Registration and listing of pharmaceutical products
16 A pharmaceutical product may not be marketed, supplied, offered for sale, sold or distributed within Australia unless it is listed or registered on the ARTG. The registration of a pharmaceutical product must include at least one indication for the product within Australia.
17 The PBS is maintained by the Commonwealth under the National Health Act 1953 (Cth). Under the PBS, the government subsidises the costs of medicines for many medical conditions. Medicines which are eligible for such subsidisation have to be listed on the SPB.
18 Pharmacists are paid by the government for dispensing items which are on the SPB. If a medicine is not listed on the SPB a pharmacist cannot supply a prescription for that medicine under the PBS and the patient has to pay the full price for the medicine under a "private" or "non-PBS" prescription. This means that the prescription is not subsidised by the government. Whereas the PBS price is a fixed price (while allowing for concessions), the price charged for non-PBS medicines may differ across pharmacies.
19 Some medications on the SPB are subsidised only for a specific patient group or indication. If a medicine is listed on the SPB for a particular indication, and the patient's clinical condition does not match the indication, the prescription is not eligible to be supplied on the PBS, but can still be dispensed as a private prescription.
20 An amount known as the "co-payment" is the amount which a patient pays towards the cost of their PBS medicine. From 1 January 2014, patients pay up to $36.90 for most PBS medicines or $6 if they have a concession card (that figure drops to zero once a patient's expenditure on pharmaceutical products reaches a certain level).
21 The supply of prescription medicines to consumers is regulated by relevant state and territory poisons legislation (Poisons Legislation). This legislation interacts with and supplements Commonwealth legislation which regulates therapeutic goods. The active chemical substances in prescription drugs are listed in Schedule 4 to the Standard for the Uniform Scheduling of Medicines and Poisons (the Poisons Standard). While a medicine has to be registered for particular indications under the Therapeutic Goods Act 1989 (Cth) (the TGA), the Poisons Standard only lists the relevant chemical substances in a drug and does not refer to the indication or uses for such substances. Accordingly, a prescription can be given for a non-ARTG registered indication, as long as the prescription is in accordance with the considerations set out in the relevant Poisons Legislation. Such prescriptions are known in the industry as "off-label" prescriptions. They can be given by a medical practitioner or any other health professional who is capable of legally issuing a prescription.
22 In most cases, medical practitioners prescribe the brand name of a prescription medicine, except in the case of hospitals where the practice is to use generic names.
23 I will now provide a broad summary of the relevant evidence adduced by the parties, while noting that, in view of the urgency of the matter, the summary will necessarily be at a higher level of generality and less comprehensive than would otherwise be the case.
Summary of the applicants' evidence
24 A pharmacist, Dr Shane Jackson, gave evidence for the applicants in which he outlined the marketing of generic medicines. I accept that evidence, which may be summarised as follows.
25 Generic suppliers typically aim to persuade pharmacists to supply a generic product to patients who hold a prescription for the original brand of a particular medicine. Generic suppliers achieve this by providing pharmacists with a financial incentive, usually in the form of a discount or rebate. This means that if the pharmacist supplies a generic product instead of the original brand, the pharmacist will make a greater return. Provided there is no safety issue for the patient and relevant legal requirements are met, this is generally recognised by pharmacists as an acceptable and sensible business practice. Generic suppliers do not normally market their products to medical practitioners. Rather, they direct their marketing to pharmacists with a view to persuading them to substitute generic products at the pharmacy level.
26 Prescribers have a discretion as to whether to prevent brand substitution under a PBS prescription by "ticking a box" on a standard PBS prescription form which appears alongside the words "brand substitution not permitted".
27 A pharmacist may offer a PBS listed generic substitute to a patient, and claim a PBS subsidy, if:
(a) the patient agrees to the substitution;
(b) the prescription does not prevent such substitution;
(c) the brands are identified in the SPB as interchangeable; and
(d) substitution is permitted under Poisons Legislation.
