6.1 Consideration of the arguments
154 Roche submits that the following factors weigh in favour of the grant of an interlocutory injunction.
155 First, it is the owner of the patents, the infringement of which is not in dispute. Whilst there is, as Roche accepts, an arguable case on Sandoz's cross-claim for invalidity based on an absence of an inventive step, this is not sufficient to displace the conclusion that the balance lies in Roche's favour. For the reasons set out in section 5 above, I agree.
156 Secondly, MABTHERA has been on the market since 1999. Roche has a well-established market position in relation to the patented indications. The status quo is that the only rituximab product on the Australian market is MABTHERA. The launch of RIXIMYO in the face of Roche's patent rights will adversely affect the status quo and severely affect the business of FHLR and Roche Products.
157 Thirdly, Roche contends that any loss that it suffers as a result of the launch of a generic rituximab will not be able to be adequately calculated or quantified by an award of damages. In this regard it is necessary to distinguish between the causes of any loss that Roche contends it will suffer and the difficulties that Roche contends will be involved in quantifying that loss.
158 The categories of loss that it asserts it will suffer are:
(1) a 16% price drop mandated by the PBS (there is also a separate 14.5% price drop, but this will occur regardless of Sandoz's actions);
(2) additional decreases in price caused by (i) competition with Sandoz and possibly at least one other generic; and (ii) subsequent additional decreases in price by reason of mandatory price disclosure obligations under the PBS;
(3) loss of market share; and
(4) loss to goodwill as a result of (i) any partial increases in price upon the grant of a final injunction; and (ii) the possibility of terminating staff, which may also result in loss of market presence in Australia.
159 The factors that Roche contends are relevant to the irreparable nature of the harm and difficulties in assessing the loss are said to be:
(1) that the 16% price drop is unlikely to be reversed and Roche will not be able to increase its prices to what they were before Sandoz's entry;
(2) as a result of the likely entry of at least one second generic rituximab (discussed further below), it will be difficult to assess each generic's liability for the loss;
(3) future losses may need to be assessed, which would require hypothesising in relation to future pricing, market share and so forth; and
(4) the losses to goodwill referred to in paragraph [158(4)] above are unquantifiable.
160 The evidence of Mr Petersen is that (in approximate terms as at 2017); 47% of sales of MABTHERA are for FL, worth $68 million; 7% of sales are for CLL, worth about $9.8 million; 29% of sales are for DLBCL, worth about $42 million; and 9% of sales are for RA, worth about $12.5 million. Approximately 8% of sales are for uses that are not within those indications.
161 Mr Samwell's evidence is that Sandoz's launch of RIXIMYO is contingent on it obtaining PBS listing, but upon launch it will be made available for all patients. For PBS subsidised indications, it is likely that the biosimilar product would be "A" flagged with the result that even where a doctor prescribes rituximab by reference to the brand name MABTHERA (rather than the active ingredient rituximab) a hospital would be entitled to dispense the biosimilar product on the basis that it is considered therapeutically interchangeable with MABTHERA, unless the doctor ticks a box on the prescription that indicates that it must not be substituted.
162 Mr Petersen estimates that Roche will lose a substantial share of the rituximab market and that Roche's loss is likely to be in the order of tens of millions of dollars. He provides an analysis of likely loss of market share by reference to the United Kingdom (UK) experience, and claims that such loss would likely be exacerbated by the operation of the "biosimilar uptake drivers" implemented as a matter of government policy. In the case of RIXIMYO, the PBAC made a number of positive recommendations designed to encourage the prescribing of that product by clinicians. Given the sales volumes to which I have referred above, I accept that the loss of revenue to Roche in the first 12 months will be very significant. Even if one notes that the NHL and CLL patents will expire in the latter half of 2019, it is not unrealistic to expect that sales in respect of all patented indications in the next 12 months alone would be very substantial.
