particles have a diameter of ≤ 15.0 µm, 99% of the particles have a diameter of ≤ 12.5 µm, 95% of the particles have a diameter of ≤ 10.0 µm and 50% of the particles have a diameter of ≤ 3.0 µm. Furthermore, no particle is larger than 20 µm, and ≤ 10 particles have a diameter of ≥ 15 µm and ≤ 20.0 µm. To obtain a more rapid rate of dissolution, it is preferred to include carriers or excipients which act to promote dissolution of both active substances. Examples of such carriers and excipients include substances that are readily soluble in water such as cellulose derivatives, carboxymethylcellulose, hydroxypropyl cellulose, hydroxypropylmethyl cellulose, gelled starch, gelatin or polyvinylpyrrolidone. In particular, it appears as though polyvinylpyrrolidone might be particularly helpful to promote dissolution. The composition of the invention preferably comprises drospirenone in an amount corresponding to a daily dosage of from about 2.5 mg to about 3.5 mg, in particular about 3 mg. The amount of ethinylestradiol preferably corresponds to a daily dosage of from about 0.015 mg to about 0.04 mg, in particular from about 0.015 mg to about 0.03 mg. More particularly, the present composition comprises an amount of drospirenone corresponding to a daily dosage of from about 3.0 to about 3.5 mg and ethinylestradiol in an amount corresponding to from about 0.015 to about 0.03 mg. Apart from its ability to inhibit ovulation, the composition of the invention has been found to possess pronounced anti-androgenic properties and may therefore be used in the prevention or treatment of androgen-induced disorders, in particular acne. Such use may be independent from or concomitant with the use as a contraceptive disclosed above. Furthermore, since drospirenone is an aldosterone antagonist, it has diuretic properties and is therefore suitable for counteracting the water-retentive properties of ethinylestradiol. In a particular embodiment, the invention relates to a pharmaceutical preparation consisting of a number of separately packaged and individually removable daily dosage units placed in a packaging unit and intended for oral administration for a period of at least 21 consecutive days wherein each of said daily dosage units comprises a combination of drospirenone in an amount of from about 2 mg to about 4 mg and ethinylestradiol in an amount from about 0.021 to about 0.05 mg. … The composition of the invention may be formulated in any manner known in the pharmaceutical art. In particular, as indicated above, the composition may be formulated by a method comprising providing drospirenone and, if desired, ethinylestradiol in micronized form in said unit dosage form, or sprayed from a solution onto particles of an inert carrier in admixture with one or more pharmaceutically acceptable excipients that promote dissolution of the drospirenone and ethinylestradiol so as to promote rapid dissolution of drospirenone and preferably ethinylestradiol on oral administration. Examples of suitable excipients include fillers, e.g. sugars such as lactose, glucose or sucrose, sugar alcohols such as mannitol, sorbitol or xylitol, starch such as wheat, corn or potato starch, modified starch or sodium starch glycolate, lubricants such as talc, magnesium stearate, calcium stearate, colloidal silica or stearic acid, and binders such as polyvinylpyrrolidone, cellulose derivatives, carboxymethyl cellulose, hydroxypropyl cellulose, hydroxypropylmethyl cellulose, methyl cellulose or gelatin, for making oral dosage forms such as tablets, pills or capsules. Tablets may conveniently be coated with a suitable film-forming agent, e.g. hydroxypropylmethyl cellulose, hydroxypropyl cellulose or ethyl cellulose, to which a suitable excipient may optionally be added, e.g. a softener such as glycerol, propylene glycol, diethylphthalate or glycerol triacetate, filler such as sucrose, sorbitol, xylitol, glucose or lactose, a colorant such as titanium hydroxide, etc. … The present invention is further described in the following examples which are not in any way intended to limit the scope of the invention as claimed. EXPERIMENTAL Example 1 Preparation of tablets containing drospirenone ad ethinylestradiol Tablet cores of the following composition micronized drospirenone 3.00 mg micronized ethinylestradiol 0.03 mg lactose monohydrate 48.17 mg corn starch 14.40 mg modified starch 9.60 mg polyvinylpyrrolidone 25,000 4.00 mg magnesium stearate 0.80 mg

were prepared by charging a fluidized bed granulator with 31.68 kg corn starch, 21.12 kg modified starch, 6.60 micronized drospirenone, 0.066 kg micronized ethinylestradiol and 105.974 kg lactose monohydrate and activating the fluidized bed. An aqueous solution of 8.80 kg polyvinylpyrrolidone 25,000 in 46.20 kg purified water was sprayed continuously onto the fluidized bed while drying by heating the air stream of the fluidized bed. At the end of the process 1.76 kg magnesium stearate was sucked into the granulator and mixed with the granules by maintaining the fluidized bed. The resulting granulate was pressed into tablet cores by compression using a rotary tablet press. … Example 2 Dissolution of drospirenone from tablets The rate of dissolution of drospirenone from the tablets prepared in Example 1 was determined by the USP XXIII Paddle Method using a USP Dissolution Test Apparatus 2 including 6 covered glass vessels and 6 paddles. Tablets were placed in 900 ml water at a temperature of 37ºC (± 0.5ºC) and stirred at 50 rpm. The results appear from Figs. 1, 2 and 4. From Fig. 1, it appears that the batch numbered V8 containing macrocrystalline drospirenone (but otherwise identical to the tablets prepared in Example 1) exhibited an extremely slow dissolution of drospirenone, whereas all batches containing micronized drospirenone exhibited a dissolution rate of more than 70% within 30 minutes. Fig. 2 and Fig. 4 shows the results of dissolution of drospirenone from tablet cores and film-coated tablets, respectively. In both cases more than 70% of the active agent is dissolved within 30 minutes. Thus, the film coating did not significantly influence the rate of dissolution. … Example 4 Bioavailability of drospirenone and ethinylestradiol from tablets containing 3 mg of drospirenone and 0.03 mg ethinylestradiol 42 healthy women between 18 and 35 years of age were included in an open-label crossover study after their informed consent had been obtained. The aim of the study was to investigate the relative bioavailability of drospirenone and ethinylestradiol from a tablet formulation containing 3 mg drospirenone and 0.03 mg ethinylestradiol with reference to an oral suspension containing 6 mg of drospirenone and 0.06 mg ethinylestradiol per vial. The bioavailability was determined using serum concentrations of each active agent as parameters. Compared to the oral suspension, the relative bioavailability of drospirenone and ethinylestradiol from the tablets is 107% and 117%, respectively. It was therefore concluded that both drospirenone and ethinylestradiol are completely released from the tablets in vivo. The absolute bioavailability of drospirenone was determined in two studies to be 76%±13% after oral administration of 2 mg drospirenone to 8 young healthy women and 85%±24% after oral administration of a microcrystalline suspension containing 3.13 mg drospirenone to 6 postmenopausal women. The oral bioavailability of ethinylestradiol was determined in several studies, and mean values of from 36% to 59% were reported in the literature indicating a first-pass effect. … The results of the study showed that both LH and FSH were clearly suppressed with both trial preparations. Accordingly, the secretion of estradiol and progesterone were greatly reduced over all three treatment cycles with the exception of 3 volunteers receiving the 2 mg drospirenone preparation. This result was, in principle, confirmed by the accompanying ultrasound examinations. Follicular ripening occurred in several cases with both trial preparations. Athough three ovulations were diagnosed with the preparation containing 2 mg drospirenone (one of which was described as "equivocal" and the other as a "tablet-taking error"), no differences were demonstrable statistically (p > 0.05) between the two trial preparations as regards the hormones LH, FSH, estradiol and progesterone, and the parameter "ovulation during the treatment cycles". In keeping with the hormones, cervical function was greatly limited and the "spinnbarkeit" and crystallisability of the cervical mucus was greatly reduced with both trial preparations. Prolactin increased minimally and SHBG and CBG distinctly with both preparations. Triglycerides and HDL levels increased with both trial preparations, while LDL levels decreased. Total cholesterol was largely unchanged in both treatment groups. Oral glucose tolerance remained virtually unchanged or was slightly decreased. Testoserone, androstenedione and DHEA-S decreased minimally. The subjective and objective tolerance was good with both treatments. This was also the case for cycle control with the exception of the first cycle with 2 mg drospirenone. Blood pressure, heart rate and body weight remained constant in the majority of cases or showed a slight tendency to decrease. After three months' treatment, it was concluded: The two trial preparations were equally good as regards the subjective and objective tolerance. No negative metabolic effects were observed with either preparation. HDL was influenced positively in the sense of an increase. The results confirmed the results of earlier studies that the 2 mg drospirenone preparation was in the threshold region of ovulation inhibition, whereas the 3 mg drospirenone preparation had a demonstrable ovulation-inhibiting effect in all cases examined. Claims defining the invention are as follows: … 3. A pharmaceutical composition in oral dosage form comprising: 3 mg of drospirenone and 0.01 mg to 0.05 mg of ethinylestradiol, together with one or more pharmaceutically acceptable carriers or excipients, wherein the oral dosage form is a tablet, and wherein at least 70% of said drospirenone is dissolved from said composition within 30 minutes, as determined by USP XXIII Paddle Method II using 900 ml of water at 37ºC as the dissolution media and 50 rpm as the stirring rate. … 11. A pharmaceutical preparation consisting of a number of separately packaged and individually removable daily dosage units placed in a packaging unit and intended for oral administration for a period of at least 21 consecutive days, wherein said daily dosage units are in tablet form and comprise a combination of 3 mg of drospirenone and ethinylestradiol in an amount from 0.01 to 0.05 mg, wherein at least 70% of said drospirenone is dissolved from said dosage units within 30 minutes, as determined by USP XXIII Paddle Method II using 900 ml of water at 37°C as the dissolution media and 50 rpm as the stirring rate. 5 The priority date of the patent is 31 August 1999.