28 If a medical practitioner writes a prescription, whether PBS or non-PBS, for a particular pharmaceutical product, whether or not a particular brand is specified, and the pharmacist is aware that there is an alternative brand of the same pharmaceutical substance registered on the ARTG and available to the pharmacist, the pharmacist is entitled to supply that alternative brand. Accordingly, irrespective of any PBS requirements, a pharmacist may legally dispense and supply a generic medicine to a patient holding a private prescription for the original prescribed brand. A pharmacist may also supply a generic non-PBS medicine to a patient with a PBS prescription after consulting with the patient. That applies even if the box is ticked alongside the brand substitution statement because that box applies only to PBS prescriptions. If, however, the pharmacist substitutes a non-PBS medicine, the pharmacist is not entitled to claim a subsidy under the PBS.
29 As a matter of practice, supplying a substitute product in the manner described above makes practical sense where the non-PBS subsidised cost of the medicine is less than the PBS patient co-payment. Dr Jackson gave evidence that he was aware of cases where substitution of non-PBS products had occurred on a very large scale where discount pharmacies, such as warehouse pharmacies, advertise a private label at a heavily discounted price.
30 Dr Jackson described private-label substitution as follows. The usual combined subsidy and margin on the dispensing of an original brand to a patient under the PBS is approximately $13 per product. However, if a generic company can supply the pharmacist with a product at say $10, the pharmacist may charge the patient an amount such as $30. This means that the pharmacist increases his or her return from $13 to $20, and the patient gets a $6.90 saving. In different marketing models, discount pharmacies may offer larger or smaller discounts to patients in order to gain market share or increase their margin. The net effect is that a pharmacist can make an increased return on the sale of a generic product, as compared with the sale of an original brand. Simultaneously, however, the generic supplier achieves a sale of its product at the expense of a sale by the supplier of the original brand. There is no payment made under the PBS because the supply of the generic product occurs outside the PBS.
31 Dr Jackson also described the prescription and supply of medicines in hospitals. It is unnecessary to summarise that evidence because the respondent undertook that it would not market or supply any pregabalin products to hospitals until the main proceedings have been determined.
32 Dr Jackson explained that currently there are no generic alternatives to Lyrica. Lyrica is a prescription-only drug and is listed on Schedule 4 of the Poisons Standard. Consequently, a pharmacist may only dispense that product upon a patient presenting a prescription. As noted above, Lyrica was listed on the SPB with effect from March 2013. Previously it was only available on private prescription or through hospitals. As also noted above, Lyrica is indicated on the SPB only for the treatment of neuropathic pain. If Lyrica is prescribed to treat seizures, the prescription cannot be a PBS prescription and the pharmacist would not receive any government subsidy. Dr Jackson said that in his experience the overwhelming majority of prescriptions for Lyrica are PBS prescriptions for neuropathic pain.
33 Dr Jackson further explained that, because the Apotex Products will not be listed on the SPB, they will not be flagged there as interchangeable with Lyrica. This means that pharmacists could not legally substitute the Apotex Products for Lyrica and claim a PBS subsidy. Dr Jackson explained, however, that while a pharmacist could not legally dispense and supply the Apotex Products in substitution for Lyrica even though the Products are not on the SPB, a pharmacist is permitted to make that substitution if the pharmacist is aware that the Apotex Products are a non-PBS bioequivalent to Lyrica which is listed on the ARTG. The PBS prescription could be converted to a private prescription (presumably with the patient's consent).
34 Likewise, if a medical practitioner wrote a private (i.e. non-PBS) prescription for Lyrica and a pharmacist is aware that there is an alternative brand of pregabalin which is registered on the ARTG and available to the pharmacist, he or she could supply that alternative brand after consulting the patient.
35 Dr Jackson also gave evidence that, in his opinion, the letters which Apotex proposes to send to prescribers and pharmacists will have no impact on potential brand substitution. This view was expressed by reference to an earlier draft of the proposed letters which contained a statement that the Apotex Products are not "presently" indicated for the treatment of neuropathic pain and also that this difference between Lyrica and the Apotex Products was "not safety related". It should be noted that the term "presently" has been omitted from the revised letters. For reasons which I explain below, I do not accept Dr Jackson's opinion on this topic.
36 Dr Jackson also provided an affidavit in reply. He described the concept of bioequivalence in pharmaceutical products. He adopted the definition of the concept from the Guideline on the Investigations of Bioequivalence issued by the European Medicines Agency, which is in the following terms:
Two medicinal products containing the same active substance are considered bioequivalent if they are pharmaceutically equivalent or pharmaceutical alternatives and their bioavailabilities (rate and extent) after administration in the same molar dose lie within acceptable predefined limits. The limits are set to ensure comparable in vivo performance, i.e. similarity in terms of safety and efficacy.