163 The listing of RIXIMYO on the PBS will cause a mandatory 16% price reduction of the approved price of MABTHERA, which will be increased to 25% on 1 October 2018. It is not necessary in the present case to address the detail of the arrangements that lead to the 16% price drop. The details of the scheme pursuant to which this would take place have been set out in detail in the first affidavit of Ms Todd and are not in dispute. In short form, upon the introduction of a biosimilar brand the MABTHERA products would move from PBS "Formulary F1" to "Formulary F2", which would prompt the price reduction. The evidence of Mr Petersen and Ms Todd is that, whilst the Minister has a discretion to reverse a product price reduction, in their experience this has never occurred. I accept that if the present injunction is refused, but at trial a final injunction is granted, the evidence indicates that the prospect that Roche would be in a position to restore its prices to their present level is remote.
164 Roche next submits that it will be faced with competition not only from Sandoz, but also from sales of at least one additional biosimilar. This will have a confounding effect on the calculation of damages, because it will lead to Roche competing with two or more biosimilar products in the market for rituximab.
165 In this context Roche draws attention to the fact that Sandoz is not the only company with a rituximab product approved and listed on the ARTG. On 16 April 2018, Celltrion Healthcare Australia Pty Ltd (Celltrion) registered two products, RITEMVIA and TRUXIMA on the ARTG in respect of the same indications as MABTHERA. The agenda for the July 2018 PBAC meeting includes an entry seeking to include the TRUXIMA brands of rituximab on the PBS for all indications for which the reference biologic (that is, MABTHERA) is listed. Ms Todd believes that if Roche is unsuccessful in restraining Sandoz, then the July PBAC meeting will consider and approve the listing of TRUXIMA, which she expects will take place on 1 December 2018, with the consequence that a second biosimilar product would be "A" flagged for prescription. The solicitors for Roche, Spruson and Ferguson, have written to Celltrion, informing it of the patents, and seeking details as to its proposals, but the evidence discloses no substantive response.
166 The evidence indicates that Celltrion rituximab products have been released on the market in the UK, and that they compete there with Roche's UK MABTHERA products. Mr Petersen gives evidence that in April 2017 TRUXIMA received UK regulatory approval for all of the indications for which MABTHERA is approved in the UK. In June 2017, Sandoz International launched a further biosimilar version of rituximab under the name RIXATHON, which was approved for the same indications. Mr Petersen gives evidence that the price of the biosimilar products was in the order of 40% less than that of MABTHERA and that, upon the introduction of those products to the market, the use and market share of MABTHERA decreased significantly.
167 Sandoz points out that the regulatory regime in the UK is different to that in Australia, and that accordingly the history of events there is not relevant to what is likely to happen in Australia. That is likely to be so in many respects, but in my view two matters are able to be drawn from the evidence concerning the UK experience. First, that it is more than idle speculation to consider that one or other of the Celltrion products will be imminently ready for launch in Australia. Indeed, the evidence suggests that it is likely. Secondly, the market experience in the UK indicates a price drop of about 40%. In the present case Mr Samwell has given evidence that the introduction of biosimilar products competing with reference biological products will not cause prices to drop in the way that the market has seen for small molecule drugs, where reductions of up to 80% have been experienced. However, Sandoz supplies no information as to the pricing that it expects to adopt if it is permitted to launch its product. No doubt that is for sound commercial reasons, but the result is that the Court has no metric by which to gauge the likely price drop other than, perhaps, information from the experience in the UK. Mr Petersen gives evidence that in his view the price drop will be similar if not greater than that experienced in the UK. This is particularly as a result of the further mandatory price disclosure mechanism, which in turn will lead to additional price drops.
168 The mandatory price reduction mechanism arises under the NH Act by operation of what is euphemistically called a "simplified price disclosure" mechanism, which applies to manufacturers of medicines listed in the F2 formulary. Under the NH Act the sponsors of drugs listed on the F2 formulary must disclose to the Department of Health's Price Disclosure Data Administrator certain data in relation to the products sold (other than those sales to public hospitals). This data is then used to determine the "weighted average disclosed price" (WADP) of the listed items. The calculation takes into account the average PBS approved ex-manufacturer prices of all relevant brands, the disclosed net revenue generated by those brands and the volumes sold. If the WADP is at least 10% less than the approved ex-manufacturer price (AEMP) in a given period, then the AEMP will be adjusted downwardly, thereby causing a further reduction in price for the listed products. In this equation, the greater the market share of the generic products, and the greater the rebates or discounts given in respect of those products, then the greater the reduction in the WADP and therefore the greater the reduction in the AEMP.