STATUTORY PROVISIONS 6 Section 138(3) of the Patents Act 1990 (Cth) (the Patents Act) sets out the grounds on which a patent may be revoked. Insofar as relevant, that section provides as follows: (3) After hearing the application, the court may, by order, revoke the patent, either wholly or so far as it relates to a claim, on one or more of the following grounds, but on no other ground: … (b) that the invention is not a patentable invention; … (f) that the specification does not comply with subsection 40(2) or (3). 7 Section 18(1) of the Patents Act provides that: (1) Subject to subsection (2), an invention is a patentable invention for the purposes of a standard patent if the invention, so far as claimed in any claim: (a) is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies; and (b) when compared with the prior art base as it existed before the priority date of that claim: (i) is novel; and (ii) involves an inventive step; and … 8 Section 7(2) of the Patents Act deals with the requirement for a patent to involve an inventive step. The relevant version of s 7(2) for the patent is as follows: (2) For the purposes of this Act, an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with either of the kinds of information mentioned in subsection (3), each of which must be considered separately. (3) For the purposes of subsection (2), the kinds of information are: (a) prior art information made publicly available in a single document or through doing a single act; or (b) prior art information made publicly available in 2 or more related documents or, or though doing 2 or more related acts, if the relationship between the documents or acts is such that a person skilled in the art in the relevant patent area would treat them as a single source of that information; being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood and regarded as relevant to work in the relevant art in the patent area. 9 By s 13 of the Patents Act: Subject to this Act, a patent gives the patentee the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention. 10 "Exploit" is defined in Sch 1 to the Act (s 3) as follows: "exploit" , in relation to an invention, includes: (a) where the invention is a product - make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or (b) where the invention is a method or process - use the method or process or do any act mentioned in paragraph (a) in respect of a product resulting from such use. 11 Section 117 deals with infringement of a patent by supply in these terms: (1) If the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier unless the supplier is the patentee or licensee of the patent. (2) A reference in subsection (1) to the use of a product by a person is a reference to: (a) if the product is capable of only one reasonable use, having regard to its nature or design - that use; or (b) if the product is not a staple commercial product--any use of the product, if the supplier had reason to believe that the person would put it to that use; or (c) in any case - the use of the product in accordance with any instructions for the use of the product, or any inducement to use the product, given to the person by the supplier or contained in an advertisement published by or with the authority of the supplier.

JAMES ROWE 12 Dr Rowe has had over 30 years' experience in the pharmaceutical industry having obtained a Bachelor of Pharmacy degree in 1966, a Masters of Science in 1976, and a PhD in Pharmaceutics in 1980. Throughout this period he was involved in the development of new pharmaceutical products including the evaluation and testing of new drug formulations and now provides services as a consultant to the pharmaceutical industry. However, Dr Rowe has not carried out preformulation studies for a new API or been involved in decisions about dosage forms for a new API. 13 Dr Rowe explained that solid dosage forms commonly used since the 1960s to deliver API are known as immediate release, extended or controlled release, and delayed release preparations. Immediate release preparations are designed to release the API with minimum delay after ingestion. Extended or controlled release preparations are designed to release the API over a period of time. Delayed release preparations, which are enteric coated formulations, are designed so that the dosage form remains intact until after it passes the pylorus in the stomach and enters the small intestine. 14 Dr Rowe also explained that a pharmaceutical composition is composed of an API and non-pharmaceutically active ingredients, the latter being known as excipients. Excipients are able to be classified according to function and include bulkers or fillers, disintegrants, binders, lubricants and coating excipients. 15 Dr Rowe said that his first introduction to enteric coatings was in 1969 and they were reasonably common in Australia by the 1970s. By 1999 the use of enteric coatings was very common. According to Dr Rowe the variability in effect of enteric coatings is huge. He said that he had never formulated an enteric coating formulation where he did not know the oral bioavailability of an immediate release oral dosage form. According to Dr Rowe: The normal procedure is to determine the oral bioavailability of the API as a first step. This enables the formulator to assess if an enteric coat is in fact required. It also evaluates the effectiveness of an enteric coated formulation over a conventional immediate release formulation. 16 Dr Rowe also said that if preformulation testing showed that an API degraded, the formulator would be aware of a potential issue with degradation in vivo but "would not immediately dismiss the possibility that the API may still be absorbed and simply proceed to develop an enteric coated product consistently with this". Dr Rowe said that a formulator "would not operate on the 'prospect' that the bioavailability of DRSP would be better with an enteric coat - rather, they would test this hypothesis". 17 Dr Rowe referred to Aulton at p 171 as follows: In addition to the protection offered by enteric coating, the delayed release of drug also results in a significant delay in the onset of therapeutic response of the drug. The onset of the therapeutic response is largely dependent on the residence time of the enteric coated tablet in the stomach. Gastric emptying of such tablets is an all-or-nothing process, ie. the tablet is either in the stomach or in the duodenum. Consequently drug is either not being released or being released….Hence there is considerable intrasubject and intersubject variation in the onset of therapeutic action exhibited by drugs administered as enteric-coated tablets. 18 According to Dr Rowe, Remington at pp 989-993 highlights the factors which are the cause of the difficulties with enteric coated formulations, namely, different pH levels at which different enteric coats begin to dissolve, the influence of food intake on the pH of the stomach, and the potential problems of alcoholic beverages dissolving the enteric coat and releasing the API in the stomach. In fact, examination of Remington discloses that these issues are identified in respect of extended release formulations rather than delayed released formulations. In any event, Dr Rowe said he was aware of these issues before 1999 and that potential damage to the integrity of the dosage form may cause dose-dumping which means that the drug is released in the stomach. It is true that there is a risk of dose-dumping in respect of enteric coated formulations, as the balance of the evidence discloses, but it is also the case that before 1999 enteric coating of granules inside a tablet or capsule was perceived as largely resolving this potential problem. Moreover, enteric coatings were otherwise in common use and perceived as effective and successful formulations. 19 In Dr Rowe's opinion, in deciding whether or not an enteric coating is necessary, it is relevant to know whether or not the enteric coated tablet performs better than an immediate release tablet. Dr Rowe said he would not enteric coat a formulation where satisfactory bioavailability is obtained from an immediate release formulation and the only way to establish this is to undertake a bioavailability study on an immediate release formulation before or at least in parallel with the testing of any other formulation. If bioavailability studies are not undertaken then according to Dr Rowe a formulator will then be unsure if a product is performing optimally with the result that a more complicated and less efficient tablet may be developed. 20 Dr Rowe considered that while it was true that formulations are tested at the equivalent of about pH1, which is the same as the acidic environment in the stomach, dissolution testing in vitro is merely a guide to what will happen in vivo. Dr Rowe thus concluded that it is not legitimate to rely solely upon the reserved degradation in preformulation studies as definitive of in vivo results. 21 While Dr Rowe did not dispute that DRSP was poorly soluble and acid labile, he did not agree that this meant the compound will not be absorbed. He referred to his own unpublished work in relation to the drug naltrexone which he described as acid labile but available on the market in an immediate release tablet form. Dr Rowe agreed, however, that he was not aware of any published work in respect of naltrexone describing it as acid labile, his conclusion being based solely on his own work with that drug. Dr Rowe also referred to erythromycin being available in immediate release form and achieving sufficient bioavailability for therapeutic effect despite being acid labile. Examination of MIMS, however, discloses that nearly all erythromycin tablets are enteric coated. 22 Dr Rowe was asked about his expectations if confronted by an API which was acid labile and poorly soluble. It was put to him that he would not have any reasonable expectation that an immediate release form, unprotected, would be bioavailable. Dr Rowe said "I would have to do the study" and "I would have to define it to know what the problem was". 23 Dr Rowe also commented that because the variability of in vivo performance of enteric coatings is extremely large, he would not immediately consider an enteric coating appropriate for an oral contraceptive product which has to be 100% clinically effective. Dr Rowe was cross-examined about this evidence and, in particular, an affidavit he swore in 1998 about omeprazole. In his 1998 affidavit Dr Rowe noted that omeprazole degrades rapidly in acidic solutions, that is it is acid labile, and said this "would have meant to me that it must be protected from the gastric juices of the stomach". Dr Rowe also noted that because omeprazole is only very slightly soluble in water but rapidly soluble in alkaline solutions: This would have meant to me that an enteric coated dosage form would have been ideal, because, once the dosage form had passed the stomach, the omeprazole would dissolve rapidly and be bio-available. 24 Dr Rowe said in his affidavit that there were many drugs which were similar to omeprazole in these respects, a good example being erythromycin "in which the drug is acid labile and is usually formulated as an enteric coated product". 