37 Dr Jackson said that the concept of bioequivalence and similarity in terms of safety and efficacy is fundamental to the registration of generic products. He explained that for a generic product to be registered on the ARTG, it must have been demonstrated to be the bioequivalent to the originator product. Such a generic product is registered on the ARTG in the same doses and in the same dosage form, irrespective of the indication. Dr Jackson also said that, as a general proposition, Australian pharmacists are taught and know that generic medicines are approved on the basis of evidence produced to the regulator that they are bioequivalent to the registered originator product for which full efficacy and safety data has been provided.
38 Dr Jackson also said that, while in his view a private prescription for pregabalin could be given for seizures, it is more likely that it would be for other things such as off-label uses (including for pain other than neuropathic pain) or for indicated uses as approved by the TGA but which are not PBS listed uses (such as where pregabalin is prescribed as a first line treatment rather than as a treatment for pain refractory to treatment by other drugs, which is the PBS listed restriction). Dr Jackson said that if the Apotex Products were truly dispensed only for the seizure indication, there would be no commercial reason for a pharmacy to stock the Products because they would be dispensed very rarely. I do not accept that evidence, which contradicts the market estimates provided by Pfizer in support of its unsuccessful application in 2005 to have Lyrica listed on the SPB for the seizure indication. It is also inconsistent with confidential evidence adduced by Apotex in the proceeding which sets out the prices at which it proposes to offer the Apotex Products to pharmacists for the seizure indication. In my view, there is no reason to doubt the genuineness of those figures which, although only estimates, indicate that Apotex views the seizure market as significant and it aims to acquire most of that market over time.
39 Mr John Dimopoulos also gave evidence on behalf of the applicants, both in chief and in reply. Mr Dimopoulos currently holds the position of Cardiovascular and Pain Therapy Lead of Pfizer Australia Pty Ltd. He gave evidence concerning the significant funds expended by Pfizer in neuropathic pain education and awareness, including in relation to telephone hotlines which provide patient support. He also gave evidence that the Pfizer group's costs associated with bringing Lyrica to market exceeded US$1 billion. He gave confidential evidence relating to Pfizer's approximate revenue from sales of Lyrica in Australia in each of the past three years and its budgeted revenue for 2014. He described how Pfizer spends a significant amount of money to promote the Lyrica brand to prescribers. I accept that evidence.
40 Mr Dimopoulos said that Pfizer did not promote Lyrica for the treatment of epilepsy and he said that, to the best of his knowledge, doctors - apart from some specialists - do not prescribe Lyrica for epilepsy other than in rare cases. He said that is because there are cheaper and more effective medicines which are available to treat seizures. Accordingly, Pfizer has not commercialised Lyrica for partial seizures in Australia because it would not be economically viable to do so. To support his claims, he included a confidential annexure to his first affidavit, which extracted data from what was described as a "BEACH Survey Report" for the period March 2011 to February 2013. That survey recorded Lyrica being prescribed during that period by general practitioners in relation to 319 medical conditions, none of which was epilepsy.
41 In his affidavit in reply, Mr Dimopoulos attached a further confidential annexure which recorded data concerning the prescriptions written for Lyrica by a rotating panel of 420 doctors during the 12 months ending December 2013. He said that this data revealed that prescriptions for epilepsy comprised only 0.23% of the Lyrica prescriptions written during that period.
42 As will emerge below, Apotex submitted that the Court should not accept Mr Dimopoulos' evidence that there is no seizure market for pregabalin in Australia.
43 Mr Dimopoulos claimed that, if the Apotex Products were launched, he expected that Pfizer would quickly and significantly reduce, and eventually cease, its education and awareness campaigns concerning neuropathic pain and its promotional activities directed at Lyrica. He estimated that Pfizer would reduce its marketing spend on Lyrica by approximately 70% and that such promotion would virtually cease within six months. He said that he expected that there would also be a reduction in both patient services and staff at Pfizer Australia. He also gave evidence of other expected adverse impacts, including on Pfizer's expenditure on research and development and its broader business.