169 Mr Petersen gives evidence that the future price disclosure obligations for MABTHERA and other rituximab products in respect of all discounted sales to community pharmacies and private hospitals will trigger corresponding price reductions from the second year of sales onwards. The first reduction would not occur until October 2019 and then would occur every 6 months after that for 3 years. As a consequence, the first reduction would occur after the earliest patent has expired, however, Roche notes that the reduction would occur sooner than it otherwise would have if Sandoz were injuncted.
170 As a consequence of competition from Sandoz and also Celltrion, Mr Petersen expects that Roche will be obliged to reduce the price of MABTHERA substantially. This, Roche submits, will produce a spiralling effect on prices after the first 12 months because of the operation of the simplified price disclosure mechanism.
171 Mr Petersen gives evidence that it is not technically or commercially feasible for Roche Products to set different prices for units of MABTHERA depending on whether they are used for inpatient treatment or dispensed for outpatient treatment. This is because Roche Products is not able to identify the particular end patients ultimately receiving the products, especially where MABTHERA is sold to a compounding house which subsequently distributes the drug. As a consequence, whilst the mandatory price reductions only concern that proportion of sales to which a PBS subsidy applies, Roche will apply the same price to all of its MABTHERA products, regardless of their end use.
172 Although, as Sandoz submits, these pricing consequences to Roche are a matter of commercial choice, I accept that as a matter of practical implementation this will be a consequence of any mandatory price drop.
173 Roche points to a number of other side effects of the price reductions which it considers would flow from the introduction of RIXIMYO into the Australian market. One is that if interlocutory relief is refused and a final injunction is ultimately granted such that RIXIMYO products were required to be withdrawn from the market, it would be necessary to raise the prices of the MABTHERA product to some extent (although it alleges that it would not be able to return to former prices). This would inevitably result (according to Mr Petersen) in the loss of some of the goodwill amongst Roche's customers and also give rise to risks for the reputation of Roche Products in Australia generally and, consequently, the business of FLHR. Sandoz counters this point by noting that the majority of rituximab customers are hospitals (although there is still at least a small proportion of patients who pay for rituximab themselves). Hospitals, being more sophisticated customers, would understand the nature of the pharmaceutical business. Sandoz therefore contends that any damage to goodwill would be diminished. Further, Sandoz submits that Roche would not raise its prices again in any event because at least two if not three of the patents will have expired and Petersen indicates that the same price will be charged for Mabthera across the board.
174 Mr Petersen expects that, given the drop in revenue (noted in paragraph [162] above), within 12 months following the launch of the RIXIMYO products, Roche would be likely to be required to terminate some staff. He notes that there is presently no marketing staff dedicated specifically to MABTHERA but that it is likely that the salesforce allocated to other products would be terminated and this would result in a reduction of Roche Products' presence in the Australian marketplace and have a consequential impact on the goodwill enjoyed by Roche.
175 Fourthly, Roche contends that Sandoz has been aware since at least December 2017 of the patents and of the intention of Roche to assert its rights. It submits that Sandoz has taken steps to prepare for the launch of RIXIMYO in full knowledge of the possible consequences of an interlocutory injunction being granted, and so, in weighing the balance of convenience, substantial weight should be placed in favour of the patentee given that the respondent "deliberately took the applicants' innovation, knowing of the claim that this was an invention entitled to protection": Tidy Tea Ltd v Unilever Australia Ltd [1995] FCA 1439; 32 IPR 405 at [415]. As Roche noted in opening, the method of treatments patents have been on foot in the absence of the compound patent since 2013 and all but one were amended, with no oppositions thereto.
176 Finally, Roche also points to the fact that there has been no allegation of delay on Roche's part in bringing its action against Sandoz.
177 Sandoz answers the Roche claims that damages would not be an adequate remedy in two parts. First, it submits that the difficulties that Roche contends would confront the calculation of its loss are overblown and are not as complicated as Roche claims. Secondly, it submits that the harm that it and the public will suffer if at final hearing a final injunction is refused and a claim is made on the undertaking as to damages, is far harder to calculate and would result in greater irreparable harm.