25 In respect of the formulation of omeprazole Dr Rowe concluded in this affidavit that "the simplest approach would be… to enteric coat the omeprazole using conventional coating techniques". 26 It was put to Dr Rowe that his evidence about both erythromycin and the use of enteric coats in his 1998 affidavit was not consistent with the evidence he was giving in this matter, in particular, his evidence that using an enteric coat was a "more complex formulation exercise" and that given the known problems of variability arising from enteric coating he would explore all other formulation possibilities thoroughly rather than "resorting to enteric coating". Dr Rowe did not accept that there was inconsistency in his evidence, the key difference being that in respect of omeprazole he had information that it was poorly absorbed but he did not have equivalent information about DRSP. 27 I consider that there is inconsistency in the evidence of Dr Rowe which is not adequately explained by his reference to the information available about omeprazole. 28 First, in 1998 Dr Rowe described erythromycin as an acid labile drug which is "usually formulated as an enteric coated product". In this proceeding he said only that erythromycin, an acid labile drug, was available in immediate release form and that he had compared that form with "new formulations of enteric coated erythromycin", referring to the non-enteric coated version as "standard erythromycin base tablets". The impression given by the respective evidence is different. The evidence in this proceeding suggests that erythromycin is usually not enteric coated whereas the evidence in 1998 is that erythromycin is usually enteric coated. 29 Second, in 1998 Dr Rowe described the use of an enteric coated dosage form for omeprazole as "ideal" without any mention of any problems with enteric coated tablets. In this proceeding, however, he referred to factors which are the cause of difficulty with enteric coated formulations, including the risk of dose-dumping and large variability. As noted above, the factors which he identified from Remington relate to controlled or extended release products rather than enteric coated products. Irrespective of that, in his 1998 affidavit Dr Rowe described the problem of variable responses not as a result of enteric coating but as a result of the instability of omeprazole in an acidic environment (that is, its acid lability) and concluded that enteric coating was the "ideal" answer to this problem. As will be apparent, in the present case, DRSP is also acid labile but instead of an enteric coating being Dr Rowe's answer to this problem, Dr Rowe's evidence is to the effect that an enteric coating would cause the type of problems which he earlier said an enteric coating would resolve. 30 Third, in his 1998 affidavit Dr Rowe described the use of enteric coatings as "the simplest approach" involving "conventional coating techniques", it being an "obvious and routine task" for any competent formulator to produce an enteric coated dosage form either as an enteric coated tablet or as a coated granule or pellet formulation subsequently filled into hard gelatine capsules. By contrast, in his evidence in this proceeding, Dr Rowe described enteric coating as a more complex process which would have led him, as discussed, to "explore all other formulation possibilities thoroughly rather than resorting to enteric coating". 31 The differences of substance and emphasis in this evidence are significant. They tend to undermine the weight which would otherwise be given to Dr Rowe's evidence. This is particularly so given that Dr Rowe agreed that he could have predicted from the structure of DRSP that it would have been both poorly soluble and acid labile, given that most steroids are poorly soluble and the structure includes a lactone ring. 32 Dr Rowe was also asked how a formulator would read a reference to 3 mg of a substance. Dr Rowe said that if this was presented in a dosage form rather than as an accurate weight in some scientific experiment, a formulator would read the reference as 3 mg plus or minus the standard variance, the standard variance being set out in Australia in an order under the Therapeutic Goods Act 1989 (Cth), Therapeutic Goods Order No 56 - General Standard for tablets, pills and capsules (TGO No 56). Dr Rowe said a formulator would have to read the reference this way if it was in the context of a dosage form because "it's impractical to try and get 3.000 mg in each dosage unit".

SUSAN WALTERS 33 Dr Walters is an Adjunct Associate Professor at the University of New South Wales and University of Canberra and provides consultant services to the pharmaceutical industry. She has more than 40 years' experience in pharmaceuticals having worked as a scientist, senior scientist, principal scientist at the Therapeutic Goods Administration (TGA) from 1974-1985 and most recently as Chief Scientist in the Pharmaceutical Chemistry Evaluation Section, Drug, Safety and Evaluation Branch of the TGA between 1985 and 2001. She holds a Bachelor of Pharmacy (Hons) and a PhD, and specialised in her final undergraduate year in organic and analytical chemistry. She also worked for a pharmaceutical manufacturer between 1971 and 1974 before commencing work at the TPA. Accordingly, Dr Walters' main experience has been as a regulator and not as a formulator. She has not been involved in any formulation activity since the early 1970s when she formulated two new cough syrups but has reviewed numerous applications for approval of pharmaceutical formulations in her role at the TGA. 34 Dr Walters said that dissolution rate testing is a surrogate for bioavailability and that while dissolution rate data may be suggestive of an API's behaviour in vivo they are usually not a definitive prediction of what will actually occur in vivo. An example is digoxin tablets where an apparently minor manufacturing change led to a significant reduction in rate of absorption with potentially catastrophic consequences for patients. 35 Dr Walters said that not all tablets that contain acid labile APIs need to be enteric coated or formulated with a buffer depending on the degree of acid sensitivity and whether the API survives passage through the stomach. According to Dr Walters the "bottom line is whether the active ingredient is well absorbed into the blood stream or is significantly degraded in the stomach prior to absorption". 36 Even if an API was determined to be poorly water soluble then Dr Walters said that there were several well known techniques available to improve the dissolution of properties of tablets in 1999, including reducing the particle size of the API by milling or grinding, adding a solubilising agent to the formulation and defining an optimal polymorph. In the case of digoxin, for example, the manufacturing change led to a greater particle size of the API and a lower surface area for dissolution, which led to a significant reduction in the rate of absorption. 37 Dr Walters noted that oral contraceptives are commonly available as immediate release tablets and she is unaware of an enteric coated OC. In respect of DRSP, Dr Walters immediately noticed that the spiro-configuration of the lactone at position C17 is similar to that of spironolactone. This led Dr Walters to search for stability data on spironolactone, no such data being available as at 1999 in respect of DRSP. Ultimately, when Dr Walters read Nickisch as a result of considering Professor Davies' affidavit she agreed that spironolactone did not explain the stability of DRSP due to the difference in the lactone rings. In Dr Walters' view the information available about DRSP as at 1999 indicated that it would be "unnecessary to enteric coat the tablet, and desirable to formulate a rapid dissolution pharmaceutical composition" referring to Krause I and Krause III in support. 38 In particular it was Dr Walters' view that while in vitro preformulation studies would guide the development team as to potential issues the team would also be aware that in vitro results are not always indicative of in vivo behaviour so that: a formulator would not exclude the option of developing a product that is simpler and cheaper to produce in comparison with enteric coated products without in vivo studies confirming that an immediate release formulation was not a viable option. 39 Dr Walters said that a limited bioavailability study would "allow the development team to decide whether an immediate release tablet has sufficient and consistent bioavailability for further development". It would also show "whether an immediate release tablet has a lower bioavailability than enteric coated". As Dr Walters put it: … a team would not immediately opt to develop an enteric coated tablet, to the exclusion of an immediate release formulation, with testing in vivo performance in the particular circumstances of this drug. 40 According to Dr Walters if an in vitro test showed an unacceptable dissolution rate (as DRSP does) then "you would have to think carefully about how you - how you were going to - what would be the next step you would take in the design of the formulation". 41 Dr Walters also noted that "micronization" is a relative concept. The reduction of particle size involved in micronization may vary. 42 Dr Walters referred to enteric coated tablets as having the disadvantages of higher manufacturing costs, greater within and between batch variation and other errors, and more variable onset of action because of variations in stomach emptying unless individually coated granules or pellets are used, which is an even more expensive process and would need to be experimentally validated. According to Dr Walters, having determined that an API has a degree of acid lability, the usual practice would be to estimate the extent and variability of absorption by means of a pilot scale bioavailability study comparing an immediate release and an enteric coated tablet. The example of digoxin, in Dr Walters' view, "illustrates why an experienced formulator would not assume that poor absorption will always be the consequence of acid lability". 43 Dr Walters agreed that DRSP was acid labile and had low water solubility and that to be bioavailable the dissolution rate needed to be improved. She agreed also that improving the dissolution rate would mean that the API has a greater exposure to the acid environment of the stomach to the limit of dissolution. Dr Walters accepted that to be bio-available the dosage form for DRSP had to pass through the stomach intact and that for an oral contraceptive the approach had to be "one size fits all" in the sense that the drug might be taken at any time in the day and on the basis of differing stomach conditions such as being fed or fasted. Dr Walters did not accept that these considerations meant that it would have been obvious to the formulator to look at protecting the dosage form in the stomach given the information in Krause I and Krause III. 44 Dr Walters described the dissolution rate of 70% of "said" DRSP in 30 minutes using the standard USP XXIII Paddle Method referred to in claim 3 of the patent as "a little tighter than the 75% dissolution in 45 minutes specified by the British Pharmacopoeia in 1999" (this being for immediate release formulations as Professor Davies noted).