44 Mr Dimopoulos claimed that if the Apotex Products were introduced, Pfizer Australia would suffer losses which could not be calculated with precision, but which he estimated as being in the millions or tens of millions of dollars. He said these losses would result from lost sales to Apotex and from loss of profits for sales retained by Pfizer if, as he expected to be the case, it was forced to discount Lyrica in order to compete with the Apotex Products. He said the amount of any loss was impossible to quantify because of factors such as the complexity of the market, pricing effects and the many kinds of indirect damage to Pfizer which he expected to occur. I will deal with these matters below under the topic of the balance of convenience.
45 Mr Dimopoulos also said that if Apotex was permitted to launch the Apotex Products, he expected that another generic supplier, Generic Partners, would quickly move to launch some or all of its products after first amending their ARTG registrations to limit the approved indications to partial seizures in the manner done by Apotex Products. I do not accept that evidence because, as Apotex pointed out, Generic Partners would need to first overcome the difficulties presented by the Seizure Patent.
46 As noted above, Mr Dimopoulos said that Pfizer had not commercialised Lyrica for the treatment of seizures because there are cheaper or more effective products for that purpose which are safe and readily available. He also said that Pfizer had not sought to list Lyrica on the SPB for partial seizures. This claim is incorrect. As Apotex pointed out, Pfizer sought unsuccessfully in July 2005 to obtain such a listing. The document produced by the Department of Health relating to that unsuccessful application reveals that Pfizer had claimed in support of its application that less than 10,000 patients would be treated by pregabalin by the fourth year of SPB listing, which would involve an estimated net cost to government of listing the product for that indication at less than $10 million per year by the fourth year of listing. Those estimates took into account the stated expectation that the overall anti-epileptic market was expected to grow if the product were listed for that indication. Apotex relied upon this evidence as contradicting Pfizer's claim that there is no market for the use of pregabalin for seizures.
47 Professor Stephan Schug gave expert evidence. Professor Schug holds the Chair of Anaesthesiology at the University of Western Australia and he is also the Director of Pain Medicine at Royal Perth Hospital. He said that, in his experience, pregabalin is rarely used as an anti-seizure medication, largely because there are well established alternatives. He also said that, to the best of his knowledge, Lyrica had not been promoted by Pfizer for this indication. As Apotex pointed out, Professor Schug's expertise is in anaesthetics and not neurology, a consideration which I accept affects the weight to be given to his evidence on this issue.
Summary of respondent's evidence
48 Mr Jeffrey McEvoy gave evidence for the respondent. Mr McEvoy is a pharmacist and is the National Merchandise Manager, Health, for Terry White Management, which provides management services to the Terry White Chemists group of pharmacies. He gave extensive evidence concerning pharmacists' dispensing practices, including the writing of PBS and private prescriptions. He gave evidence that while generally a pharmacist need not consider the indication for which a product has been prescribed (because that is a matter for the prescriber), in circumstances where a pharmacist is made aware that two products with the same active ingredient have been approved for different indications on the ARTG, this could raise the issue of indications in a pharmacist's mind. Mr McEvoy also said that pharmacists are likely to be aware of the indications for which a medicine has been registered because of the extensive marketing which normally surrounds that event but that, post-launch, and absent an amended indication, there is generally no further need for a pharmacist to refer back to the ARTG listing. I accept that evidence.
49 Mr McEvoy also gave evidence that, in the context of offering an alternative bioequivalent product to a patient instead of an original brand, a pharmacist could not and would not dispense a medicine for an indication which the pharmacist knew was not approved on the ARTG for that medicine. Mr McEvoy's evidence was to the effect that, in his view, a pharmacist would not risk his or her professional standings on registration by proceeding to dispense a substituted product which he or she knew was not approved on the ARTG for the treatment of the same condition as the product for which a prescription has been issued. I accept that evidence.