178 As to Roche's claims of irreparable harm, Sandoz first submits that it will undertake to keep records of sales and use of MABTHERA, including of the relevant indication for which RIXIMYO is prescribed. Mr Samwell gives evidence that the administration of rituximab takes place predominantly in a small number of hospitals and infusion clinics and that it would not be an onerous task to track the administration in each of these outlets. Mr Samwell gives evidence that more than 50% of the revenue for public non-compounding hospitals is attributable to ten hospitals and almost 60% of the revenue generated by rituximab for private non-compounding hospitals is attributable to less than 10 hospitals. If Sandoz is permitted to launch, it could enter into agreements with its customers requiring records to be kept and to be available for inspection by Sandoz from time to time to ensure that it is possible to trace sales for patented- and non-patented indications. Furthermore, the evidence of Ms Matthews (the Director of pharmacy, at RMH is that at present, records are kept at RMH in the ordinary course of dispensing with respect to what brand was administered to which patient and for what indication. This includes records of off-label use, for which applications must be made on a case by case basis.
179 In response, Mr Petersen states that the administration of rituximab takes place at approximately 270 hospitals and oncology infusing clinics in Australia, which, it submits, presents a far more complicated picture of record keeping than Sandoz suggests would apply.
180 Sandoz next submits that the assessment of harm suffered by Roche should not be assumed to be complicated by other competitors in the market. The evidence of Mr Samwell quotes a 2009 report by the US Federal Trade Commission, which estimated that the cost of developing a new biosimilar is between US$100 - US$200 million and takes between 8 - 10 years. By contrast, the development of small molecule generic drugs cost between US$1 -US$5 million and take between 3 - 5 years. This means, Mr Samwell explains, that there is less likely to be a large number of generics competing with biosimilar products and less likely to be radical price reductions. Even so, Mr Samwell gives evidence that he is aware that not only Celltrion, but also Pfizer is likely to seek to launch a biosimilar rituximab in Australia and that both have been involved in actions in other jurisdictions in relation to Roche's rituximab patents.
181 Further, Sandoz submits that the uptake of a new biosimilar medicine is relatively slow compared with small molecule compounds and that Roche's anxiety as to the likely market share and loss of sales that it will experience is unfounded. In this regard the expert evidence indicates that not only is it necessary to satisfy clinicians as to the safety and efficacy of a biosimilar relative to the reference product, but also there is a tendency on the part of practitioners to be reluctant to switch treatment for an individual patient from the reference product to a biosimilar. Professor Prince gives evidence that at present Epworth Healthcare is supplied MABTHERA by a compounding pharmacy. If the decision were to be made at a hospital level to administer a biosimilar rituximab, and he was satisfied with efficacy data that he has been presented to support the decision, he would be comfortable with transitioning (that is, switching) patients to the biosimilar. Professor Buchanan is more cautious. He gives evidence that he would be reluctant to switch patients already being treated with MABTHERA to a biosimilar, but he would be comfortable to use a biosimilar on patients who had not previously been treated with another form of rituximab (referred to as "naïve" patients). The cause for the caution arises (and it is not in dispute between the experts) arises at least in part because of the concerns about immunogenicity described in paragraph [56] above. That is, because biologic therapies are complex medications produced using a biological source, such as cells or bacteria. There can be variations and modifications between different batches from the same biologic supplier. A biosimilar is intended to be an equivalent for the reference biologic, but it cannot be identical to the reference products because the biosimilar is unlikely to have the same cell line and it is impossible to reproduce identically every step in the manufacturing process. The consequence is that some clinicians are cautious about prescribing biosimilars to patients who are already receiving the reference medicine.
182 In this connection Sandoz submits that it is not to be concluded that the introduction of a first biosimilar rituximab would have swift market penetration, despite the government policy of biosimilar uptake drivers. It submits that the direct evidence of caution from clinicians suggests a more sedate progression than might be expected with small molecule generic products. The consequence of all of this, Sandoz contends, is that for a biosimilar medicine there will be fewer market entrants and less market volatility.
183 As to Celltrion's imminent launch, Sandoz contends that Roche can only speculate that Celltrion will launch in December 2018, being the earliest possible date.