MARTYN DAVIES 45 Professor Davies is Professor in Biomedical Surface Chemistry, Laboratory of Biophysics and Surface Analysis at the School of Pharmacy at the University of Nottingham. He graduated with a degree of pharmacy in 1980, was awarded his PhD in 1985 and has dealt with pharmaceutical technology, tabletting, granulating and dissolution since 1985. In addition to his academic career Professor Davies is a co-inventor on a number of patents and patent applications and is the co-founder and chairman of a pharmaceutical development and advanced formulation characterisation company which provides services to the top 20 multi-national pharmaceutical companies worldwide. 46 Professor Davies was familiar with the UK and US versions of the patent before this proceeding because he had given evidence in other proceedings above these patents. 47 Professor Davies' basic thesis was that when confronted with a poorly soluble acid labile drug intended for use as an oral contraceptive a formulator would recognise immediately that a significant quantity of the drug will be exposed to acid in the stomach and degraded. In the context of DRSP the dosage of 3 mg is effective, 1 mg is a threshold or borderline dose and a formulator would be thinking of the risk of losing a significant proportion of the drug in the stomach. As the development team would develop a formulation that they expect to work rather than one that they expect not to work, the obvious solution for DRSP would be to create an enteric coated formulation. Professor Davies said that the fact that the immediate release form of DRSP (as set out in the patent) works is very surprising and contradicts what we know about acid labile poorly soluble drugs. The expectation for DRSP, given that it is poorly soluble and acid labile, is that it could not be effectively delivered in an immediate release form. The formulator would expect to lose half of the API by degradation in the stomach. For an oral contraceptive the full 3 mg dose has to be delivered to the patient effectively throughout the day. An oral contraceptive does not have to be immediately bio-available like some drugs (for example, digoxin) - where the API has to be delivered urgently so that an immediate release formulation is appropriate despite the acid degradation. In contrast for an oral contraceptive what has to be ensured is simply that the full 3 mg dose of DRSP is absorbed throughout the day on which the drug is taken irrespective of individual conditions. This is the reason why the development team for an oral contraceptive which is acid labile and poorly soluble would immediately progress to an enteric coated formulation not an immediate release formulation (noting that DRSP is the only acid labile progestin used in oral contraceptives). According to Professor Davies if a bioavailability study had been conducted on DRSP and it did not biodegrade the experimenters would have been very surprised. They would not have carried out that exercise with any expectation that it would succeed and, indeed, the opposite would be true. Moreover if DRSP did not biodegrade the experimenters would not know why this is so. Professor Davies still does not know why DRSP does not biodegrade in the stomach and does not believe anybody else knows the answer to this question either. In Professor Davies' words: The Patent does not give an explanation as to why, contrary to all expectations, DRSP does not suffer from a loss of bioavailability when it is exposed in an immediate release and rapidly dissolving form to the acidic conditions of the stomach. I have spent a considerable amount of time considering the issue but I am also unable to assist by offering my own explanation as to why this is the case. 48 Professor Davies noted that preformulation studies are carried out in vitro and, address amongst other things, the solubility and stability of the drug in different environments. To be effective the drug must dissolve but not degrade in the gastro-intestinal tract so that it can be absorbed into the blood stream. A formulator will always perform their own preformulation studies on the particular sample of the drug with which the formulator has been supplied even if literature about the drug was available. This is because there may be differences between the formulator sample and the batch of the drug that was the subject of the published literature. 49 Professor Davies emphasised the context of the formulation of an oral contraceptive in particular. Oral contraceptives are required to be 100% effective in a minimal low dose in treatment which extends over years. The treatment is thus chronic and not acute. The context, accordingly, is one in which the whole of the drug must be effectively delivered over the 24 hour period. According to Professor Davies preformulation testing in vitro shows that the API in an immediate release formulation was likely to significantly degrade following dissolution in the acidic environment of the stomach. The team would thus formulate the drug with an enteric coating. 50 Professor Davies explained that when a drug exhibited poor solubility during preformulation studies the formulator in 1999 had a number of techniques available to improve the dissolution rate of the drug, including micronization. A formulator would also understand that increasing the dissolution rate of the drug will also substantially increase the risk of chemical degradation in the stomach if the drug is acid labile. The formulator thus would want to avoid the rapid dissolution of the drug in the stomach and would do so by protecting the drug from dissolving in the stomach by means of an enteric coat. Enteric coating was well established and widely used by 1999. For an API which is low dose, poorly soluble and acid labile with an intended clinical use as an OC then, in Professor Davies' words: it will be even more vital for the formulator to take steps to improve the dissolution rate of the API, but also to apply an enteric coating to protect the API from dissolution and degradation in the stomach, so that the low dose of the API is made bioavailable and able to exert its therapeutic effect. 51 According to Professor Davies, whether or not in vitro dissolution rate data is predictive of in vivo results depends on the dissolution rate data that has been obtained. It is true that a rapid dissolution rate in vitro is not necessary predictive of good absorption and bioavailability in vivo because there are a number of factors in addition to dissolution rate which reduce the absorption of an API in vivo. However, a poor dissolution rate in vitro is predictive of a poor dissolution rate in vivo and hence poor absorption and bioavailability. Similarly a negative result during in vitro stability tests is predictive of a negative stability result in vivo. This is why Professor Davies said that: If the formulator obtains a poor dissolution rate in vitro, they would not repeat the experiment in vivo in order to confirm the poor solubility of the API. The formulator would take steps to improve the dissolution rate of the API… and then repeat the in vitro dissolution tests to assess whether the dissolution rate of the API has been improved. This process is designed to ensure that a formulation with the best possible release profile is taken into Phase 1 trials. and … if the API was shown to degrade under acidic conditions designed to mimic the conditions in the stomach, the formulator would have no expectation of a different outcome in vivo to the in vitro tests that had already been carried out. Based on those results the formulator would disregard an immediate release formulation as an option, and proceed to use an enteric coating for the formulation to be taken through in vivo clinical trials. 52 As Professor Davies put it: …the formulator would not acquire any useful information or reach any conclusions relevant to their task from the Krause papers. The Krause papers contain information relating to the dissolution of (a) high dose (b) macro-crystalline (c) spironenone tablets (d) intended for use as an anti-hypertensive. This would not give the formulator any guidance as to the development of (a) low dose (b) DRSP tablets (c) Intended for use as an OC. 53 Professor Davies explained that the concept of in vivo/in vitro correlation occurs at a later stage in drug development where the team is concerned with consistency of the manufactured product. 54 Professor Davies disagreed with Dr Walters that the formulator would expect to glean any useful information from the similarities that exist in chemical structure between DRSP and spirorenone as even small changes in chemical structure can have a profound impact on chemical efficacy and such properties as drug solubility. Spirorenone is a diuretic and does not have any progestin effect. DRSP has both a diuretic effect and progestin effect. DRSP undergoes rapid isomerisation into its inactive isomer under acidic conditions whereas spirorenone does not undergo isomerisation. Professor Davies noted that Krause I discloses that approximately 50% of the DRSP dose is acid catalysed into its inactive form within approximately 90 minutes which is well within the typical residence time in the stomach; this means that in an immediate release form the formulator would expect that there would be ample time for DRSP to be exposed to stomach acid and hence undergo isomerisation into its inactive form. Professor Davies said: The in vitro experiment reported in Krause I is the type of preformulation stability study that a formulator would have performed if given the task of developing a DRSP formulation as at 31 August 1999, except that the stability tests would also have been conducted at body temperature. As soon as the formulator discovered that DRSP was poorly soluble and also acid labile, the formulator would have understood that for DRSP to be readily absorbed in vivo, they would need to take steps to improve dissolution of the drug … (i.e. the very approach they would want to avoid, owing to the drug's instability in acid). Consequently, the formulator would use an enteric coating to protect an otherwise rapidly dissolving formulation from exposure to acid in the stomach. As I explained earlier, the process of formulation development is premised on minimizing risk going forward. Amongst other things, this involves ensuring that the chosen formulation delivers the correct level of drug into a patient's bloodstream in a stable and reproducible manner. Presented with data that showed that DRSP undergoes rapid isomerisation in conditions that mimic the human stomach, the formulator would have been immediately directed towards an enteric coated formulation to protect the DRSP from isomerisation and avoid the risk of loss of bioavailability. In such circumstances, the formulator would not try an immediate release formulation because they would have no expectation of success. 55 In respect of enteric coatings, Professor Davies said: By 31 August 1999, modern enteric coated forms had been developed that largely overcame any potential challenges arising from intra- and inter-subject viability of gastric residence times. This was achieved by formulating the product in the form of individually enteric-coated granules that were typically contained in a capsule or rapidly disintegrating tablet. These small individually enteric-coated granules or pellets contained in capsules or tablets are described on p171 of Aulton …. The small coated granules can pass through the stomach to the small intestine where the drug can be absorbed. This technique avoids the "all-or-nothing" gastric emptying process otherwise associated with an intact tablet passing from the stomach to the small intestine. Instead, the small granules ensure a gradual but continual release from the stomach to the small intestine. Some examples of drug formulations which used these small enteric-coated granules prior to 1999 are omeprazole, lansoprazole, erythromycin eg, in the products named Erymax (Elan Pharma) and Tiloryth (Tillomed Laboratories), pancreatin (eg, in the products named Pacrex, Creon or Pancrease). In any event, variation in emptying times resulting in variation or delay in onset of action does not present a drawback for contraceptives. To be sure, there are undoubtedly some drugs that are used to treat acute conditions which require immediate treatment, and therefore, immediate absorption. In such a case, it would be critical not to delay the onset of pharmaceutical action. In contrast, a delay in the onset of action (or absorption) of a contraceptive is not critical so long as the woman is administered her daily dose on a chronic basis. There is no need for immediate absorption. The fundamental concern is only that the woman be administered a therapeutically effective dose on a daily basis. 56 In respect of the process of formulation, Professor Davies said: • "… we don't live in utopia. You have to make hard decisions about the way forward"; • "… you only have limited resources … And you tend to take experiments where you have an expectation of success. You don't go down avenues where you - everything teaches you; that would be a problem"; and • "… in vitro studies are really important. They help you … reduce the number of human patients required. It's about economically using your resources … So there's a natural selection that occurs through this process".

