A turning of the tide: interlocutory injunctions in Australian pharma patent cases

Over the course of at least a decade, patentees in pharmaceutical patent cases have had a very strong track record of obtaining interlocutory injunctions to prevent the launch of generic products in Australia. The Federal Court's recent experience in assessing claims for compensation, when restrained generic pharmaceutical companies have ultimately succeeded (because the patent was revoked or not infringed), has resulted in a fundamental shift in its approach.

Patentees can no longer safely assume that the Federal Court (Court) will readily come to their aid to prevent a generic or biosimilar launch on the basis that the launch will result in a significant price reduction and irreparable harm to the patentee. Rather, patentees will need to work harder to persuade the Court of the strength of their infringement case and the complexities involved in assessing damages having regard to the particular market in question.

Those seeking to launch generic and biosimilar products with strong revocation or non-infringement positions may well be able to defend an interlocutory injunction, including by highlighting the complexities that would be involved in a compensation claim if it ultimately succeeds. They are likely to find themselves 'preaching to the converted'.

A strong track record in favour of patentees

Prior to 2018, the Court had demonstrated a strong tendency to grant interlocutory injunctions to restrain the launch of a generic or biosimilar in pharmaceutical patent cases. In assessing whether to grant an interlocutory injunction, the Court considers:

the strength of the infringement case (including any cross-claim for revocation of the patent); and the balance of convenience including whether damages will be an adequate remedy. Importantly, the two limbs of the test are interrelated, so that the weaker the infringement case, the more the balance will need to weigh in the patentee's favour and vice versa.

An unavoidable condition of obtaining an interlocutory injunction is that the patentee must give the 'usual undertaking as to damages' to compensate parties adversely affected by the injunction if, as it transpires, that injunction ought not to have been granted.

In Australia, many medicines are subsidised by the Federal (Commonwealth) Government under the Pharmaceutical Benefits Scheme (PBS). The launch of a first generic or biosimilar product will cause an automatic price drop (now 25%) in the price at which the reference product (and any generic) will be subsidised. A patentee will also generally be forced to implement 'voluntary' price reductions to effectively compete with a generic entrant.

Interlocutory injunctions were granted to restrain the launch of a range of generic...