184 In my view the evidence does not permit the conclusion that there will not be other generic competitors in the market in the short term. To the contrary, the evidence indicates that it is at least likely (absent an interlocutory injunction) that the Celltrion TRUXIMA product will be launched in Australia after 1 December 2018. That event is likely immediately to introduce some confounding effects on the assessment of loss suffered by Roche.
185 In further answer, Sandoz submits that the assessment of a claim for compensation by Sandoz under the usual undertaking as to damages is likely to be more complex, time-consuming and costly than required if damages were sought by Roche at the conclusion of any proceedings. Sandoz submits that three cases that are yet to be determined in this Court establish this point: Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (Federal Court of Australia proceeding no. VID 195 of 2009 and other related proceedings - NSD 596 of 2009 and NSD 1124 of 2009) (Venlafaxine Proceedings); Apotex Pty Ltd v Sanofi-Aventis & Ors (Federal Court of Australia proceeding no. NSD 1639 of 2007 and other related proceedings - NSD 1311 of 2008 and NSD 1408 of 2008) (Clopidogrel Proceedings); Watson Pharma Pty Ltd v AstraZeneca AB (Federal Court of Australia proceeding no. NSD 2342 of 2011 and other related proceedings NSD 208 of 2012 and NSD 673 of 2011) (Rosuvastatin Proceedings).
186 Sandoz relies on the evidence of Mr Swinn, who is the solicitor for Sandoz in the present proceedings and for Sigma in the Venlafaxine Proceedings. He notes that in each case one or more generic pharmaceutical companies were restrained by interlocutory injunction from supplying their product(s). In each, the generics subsequently established that a final injunction should not be granted, because the patent was revoked. Proceedings are now on foot in each case whereby persons who claim to have been adversely affected by the grant of the interlocutory injunction seek compensation from the patentees pursuant to the usual undertaking as to damages. In each case the parties initially included at least the companies restrained and the Commonwealth of Australia (which subsidised the cost of the originator product through the PBS), although in the Clopidogrel and Rosuvastatin proceedings the generics settled, leaving the Commonwealth as the only remaining claimant. In the Venlafaxine Proceedings suppliers to the generics have also claimed.
187 Mr Swinn gives evidence that in the Venlafaxine Proceedings, the pleadings reveal a very significant number of issues to be in contest concerning the hypothetical position that the various claimants would have been in, had they not been restrained by the interlocutory injunction (that is, the "counterfactual" position). The variables in issue include whether each generic claimant would have launched its generic product at all; if so, when it would do so; whether each generic would have confined its sales to the non-PBS market or sought listing on the PBS; if so, when each generic product would have been listed on the PBS; the total size of the market for the generic products in each month of the claim period; the prices at which the generic products would have been sold by each market participant each month during the claim period; the portion of the market that would have been captured by each generic; and whether the originator would have launched its own generic or authorised a third-party to do so or taken other measures to protect its market. According to Mr Swinn, the econometric evidence going to loss proposed a total of 22 alternative counterfactual scenarios, depending on the possible factual outcomes determined by the Court. This, Mr Swinn says, has led to approximately 4,500 pages of affidavit material going to factual issues and issues requiring expert opinion evidence.
188 Mr Swinn records that the Colpidogrel compensation claim was heard over 6 weeks in 2017 and that judgement is reserved; that the Venlafaxine claim is listed to be heard over 6 weeks in June and July 2018; and that the Rosuvastatin proceedings are yet to be set down.
189 Sandoz contrasts the time and complexity of these proceedings with claims for damages made by patentees who ultimately succeed in establishing infringement and points to Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd [2017] FCA 250; 124 IPR 23 as an example of a case where such a claim was advanced, heard over 8 days and determined in short measure.
190 Sandoz submits that in the event that any injunction is discharged at final hearing, any analysis of loss that it suffers will be entirely hypothetical and will require consideration of counterfactual situations of varying types and complexity, such as those that have dogged the cases referred to above, including the likely impact of the possible entry of TRUXIMA or another generic rituximab and the entry into the market of Roche's own GAZYVA product, which does not contain rituximab but has therapeutic relativities to MABTHERA. GAZYVA is presently listed on the PBS for CLL and an application has been made for GAZYVA to be listed on the PBS for untreated FL. Furthermore, the market for biosimilar products is relatively new, which will make it much harder to determine what might have happened, the impact of the biosimilar uptake drivers (if any) and the benefits of any first mover advantages that may accrue.