NOVELTY 57 In their amended particulars of invalidity dated 4 July 2012 the respondents contended that the invention claimed in the patent was liable to be revoked because it was not novel, relying on a single document being Gast (PCT Publication WO 98/04269) "Monophasic contraceptive method and kit comprising a combination of a progestin and estrogen", published on 5 February 1998. 58 On 11 March 2013, before the hearing commenced, the respondents sought leave to rely upon an affidavit of Terence Clive Burgess sworn 27 September 2012 pursuant to an interlocutory application the respondents filed on 5 March 2013. I refused leave and dismissed the interlocutory application (Bayer Pharma Aktiengelsellschaft v Generic Health Pty Ltd [2013] FCA 226). At the commencement of the hearing the respondents advised that, as a consequence of my ruling, the respondents would not be pressing their claim for invalidity based on lack of novelty. Accordingly, no evidence was sought to be tendered relevant to this issue. It follows that the claim cannot succeed and need not be considered further.

PRINCIPLES 59 There were two issues of principle between the parties. Given the factual findings set out below the resolution of these issues of principle is unnecessary but I will address the issues in any event. 60 The respondents contended that the invention was obvious because, based on the evidence of Dr Rowe and Dr Walters, it should be found that the hypothetical formulator (being a member of a drug development team) at the priority date of the patent (31 August 1999), if confronted by DRSP - an acid labile and poorly soluble API - as a matter of course and routine would carry out a limited or pilot bioavailability test in vivo for the purpose of determining whether there was any bioavailability problem with the DRSP and whether an immediate release formulation of DRSP would be sufficiently bioavailable. On this thesis the hypothetical formulator would not respond to the acid lability and poor solubility of DRSP by immediately proceeding to develop an enteric coated formulation as Professor Davies suggested. The respondents submitted that these facts, if found, should lead to a conclusion of invalidity of claims 3 and 11 of the patent on the ground of lack of inventive step or obviousness. 61 The applicants contended that even if these facts were found (which they should not be on the evidence) the respondents could not succeed on the ground of lack of inventive step or obviousness. This is because on any view of the evidence, when confronted by the acid labile and poorly soluble API which is DRSP, the hypothetical formulator would not carry out a bioavailability study at all as part of the preformulation testing and, even if the hypothetical formulator did so, they would not do so with any expectation of success. Moreover, the invention claimed does not relate to any immediate release form of any version of DRSP. The invention claimed, insofar as is relevant in claims 3 and 11, is for a form of DRSP which satisfies the dissolution criteria specified in those claims. The evidence of Dr Rowe and Dr Walters, according to the applicants, simply failed to address the invention as claimed because of the mistaken assumption that the invention consisted of nothing more than an immediate release form of DRSP. 62 There are two issues of principle to which this dispute gives rise both founded on the reasoning of the High Court in Aktiebolaget Hassle v Alphapharm (2002) 212 CLR 411; [2002] HCA 59 (Alphapharm). The respondents submitted that the High Court endorsed the reasoning of Aickin J in Wellcome Foundation Limited v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 (Wellcome Foundation) so that the relevant question for determining obviousness is whether the hypothetical addressee of the patent faced with the same problem would have taken as matter of routine whatever steps might have led from the prior art to the invention (Wellcome Foundation at 286). The applicants submitted that the High Court in Alphapharm explained what Aickin J meant by routine steps, the result being the so called reformulated "Cripps question" (Olin Mathieson Chemical Corporation v Biorex Laboratories Limited) [1970] RPC 157 at 187-188). As such it is necessary to ask and answer the question "would the notional research group at the relevant date in all the circumstances directly be led as a matter of course to try the relevant experiment in the expectation that it might well produce the invention". 63 The first issue of principle, accordingly, is whether the expectation of the hypothetical formulator is a necessary part of the resolution of the issue of obviousness. 64 The respondents also referred to the decision of Lindgren J in Alpharpharm Pty Ltd v H Lundbeck A/S (2008) 76 IPR 618; (2008) FCA 559 at [180] in which his Honour explained the decision of the High Court as requiring obviousness to be determined "by asking whether a hypothetical non-inventive skilled addressee, equipped with the common general knowledge as at the priority date, would have taken steps towards the invention 'as a matter of routine' in the expectation that they might well produce the invention or some other useful result". The respondents submitted that it was unnecessary that the hypothetical formulator expect that the steps might produce the invention, it being sufficient (if necessary at all for there to be any expectation) for the hypothetical formulator to expect a useful result. In the present case the evidence of Dr Rowe and Dr Walters establishes that the hypothetical formulator would expect a useful result from the bioavailability study, being the obtaining of information to ascertain whether there was any bioavailability problem with an immediate release formulation of DRSP. 65 The second issue of principle, accordingly, is whether the expectation of the hypothetical formulator - if relevant at all - must be an expectation of the production of the invention or an expectation relating to "some other useful result" and, if so, what is meant by the words "some other useful result". 66 I do not consider that the respondents' submissions are consistent with the authorities. In Pfizer Overseas Pharmaceuticals v Eli Lilly & Co (2005) 5 ALR 416; [2005] FCAFC 224 the Full Court explained the reasoning of the High Court in Alphapharm as follows: [286] The point of departure for determining whether a claimed invention was obvious at the priority date is the statement by Aickin J in Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 at 286 ; 34 ALR 213 at 228 ; 1A IPR 268 at 281 that: The test is whether the hypothetical addressee faced with the same problem would have taken as a matter of routine whatever steps might have led from the prior art to the invention, whether they be the steps of the inventor or not. The idea of "routine" in this passage was elaborated in Alphapharm by reference to an earlier passage of Aickin J's judgment in Wellcome Foundation which was extracted at [51]. That passage referred to (Wellcome Foundation at CLR 281; ALR 224; IPR 278): … experiments were of a routine character which the uninventive worker in the field would try as a matter of course. [287] The Alphapharm majority saw an affinity between the approach adopted by Aickin J and the so-called Cripps Question posed by Graham J in Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd [1970] RPC 157. The approach enunciated by Graham J in the passage that follows was expressly approved by the majority in Alphapharm (at CLR 411; ALR 499; IPR 143): Would the notional research group at the relevant date, in all the circumstances, which include a knowledge of all the relevant prior art and of the facts of the nature and success of chlorpromazine, directly be led as a matter of course to try the -CF3 substitution in the "2" position in place of the -CI atom in chlorpromazine or in any other body which, apart from the -CF3 substitution, has the other characteristics of the formula of claim 1, in the expectation that it might well produce a useful alternative to or better drug than chlorpromazine or a body useful for any other purpose? The approval of this passage in Alphapharm did not involve any acceptance of the proposition that a claimed invention is obvious if the steps that led to it would have been seen by a skilled addressee as "worth while to try" in the light of common general knowledge at the priority date. The majority expressly rejected that criterion. They regarded the decisions of the United States' courts, which also rejected that approach, as reflecting an approach closer to that adopted in the Minnesota Mining and Wellcome Foundation decisions. 67 This analysis does not support the approach of the respondents. In particular it does not support the respondents' focus on the statement of the majority in Alphapharm at [52] to the effect that experiments "of a routine character" to be tried "as a matter of course" in isolation from the context in which they appear. Consideration of the context of the reasoning of the majority in Alphapharm supports the applicants' submissions that the High Court was engaged in a process of synthesizing the "distinct strands of thought" (at [52]) apparent in Aickin J's judgment in Wellcome Foundation and that the result of the synthesis which the majority said "should be accepted" is the reformulated "Cripps question" (at [53]). In other words, in determining obviousness it is necessary to consider the expectation of the hypothetical skilled addressee of the patent. To the extent that the respondents submitted otherwise, I do not accept their submissions. 68 It is also apparent from the reasoning of the majority in Alphapharm that the references in the authorities to "some other useful result" cannot be understood as encompassing the mere obtaining of information which the hypothetical skilled addressee might or would find useful in assisting the addressee to determine what steps to take. This is apparent from the clear rejection by the High Court of any notion that the concept of obviousness is synonymous with steps which the skilled addressee might or would consider "worthwhile to try" (at [34] and [66]-[76]). That this is so is apparent from the majority's preference for the United States authorities discussed at [73] - [76], in particular the reference to the concept that any research endeavour usually involves an element of obviousness to try (Application of Tomlinson (1966) 363F 2d 928 at 931. In the face of this reasoning the references to "some other useful result" in the context of obviousness must be understood as the claimed invention or at least something very like the claimed invention.