50 Evidence was also given on behalf of Apotex by Mr Roger Millichamp. He is currently Apotex's managing director. He noted that the TGA prohibits the marketing by sponsors of therapeutic goods for any "off-label" uses. He described how Apotex had attempted to "clear the way" for marketing the Apotex Products by commencing proceedings in the Federal Court on 8 May 2013 which sought the revocation of both the Pain Patent and the Seizure Patent. He also described how the part of the proceedings relating to the Seizure Patent was discontinued by consent on confidential terms on 23 October 2013. He described how, in early August 2013, he instructed his regulatory staff to take steps to amend the product information document and approved indications for the Apotex Products to ensure that they were limited to treatment of seizures only. He described how Apotex intended to commence marketing the Apotex Products at approximately 7 pm AEST on Friday, 14 March 2014 at a national conference of pharmacists to be held on the Gold Coast.
51 Mr Millichamp described how, in preparing for that launch, Apotex had developed various promotional materials and revised letters to be sent to prescribers and pharmacists regarding the Apotex Products. As will be seen further below Apotex emphasises the statements made in those materials which highlight the limitation of the Apotex Products to the seizure indication alone. Emphasis is also placed by Apotex upon statements which appear in those materials to the effect that the Apotex Products are not listed on the PBS and, perhaps most importantly of all, that the Products are not indicated for the treatment of neuropathic pain.
52 Set out below is a copy of an example of Apotex's promotional materials, as well as copies of the revised letters to be sent to pharmacists and prescribers:
53 Mr Millichamp also gave evidence that he did not expect that pharmacists would substitute the Apotex Products to fill PBS prescriptions for Lyrica because there would be no profit incentive. His explanation was that Medicare data indicated that the majority of prescriptions for Lyrica processed by the PBS are for concessional patients (i.e. those who pay either $6 or nothing for their prescriptions). He agreed with Dr Jackson that private prescription supply to concessional patients did not make practical sense. He also said that it did not make sense for a prescriber to write a private prescription for Lyrica if the indication being treated was neuropathic pain because that would take the matter outside the PBS. I accept that evidence.
54 Mr Millichamp gave evidence about the advantages for Apotex in being in a "first to market position" in supplying a generic product without competition from any other generic supplier. I accept that evidence, together with his statement that Generic Partners is unable at present to offer products which are indicated for both the treatment of partial seizures and neuropathic pain. I took him to be referring to the constraints created by both the Pain Patent and the Seizure Patent.
55 I also accept Mr Millichamp's evidence that a pharmacist or prescriber would not know of the fact of the removal of the neuropathic pain indication from the ARTG registration for the Apotex Products by merely looking at the current ARTG records. Similarly, I accept his evidence that any pharmacist or prescriber who became aware of the change in the indications would not know why the change had occurred.
56 Apotex's solicitor, Ms Kellech Smith also gave evidence. Of particular significance to the question of the balance of convenience is her evidence regarding her experience in another set of proceedings involving Australian Patent No 597784 (the Clopidogrel Patent) and the extensive and complex damages inquiry resulting from Apotex seeking to enforce the usual undertaking as to damages in circumstances where it had been restrained by an interlocutory injunction but ultimately succeeded in its revocation application. Ms Smith estimated that there had been approximately 23 days of Court time addressing various issues in relation to the damages inquiry in that matter and she estimated that the first instance hearing would take at least six weeks. She estimated that the legal costs and disbursements incurred by Apotex to date in that damages inquiry exceeded $7 million. I accept that evidence.
57 Mr Antony Samuel gave expert evidence on the difficulties of assessing the parties' respective damages depending on whether or not interlocutory injunctive relief was granted. Mr Samuel is a Chartered Accountant. He has been involved in numerous cases, both here in Australia and overseas, relating to compensation arising from the giving of an undertaking as to damages in intellectual property cases or assessing damages arising from patent infringements.
58 Mr Samuel gave detailed reasons in support of his conclusions that, while damages would be reasonably capable of quantification under either scenario relating to the Pain Patent, he considered that damages or an account of profits arising from patent infringement in a scenario where no interlocutory injunction is issued and the Pain Patent is ultimately found to be valid "are considerably more straightforward" than the assessment of damages arising from an undertaking as to damages" (i.e. in the scenario where an interlocutory injunction is issued and the Pain Patent is ultimately found to be invalid). As noted above, Mr Samuel was not cross-examined. I found his reasoning in support of his conclusions to be rational and convincing. His assessment is also supported by Ms Smith's evidence concerning the complexity and expense of conducting an inquiry as to damages relating to the Clopidogrel Patent.