191 Sandoz raises the following further points which it contends play in its favour and against the grant of the interim injunction.
192 It submits that the launch of RIXIMYO will yield public benefits including:
(1) a reduced cost to the Commonwealth of PBS approved uses of rituximab;
(2) a reduction of substantial costs presently absorbed by hospitals and patients for "non-approved" uses of rituximab and thereby improved patient access to a life-saving drug; and
(3) (by reason of the reduced cost) the fostering of new research into potential new indications for rituximab.
193 It submits that the consequence should be that a public interest factor weighs against the grant of the interim relief sought.
194 It is perhaps axiomatic that a discounted starting price for rituximab would reduce the cost to the Commonwealth of any subsidy under the PBS. That submission has diminished force for Sandoz because of an absence of evidence (as I have mentioned) as to what discount it would give for RIXIMYO. The UK experience suggests about 40%. However, one might properly be wary of profit-making commercial parties invoking the public interest in support of their private ends. In every case concerning the threatened launch of a generic product to upset a patented monopoly there is a contingent public interest in a price drop. But this is dependent upon a finding that the monopoly is not valid, or that the generic product is non-infringing. Until that finding is made it is to be doubted that it is intrinsically in the public interest for a pre-emptive launch to take place only by reason of an asserted drop in price. These observations address submissions (1) and (3) above.
195 In pointing to a public interest in reducing costs absorbed by hospitals and patients for "non-approved" uses of rituximab (submission (2) above), Sandoz raises a more cogent point. It is necessary to explain the factual background to this submission in a little more detail.
196 As outlined in section 3.3 above, there exist significant limitations as to when a prescription for rituximab will be subsidised under the PBS. This is particularly the case for the treatment of RA. According to Professor Buchanan, approximately 80% of patients meet the criteria for continuation. He personally has 4 current private patients who have self-funded rituximab treatments for RA as they do not meet the PBS criteria for subsidised treatment. This is at a cost of $18,000 to $20,000 per person on an annual basis.
197 Furthermore, a clinician may prescribe rituximab "off-label" which means that the drug has not been approved and is therefore not registered on the ARTG for the prescribed indication. Such use is not always subsidised under the PBS. The consequence is (absent ad hoc subsidies given either by the government, private health insurance or the manufacturer such as through Roche's compassionate assistance program) that either the hospital or the patient will have to pay the full price for the drug.
198 Professor Prince gives evidence that he is aware of a significant number of off-label uses for rituximab in haematology or other immunological fields. In the field of rheumatology, Professor Buchanan gives evidence that he is aware of rituximab being widely prescribed for the treatment of auto immune diseases other than TGA approved indications. Dr Liew gives evidence of a retrospective review of patients receiving rituximab off-label at Westfield Hospital in New South Wales between July 2002 and January 2006. He reports that the study shows a growing use of such off-label indications, resulting in a cost to the hospital of $160,907 in a six-month period when, at the time, a 100mg vial of rituximab cost $943 and a 500mg vial cost $2357. Dr Liew refers to other articles published in 2010 and 2013 which report an increasing trend of off-label use. However, in this connection it is also relevant to note the evidence of Ms Todd to the effect that the PBAC conducted a review of off-label use of rituximab and found that while there was a broad unmet clinical need, the quantity and quality of available evidence for uncommon indications was limited and that rigorous assessment of cost-effectiveness for uncommon indications would be impractical due to small patient numbers and inadequate supportive evidence. As a consequence, a decision was made not to list rituximab for broader indications.
199 The evidence of off-label use is of significance, because it directs attention to the fact that care should be taken to ensure that the scope of any interlocutory injunction granted should not, absent good reason, extend beyond the scope of the monopoly reflected in the claimed invention.