THE INVENTION 69 There was a dispute between the parties about what the respondents called the starting point for the invention. Although this was said by their respondents to be relevant to the issue of obviousness their submissions did not disclose any real connection between the alleged starting point and that issue. 70 According to the respondents DRSP was not a newly synthesised compound as at the priority date and had been the subject of studies well before that date. So much may be accepted and is disclosed in the specification for the patent. That does not mean, however, that DRSP was not a new API as at the priority date which had not previously been formulated into any pharmaceutical composition. The respondents also submitted that when the specification is properly analysed it should be apparent that the patent "is directed to solving the perceived problem of finding the means to ensure that [DRSP] dissolves rapidly" so that the "alleged invention lies in the use of the known techniques of either micronization or spraying to ensure that the DRSP dissolves rapidly. The respondents said that the applicants' case that the patent "is directed to solving the problem of finding a suitable formulation such that the [DRSP] dose is bioavailable and not degraded in the stomach" is incorrect. 71 The respondents' submissions are inconsistent with the terms of the specification construed in accordance with the applicable principles. It is plain from even the first paragraph of the patent that it is not concerned merely with the dissolution of DRSP but includes methods of inhibiting ovulation by administration of DRSP, which necessarily involves the concept of DRSP being bioavailable. Read through the eyes of the skilled addressee, moreover, the first paragraph of the detailed disclosure of the invention on p 4 of the patent discloses the poor solubility of DRSP and the fact that it is rearranged to an inactive isomer under acid conditions and hydrolysed under alkaline conditions. The same paragraph continues: To ensure good bioavailability of the compound, it is therefore advantageously provided in a form that provides rapid dissolution thereof. 72 After referring to the fact that it had surprisingly been found that when DRSP is provided in micronized form as specified, rapid dissolution occurs in vitro, the specification says that, without wishing to be limited to any particular theory, it appears that the in vitro dissolution rate of DRSP is connected to the dissolution rate in vivo resulting in rapid absorption of DRSP in vivo on oral administration of the compound. This is said to be: an advantage because isomerisation of the compound in the gastric environment and/or hydrolysis in the intestine is substantially reduced, leading to a high bioavailability of the compound. 73 The specification then states that ethinylestradiol is also a sparingly soluble substance "though less sensitive to degradation than [DRSP] under conditions prevailing in the gastro intestinal tract". 74 In these circumstances the respondents' characterisation of the invention cannot be accepted. The invention is not merely finding the means to ensure that DRSP dissolves rapidly. The invention is the finding of a suitable formulation by which the DRSP is bioavailable and not degraded in the stomach. The problem which would have confronted the hypothetical formulation is that DRSP is both poorly soluble and acid labile. On the one hand the formulator would know that they had to improve the dissolution rate of DRSP but on the other hand they would know that improving the dissolution rate would mean even greater exposure of the DRSP to degradation and transformation into its inactive isomer in the acid environment of the stomach. The invention lies in the creation of a rapidly dissolving formulation of DRSP which substantially reduces isomerisation of the DRSP in the stomach leading to high bioavailability.

FACTS 75 As I have said, the facts of this case do not support a finding of obviousness on any view. Leaving aside for the moment information which might be able to be considered under s 7(3) of the Patents Act there are numerous factors which weigh against accepting the respondents' contention of obviousness. 76 First, the expert evidence has to be weighed up having regard to the fact that Dr Walters has not been involved in the task of formulating any drug, let alone a new API, since the early 1970s and her formulation experience from her period of work in industry is limited. Although I accept that this does not mean her evidence is irrelevant, I do not accept that her experience as a regulator gave her a unique insight into how the hypothetical formulator or drug development team would proceed. As for Dr Rowe, while he has had direct formulation experience, his experience does not extend to the identification of the appropriate dosage form for a new API. Although the respondents submitted that Professor Davies' formulation experience should be understood as having only commenced in 1997, two years before the priority date, this suggestion was never put to Professor Davies. This is despite the fact that in his affidavit Professor Davies said that his scientific, academic and industrial knowledge experience and expertise made him well qualified to give the opinions in his affidavit. That experience included co-founding and being the head of the Laboratory of Biophysics and Surface Analysis, a Research Division of the School of Pharmacy at the University of Nottingham until 2008 in circumstances where that laboratory "has been involved in the development of a number of pharmaceutical formulations for multi-national pharmaceutical companies". Professor Davies also said he was the founder of a company in 1997 which provides consulting services to the pharmaceutical industry providing "customised formulation characterisation and development across a broad range of therapies, mainly containing small molecules, Active Pharmaceutical Ingredients". Professor Davies also worked as a pre-registration pharmacy graduate at a hospital in 1981 and held a research and development position at Roche Products Limited. Faced with this information in his affidavit, any challenge to Professor Davies' expertise as a person directly involved in formulation had to be put to Professor Davies directly. In other words, in weighing up the competing expert opinions it is relevant that Professor Davies' experience involves extensive direct engagement with the formulation process as a member of a research drug development team which, according to his oral evidence, extends to new APIs. 77 Second, despite the respondents' submission to the contrary no part of Professor Davies' evidence disclosed any inconsistencies of the character apparent from Dr Rowe's evidence. Professor Davies' evidence was measured, thoughtful and precise whereas, as I have said, I found aspects of Dr Rowe's evidence internally inconsistent and his explanation for the inconsistency not particularly persuasive. Although the applicants submitted I should hold not dissimilar concerns about aspects of the evidence of Dr Walters I do not do so. Although I found aspects of Dr Walters' evidence unconvincing this was not because of any inconsistencies in her evidence but rather because of the more cogent and compelling opinions presented by Professor Davies. 78 Third, it is difficult to accept the basic thesis of Dr Rowe and Dr Walters that if presented with an acid labile and poorly soluble drug such as DRSP the hypothetical formulator would know that the dissolution rate of the drug would have to be improved in order for it to be bioavailable but that at the same time the hypothetical formulator would not be acutely aware of and concerned about the degradation of the drug into an inactive isomer in the acid environment of the stomach by reason of its acid lability. This is particularly so given that DRSP is an oral contraceptive and, as Professor Davies said, an oral contraceptive is taken on a long term basis, need only be delivered to the patient throughout a 24-hour period, but that the whole of the dose must be effectively delivered in order to obtain the desired therapeutic effect. None of the evidence of Dr Walters or Dr Rowe adequately explained why when confronted with these circumstances, the hypothetical formulator would not perceive it as critical that the drug be formulated in such a way that it would be protected from stomach acid. The obvious answer to protecting a drug from stomach acid in 1999 was for the drug to be enteric coated for all the reasons Professor Davies explained. 79 Fourth, the evidence of Dr Walters and in particular Dr Rowe about difficulties presented by enteric coated drugs was unconvincing in the face of Professor Davies' evidence to the contrary. I am satisfied that by 1999 and indeed well before that date enteric coatings were routinely used for the purpose of protecting drugs from the acid environment of the stomach and for protecting the stomach from the effects of certain drugs. I am satisfied that enteric coatings were seen as simple and reliable technology to achieve these purposes. I am also satisfied that it was well known by 1999 that any fear about dose-dumping could be addressed by enteric coating granules or pellets of the API which could then be made into tablet or capsule form. I do not accept that the hypothetical formulator or drug development team would have perceived any technical, therapeutic or marketing issue with the enteric coating of an oral contraceptive. To the extent that the evidence of Dr Walters and Dr Rowe depended on their view of some form of difficulty with enteric coatings - and their evidence did depend on such views to a considerable extent - I do not accept that evidence. 80 Fifth, the evidence of Dr Walters and Dr Rowe that it is normal, routine or a simple matter of course to determine the bioavailability of an API by in vivo testing was not persuasively related to the particular context of DRSP as an acid labile, poorly soluble drug intended to be used for oral contraceptive purposes. It is these contextual issues which led Professor Davies to the view that the obvious course the hypothetical formulator would have taken if confronted by all the relevant circumstances as at the priority date was to develop an enteric coated formulation of DRSP. Given those contextual considerations I find Professor Davies' evidence in this regard persuasive. 81 Sixth, I also found Professor Davies' evidence about in vitro testing and its significance more cogent than that of Dr Rowe and Dr Walters. Dr Rowe and Dr Walters accepted that in vitro testing was relevant in the sense that it would yield results suggestive or indicative of bioavailability but no more. Professor Davies explained in a most clear and compelling way that the predictive relevance of in vitro test results depends on the results obtained. Accordingly, a rapid rate of dissolution in vitro is not necessarily predictive of good bioavailability because of the many other factors at play but a poor dissolution rate in vitro is predictive of a poor dissolution rate in vivo and hence poor bioavailability. This makes sense because dissolution testing is carried out in conditions which are intended to mimic as best as possible the conditions in the human stomach. One thing which the evidence of Dr Rowe and Dr Walters never adequately disclosed is why, if presented with a dissolution rate in vitro which was poor, the hypothetical formulator would have any expectation that DRSP would be bioavailable to a sufficient extent in vivo. 82 Seventh, although Dr Rowe and Dr Walters both accepted that the dissolution rate of DRSP would have to be improved which would mean that the API would have a greater exposure to the acid environment of the stomach, they also never adequately explained why that fact would not heighten the concern of the hypothetical formulator about the likelihood of degradation of the API in the stomach. 83 Eighth, the approach of Dr Rowe and Dr Walters did not appear to give due weight to the realities of the process of formulation which were emphasised by Professor Davies in respect of his references to limited resources, the need to make hard decisions about going forward, and reducing the number of human patients required during the drug development process. All of these matters would tend to weigh against the opinions of Dr Rowe and Dr Walters that if confronted by a poorly soluble acid labile drug intended to be used as an oral contraceptive the hypothetical formulator would have carried out as some form of routine or manner of course test a bioavailability study at all. 84 For these reasons I accept Professor Davies' evidence that the hypothetical skilled addressee of the patent in all of the circumstances apparent at the priority date would not have carried out the type of bioavailability study described by Dr Rowe and Dr Walters as a matter of routine and thereby be led as a matter of course to the invention. At best I consider it is possible that the hypothetical formulator and drug development team might have carried out such a bioavailability study but this is insufficient for the purpose of obviousness. 85 I do not accept that Pilbrant is evidence to the contrary. It is true that Pilbrant was published in 1985 before the priority date and that Pilbrant states that because the drug there in question, omprazole, was poorly soluble and acid labile the options for the formulation of an oral solid dosage form were limited to a conventional form and an enteric coated dosage form the first of which was ruled out by a pilot bioavailability study. It is also true that Pilbrant states that because omeprazole degrades rapidly in an acid environment it was "essential to know the magnitude of the degradation occurring prior to the absorption of an oral dose" with the consequence that the pilot bioavailability study was performed. As Professor Davies said Pilbrant in fact confirms what the hypothetical formulator would already know and expect, which is that acid labile drugs degrade in the stomach. In that sense it cannot be said that there would be any expectation of success and, indeed, there was no success for omeprazole in a conventional form so that the only formulation option would be an enteric coated formulation. I do not accept that Professor Davies' personal knowledge of the expectations of the investigators involved in the studies reported in Pilbrant in any way affects the validity of his evidence in this regard. I also accept Professor Davies' evidence that the fact that DRSP is an oral contraceptive would mean that even if Pilbrant itself and the results reported therein about omeprazole could be taken to be part of the common general knowledge of the hypothetical formulator, what would be taken from Pilbrant is that the API would degrade in the stomach and needed to be protected by an enteric coating just as Pilbrant says was required for omeprazole. 86 Moreover if the hypothetical formulator did carry out a pilot or limited bioavailability study, which I accept is a possibility but by no means a probability, I consider that all of the expert evidence supports the conclusion that the formulator would do so in the expectation of failure and not success. There is no doubt that this is the effect of Professor Davies' evidence. In my view, despite the submissions of the respondents to the contrary, it is also the effect of the evidence of Dr Rowe and Dr Walters when such evidence is properly analysed. When the question was expressly put to Dr Rowe about his expectation in this regard the effect of his response is that he would have to do the work in order to know the result - in other words at best he had no expectation of success. Dr Walters described bioavailability studies as necessary to confirm that an immediate release formulation was not a viable option. In other words, the effect of their evidence is that the bioavailability study is needed to exclude the possibility, albeit unlikely, that DRSP would prove to be bioavailable in an immediate release form. 87 Another difficulty with the evidence on which the respondents relied is that limited attention was given to the fact that the claimed invention involves a nominated dissolution rate for DRSP. I do not accept the respondents' proposition that the dissolution rate which appears in claims 3 and 11 of the patent can be ignored or treated as irrelevant on the basis that it represents nothing more than a result of an experiment or a standard dissolution rate as at the priority date. It is the invention which is claimed which must be obvious. The claimed invention includes the dissolution rate. The dissolution rate specified is different from the standard referred to by Dr Walters but, more importantly, that dissolution rate is for a particular immediate release formulation. None of the evidence explains why it would have been obvious to the hypothetical formulator as at the priority date to have improved the dissolution of DRSP to the standard specified in claims 3 and 11 as a requirement of the pharmaceutical composition in the oral dosage form as described in those claims. As Professor Davies said, if anything, the improved dissolution rate would have been seen by the hypothetical formulator as making it even more likely that the DRSP in the oral dosage form would degrade in the stomach yet as the specification for the patent explains that is not in fact the case. This is apparent when consideration is given to the specification which discloses that the dissolution rate achieved for all batches in Example 2 related to the tablets prepared in Example 1 which involved micronized APIs in order to improve the dissolution rate. 88 A further submission of the applicants must also be accepted. As the applicants submitted it is apparent from Dr Walters' evidence that micronization is a relative concept with a potentially wide range of meanings. The respondents had not established or even attempted to establish that every immediate release formulation of DRSP that might be tried at the priority date would produce the claimed dissolution rate and nor have they established that any particular immediate release formulation would have been obvious or routine to try at the priority date let alone to try with an expectation of success. 89 Turning to information said to constitute prior art information within the meaning of s 7(3) of the Patents Act, it should first be said that I do not accept that it has been established that any of the alleged prior art information is part of the common general knowledge. Further, despite the prior art information in the respondents' amended particulars of invalidity ranging far and wide the case presented at the hearing was far more limited. 90 The applicants accepted that the hypothetical formulator would have ascertained and treated as a single source of information Krause I and III but submitted that this information would not have been regarded as of any real relevance by the hypothetical formulator. This submission is supported by the evidence of Dr Rowe that Krause I would have made no difference to the way he would have proceeded and all of the experts agreed they would carry out their own preformulation tests notwithstanding Krause I. Krause I shows that DRSP is acid labile with 50% or thereabouts of the DRSP degrading over 90 minutes compared to a 50% degradation of spirorenone in 150 minutes. Whether or not the studies in Krause I were carried out at room temperature or 37º Celsius, the temperature in the stomach, (the former being far more likely given the evidence of Professor Davies), Dr Walters' evidence about the relevance and importance of the Krause papers was not persuasive. Dr Walters' hypothesis was that because the molecular structures of spirorenone and DRSP were largely identical, the hypothetical formulator would expect them to behave similarly in vivo and because spirorenone was shown to be bioavailable the hypothetical formulator would carry out bioavailability testing of DRSP with a view to formulating an immediate release product. The reason this evidence is unpersuasive is that Dr Walters herself ultimately came to the view that there were key differences between the two molecules with the consequence that the literature about spirorenone was unhelpful in respect of DRSP. It is not apparent why there would be imputed to the hypothetical formulator at one and the same time awareness of structural similarity between the two molecules and a lack of awareness of the key differences between the two molecules, in particular the significance of the cyclo-propol ring which led Dr Walters ultimately to the view that the literature on spironolactone would not assist in understanding DRSP. When this is considered with Dr Walters' evidence about the stomach it tends to lend even greater weight to the contrary opinions of Professor Davies. Dr Walters attempted to provide a hypothesis as to why the invention claiming the patent in fact works by reference to the processes of the stomach which depended upon the notion of a limited or fixed amount of hydrochloric acid being present in the stomach for dissolution purposes. Professor Davies' contrary evidence to the effect that the processes of the stomach are dynamic with gastric acid being created by hormonal responses, there being an ongoing process of gastro intestinal transit, was readily able to be understood and far more cogent on this issue than that of Dr Walters. For these reasons I prefer the conclusion that Krause I and III would not have made any material difference to the position of the hypothetical formulator at the priority date. 91 The same conclusion must be reached in respect of Oelkers. I do not accept that Oelkers is prior art information within the meaning of s 7(3) of the Patents Act in any event. Dr Rowe did not carry out a literature search and did not suggest that the Krause papers or Oelkers were relevant to him or would have been relevant to the hypothetical formulator. Dr Walters did ascertain Oelkers in her literature search but did not understand it to be relevant to the task which she was performing. Dr Walters only reconsidered Oelkers at the request of those instructing her. For these reasons I do not accept that Oelkers constitutes information which the skilled addressee would have regarded as relevant at the priority date. As the applicants submitted, Oelkers constitutes clinical papers which do not contain any information that would be considered relevant by a formulator. 