200 Next, Sandoz submits that RIXIMYO is a very important product for it. Mr Samwell gives evidence that Sandoz has the opportunity to be the first mover in the market for a biosimilar rituximab product in Australia. This will give it a significant commercial advantage over the suppliers of other biosimilar rituximab products because it will:
(1) trigger tender opportunities for Sandoz with hospital and healthcare groups;
(2) enable it to be the first biosimilar to start to try to win, as Mr Caine QC colourfully put it, the "hearts and minds" of clinicians by demonstrating its efficacy and overcoming their reluctance to use a biosimilar or switch from MABTHERA; and
(3) give it leverage in respect of future biosimilar medicine launches.
201 The affidavit evidence of Mr Samwell expresses the opinion that the period of access of the first generic to the market is of more importance for the biosimilar market than in the case of small molecule generics, because there is a lengthy period of "conversion" in which biosimilar sponsors must invest effort in presenting the safety and efficacy case to key clinicians. He says that biosimilars represent a new paradigm in drug development and, in his experience, clinicians and other healthcare professionals are often not aware of the science behind the manufacture and regulation of both reference biologics and their biosimilars. The time in which Sandoz would be the only biosimilar is an invaluable commercial advantage that, if restrained, it would lose.
202 As I have noted, Mr Samwell gives evidence that he is aware of two potential competitors, one being Celltrion and the other being Pfizer. Sandoz contends that the period of exclusivity (by virtue of being the first biosimilar to market) will confer a benefit, even if it is confined to 4 months. The advantage is compounded by the fact that once a clinician's trust is gained, there is a reluctance to switch patients again. This in turn makes it more difficult for subsequent biosimilar brands to establish market share. Mr Samwell draws attention to the introduction of three other biosimilar products in Australia to support his contention of the advantages gained by a first mover; filgrastim (a haematology therapy for stem cell transplants and chemotherapy induced neutropenia), etanercept (a treatment for RA) and epoetin lambda (a treatment of anaemia and chronic kidney failure).
203 In the case of filgrastim the first biosimilar mover was Pfizer, who within the first 12 months apparently secured in the region of 20% of the market share. In the case of etanercept the first mover achieved just 4.5% share. For epoetin lambda, the first mover was Sandoz, which obtained an estimated 40% of the market by volume.
204 It might be said that the evidence that Mr Samwell relies upon is unconvincing in the context of the present proceeding. First, unlike the experience with filgrastim, it appears highly unlikely that Sandoz will have the benefit of an 11 month period during which it is the "first mover". Secondly, the data in support of the proposition that Sandoz was in a favourable position by reason of being the first mover for epoetin lambda is not at all clear and suggests that factors other than being the first mover were at play. Thirdly, the etanercept data might cause one to doubt that there is any advantage at all. What the contrasting results in the three examples advanced suggest is that the question of any benefit at all being accrued by a first mover is significantly affected by the nature of the drug in issue, the marketing or other efforts taken by the first mover and, no doubt, a number of other variables such as the countermeasures taken by the originator. The present information suggests that it is not really possible to know what advantage a first mover may have. Logic suggests that typically there will be some advantage, but the variables make it difficult to assess. This observation no doubt is to the benefit of Sandoz in the calculus of convenience, because it represents a factor that is difficult to quantify or predict.
205 In response to the first mover issue, Roche submits that the Celltrion products would likely be available within 4 months of the launch of RIXIMYO. They submit that the evidence of Mr Garrett (a representative of a potential purchaser of biosimilar rituximab who works at Austin Health), Mr Petersen and Mr D'Silva (from Roche) indicates that hospitals are likely to wait until the Celltrion products become available before making a decision to stock a biosimilar and, if so, which one.
206 Celltrion's products were not registered on the ARTG until after Sandoz had filed and served its balance of convenience evidence. As a consequence, there is no evidence from Sandoz which addresses these contentions. However, Sandoz submits that Roche's evidence is largely speculative and is at odds with the clinical evidence as to the urgent need for less expensive rituximab. It also notes that Sandoz has already been approached by public authorities, private hospitals and healthcare providers to participate in tenders for rituximab (for supply in the second half of 2018). On the other hand, Mr Samwell's own evidence is that there are a number of private and public hospital tenders for which Sandoz may not be in a position to participate in during 2018.