92 To the extent that it is necessary to say so, given that the respondents did not contend that Lachnit was prior art information within the meaning of s 7(3), I accept the applicants' submission that Lachnit could not constitute such information. The fact that Lachnit is referred to in the patent does not make it part of the common general knowledge nor does it make it s 7(3) information. No other evidence suggests that the hypothetical formulator would have ascertained, understood and regarded as relevant Lachnit. 93 Otherwise the only observation which should also be made in regard to obviousness is that I accept the applicants' submissions that there is a distinct quality of assumed hindsight about the respondents' case on obviousness. The patent demonstrates that the immediate release formulation which satisfies the required dissolution rates is bioavailable. In the light of this knowledge it is easy to look backwards and infer that it would have been a matter of routine for the skilled worker to carry out a bioavailability study on an immediate release formulation. However, and as the applicants put it, at the time the formulator would have been making these decisions all the preformulation data that would have been obtained would indicate that an immediate release version would degrade in the stomach and thus not be bioavailable. In the context of an oral contraceptive the idea that the hypothetical formulator would carry out an in vivo study on a formulation that they expected to fail rather than moving forward with an enteric coated formulation they would have been confident would work is unrealistic. The respondents have, as the applicants put it, succumbed to the "seductive clarity of hindsight" (Alphapharm at [21]). From the point of view of Dr Rowe's evidence this was not assisted by the fact that he had been given the patent at the outset of his engagement. In respect of Dr Walters' evidence her hypotheses about how the invention might work appeared after she had read the patent. While Professor Davies was also aware of the equivalent US and UK patents his evidence did not appear to have been affected in any way by hindsight, Professor Davies having successfully placed the hypothetical formulator in the position that would have existed at the priority date. 94 For these reasons the respondents' contention that the claimed invention lacks an inventive step by reason of obviousness cannot be accepted.

MANNER OF MANUFACTURE 95 The respondents contended that the invention does not disclose any new manner of manufacture because the invention comprises nothing more than the identification of a physical chemical characteristic of a pharmaceutical composition and the reporting of the experimental results of dissolution of the composition which are disclosed on the face of the patent to be part of the common general knowledge. This argument seems to depend on the respondents' incorrect characterisation of the invention. To the extent that any other issue is involved the respondents' submissions are inconsistent with authority. 96 It cannot be said that the specification shows on its face that the invention does not involve a manner of new manufacture (Commissioner of Patents v Microcells Ltd (1959) 102 CLR 323). Indeed the specification contends to the contrary when it notes that it has surprisingly been found that when DRSP is provided in a micronized form as specified, rapid dissolution occurs in vitro and isomerisation of the compound in the gastric environment of the stomach is substantially reduced. This can hardly be said to be an invention which consists of nothing more than the disclosure of the physical chemical characteristics of DRSP or the reporting of experimental results about the dissolution of DRSP. 97 The issues arising in respect of a contention that an invention does not involve a manner of new manufacture were recently considered by Nicholas J in Cancer Voices Australia v Myriad Genetics Inc [2013] FCA 65 at [81] - [103]. At [88] Nicholas J concluded that the essential issue was whether or not there was created a product which consists of an artificially created state of affairs which has economic significance (citing National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 at 277). As the applicants submitted, the economic significance of the claimed invention in this case cannot be disputed in circumstances where the applicants' Yasmin product has been on sale since September 2002 and it must be inferred that the respondents consider it of sufficient economic significance to develop, market and sell their Isabelle product in Australia, as well as defend the infringement claims and contend for revocation of the patent. Further, the specific dissolution rate achieved is not a quality of DRSP itself but is the result of the human intervention required to create an artificial state of affairs. 98 In these circumstances the respondents' contention of the lack of a new manner of manufacture must be rejected.

LACK OF FAIR BASIS 99 Section 40(3) of the Patents Act requires the claims of a patent to be fairly based on the matter described in the specification. There was no dispute between the parties that the relevant test is whether there is "a real and reasonably clear disclosure" of what is claimed (Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 1) (2004) 217 CLR 274; [2004] HCA 58 (Lockwood v Doric No 1) at [69]. 100 According to the respondents, while claims 3 and 11 of the patent claim any type of formulation that achieves the specified rapid dissolution parameters, there is no real and reasonably clear disclosure in the specification of what is claimed because the specification is limited to a pharmaceutical composition if preparation prepared by micronizing DRSP or spraying from a solution onto particles of an inert carrier. This is said to follow as a matter of proper construction of the specification, in particular, that the only "composition" disclosed is the composition created by the process of micronization or spraying. This argument cannot be reconciled with the terms of the specification. This is not a case of there being mere "loose or stray remarks" in the specification (Lockwood v Doric (No 1) at [69]). As the applicants submitted it is clear from the specification when read as a whole that the invention is not limited to compositions created by micronizing and spraying DRSP onto inert carrier particles, these being mere examples of how the required rapid dissolution might be achieved. 101 For these reasons the respondents' contention that claims 3 and 11 are not fairly based on the specification cannot be accepted.

INFRINGEMENT 102 The case on infringement was limited to a single question, it being accepted that the test for infringement is whether the alleged infringement takes each of the essential integers of the relevant claims (Populin v HB Nominees Pty Ltd (1982) 41 ALR 471 at 475). The only issue in dispute between the parties was whether the references to 3 mg of DRSP in claims 3 and 11 would be construed so as to extend to a standard variance, being the standard variance set out in TGO No 56, which as at the priority date specified a standard variance of ± 7.5%. 103 The respondents submitted that the claims should not be construed in this way because (i) the references to 3 mg are clear and unambiguous and cannot be varied or qualified by reference to extrinsic documents, (ii) in seeking to amend the claims recently from the reference to "from 2 mg to 4 mg" of DRSP the applicants chose to specify the precise amount of 3 mg, (iii) by way of contrast to the claims the specification contains numerous references to less precise amounts by use of words such as "about", and (iv) if construed in accordance with regulatory requirements the amount claimed would vary with the regulatory requirements as in force from time to time. 104 None of these arguments can be accepted. It is plain from the evidence that there is no question of variation or qualification of the claims by reference to extrinsic documents. As Dr Rowe made clear it is simply a question of how the skilled addressee would read the reference to 3 mg of a dosage form. The skilled addressee would read such a reference to a dosage form as 3 mg ± the accepted variance as in force at the priority date. As Dr Rowe's evidence disclosed, reading a dosage form any other way would be simply impracticable. Further it is not the case that the reference would be construed differently at different times. It is the accepted standard variance for dosage forms as at the priority date of which the skilled addressee would be aware. Attempting to construe the claims by reference to some imputed intention of the patentee in amending the claims is also fraught with danger and not a persuasive approach to construction. Nor should the references in the specification be used to construe the claims differently from how the skilled address would construe them in context. This is not a case of expanding the scope of the claims beyond what the claims actually say; it is a case of doing nothing more than giving effect to what the claims actually say. 105 For these reasons the fact that the respondents' Isabelle products, as tested, that contained 3.05 mg, 3.04 mg, and 3.03 mg of DRSP does not mean that the alleged infringing products do not involve this essential integer. Further, the undisputed evidence establishes also that all other essential integers are taken in the respondents' products. 106 For these reasons the applicants have established infringement of claims 3 and 11 of the patent by the respondents.

CONCLUSIONS 107 For the reasons set out above the respondents have not established that claims 3 and 11 of the patent are invalid. The applicants have established that the respondents have infringed claims 3 and 11 of the patent. Orders should be made accordingly. I certify that the preceding one hundred and seven (107) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

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