Sanofi was the owner of Australian Patent No. 597784, which includes claims directed to the compound having the international non-proprietary name clopidogrel. As noted above, clopidogrel has anti-clotting activity, and is prescribed primarily to prevent heart attack and stroke in high-risk patients, such as those who have a history of these conditions. The brand-name drug PLAVIX was immensely profitable – according to Wikipedia, it was the second best-selling drug in the world, grossing over US$9 billion in global sales in 2010. (And, since this is the Internet, Wikipedia also reveals that clopidogrel may have beneficial uses in cats.)
In 2007, generic pharmaceutical manufacturer Apotex Pty Ltd, wanting to introduce its own clopidogrel product to the Australian market, commenced proceedings against Sanofi in the Federal Court of Australia seeking revocation of its patent. Sanofi, in turn, accused Apotex of threatening infringement.
For the duration of the resulting proceedings, injunctions imposed by the court, along with undertakings that Apotex provided, prevented it from introducing a generic product, leaving patients, and the Australian Government, with no alternative to the premium-priced brand-name product PLAVIX. Eventually, Sanofi’s patent was found to be invalid, implying that a cheaper generic version of the drug could have been made available all along.
The notional difference in price between the brand-name product and a hypothetical generic alternative is the basis for the Government’s claim for $60 million in damages.
The Government’s Claim in More DetailUnder the Australian Pharmaceutical Benefits Scheme (PBS), various approved drugs are subsidised by the Government to improve availability and affordability. In exchange for these subsidies (which undeniably increase levels of prescription, sale and use) the government exercises a degree of price control to ensure that taxpayers are not unduly burdened by the cost of patented drugs.
One of the consequences of these price controls is that the entry of a generic product onto the market results in an immediate, and irreversible, 16% drop in the price that the government will pay for the drug. A manufacturer can apply to charge a ‘brand price premium’, however if this is granted the additional cost is paid by the patient, not by the Government, meaning that the generic product will be cheaper to the end user. So the introduction of generic competition results in guaranteed immediate, and ongoing, cost savings to the Government, regardless of patient choices.
As a result of the injunctions that were variously in place from 25 September 2007, along with other undertakings provided by Apotex until the proceedings relating to the validity of the patent were finalised in October 2009, Apotex was unable to obtain a listing of its generic clopidogrel product under the PBS. The only clopidogrel product available in Australia therefore continued to be Sanofi’s patented brand-name drug PLAVIX.
The Government contends that it incurred additional costs of subsidising the supply of PLAVIX to the tune of $60 million, which would have been saved if a generic alternative had been available. According to the Government (which is yet to provide full details of its damages calculation) most of these costs flow from the statutory price reductions and price disclosure reductions that would have occurred had Apotex not been the subject of the relevant interlocutory restraints.
Revocation of the PLAVIX PatentThe clopidogrel patent would have expired on 4 February 2013, except that it was revoked on 13 October 2009, following a finding by a Full Bench of three judges of the Federal Court of Australia (in Apotex Pty Ltd v Sanofi-Aventis  FCAFC 134) that the claimed invention was obvious. However, the court’s decision in this case has been controversial on the basis that it took, as the starting point for assessing inventive step, the background knowledge described in the specification rather than evaluating the state of knowledge at the relevant time based on the available objective evidence.
In August 2014, an expanded five-judge panel of the Federal Court ruled (in AstraZeneca AB v Apotex Pty Ltd  FCAFC 99) that, under the Patents Act 1990, the approach taken in the earlier Apotex decision is incorrect, and inventiveness must be assessed objectively, by reference to the relevant prior art information, in light of the ‘common general knowledge’ of the person skilled in the art. The enlarged panel had been assembled to enable the court to overrule its earlier decision in Apotex, should that have proven to be necessary. In the event, the court dodged this issue on the basis that Apotex was decided under the provisions of the earlier Patents Act 1952.
(For further details of this ‘starting point’ issue, see earlier Patentology article What is the Starting Point for Inventive Step? Note, however, that on 13 March 2015 the High Court granted special leave to appeal the decision in AstraZeneca: see Astrazeneca AB v Apotex Pty Ltd  HCATrans 58.)
Sanofi’s Claims of InjusticeFor its part, Sanofi is no doubt feeling more than a little hard done by.
Sanofi reached a settlement with Apotex, which duly discontinued its own claim for damages on 14 November 2014. While the terms of this settlement have not been disclosed, it doubtless involves Sanofi paying compensation that is in some way based upon the profits that Apotex might have expected to earn had it been free to market generic clopidogrel. These are profits that would have been, in large part, generated by the subsidies paid by the Australian Government. On top of this, the Government now wants Sanofi to pay the amount it says it would have saved, had it been subsidising generic clopidogrel rather than name-brand PLAVIX.
While the mathematics of all this is mind-bending (especially so given the lack of detailed financial information) it certainly seems possible that Sanofi could end up effectively ‘doubling-up’ on payments, in that it is being asked to pay not only for Apotex’s lost sales, but also for the savings the Government says it would have made had it been able to buy from Apotex. On the other hand, Sanofi did undertake to ‘submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person whether or not a party, adversely affected by the operation of the interlocutory injunction or any continuation…’.
To add insult to injury, as noted above the decision of the Full Court to revoke Sanofi’s patent is one that has been called into question (though not expressly overruled) by a subsequent panel of five judges in AstraZeneca. It was certainly, therefore, not unreasonable for Sanofi to have held a genuine belief that its patent was valid, and to have acted on that basis.
Unsurprisingly, then, Sanofi is resisting the Government’s efforts to pursue its damages claim. It is doing so via a number of arguments based in equity – broadly speaking, Sanofi contends that, for various reasons, it is unfair, unjust, or unreasonable that it should be expected to compensate the Government for its alleged loss. One of the more interesting theories advanced by Sanofi is that Apotex could not have obtained approval to bring its generic product to market without infringing Sanofi’s copyright in various forms of product information, and that the Government should not be entitled to an award of damages in circumstances in which Apotex could not have supplied the product without infringing Sanofi’s rights.
As convoluted as this sounds, the court has indicated that this proposed defence ‘raises an interesting point’, and should therefore proceed to trial.
Conclusion – Good for Taxpayers?This is not the first time that a patent covering a pharmaceutical product has been found to be invalid following a full trial and all available appeals. Nor is it the first time that an interlocutory injunction has prevented the introduction of a competing generic product for the duration of the legal proceedings, resulting in the generic challenger receiving compensation. However, I am unaware of any previous occasion on which the Commonwealth has sought compensation for the higher prices it has paid for subsidised drugs as a result of an injunction.
As an Australian taxpayer, I should probably be pleased to see the Government trying to claw back the savings it might have realised if no injunction had been issued. However, as a patent practitioner I find it a little disturbing that an unsuccessful patent-holder might be expected to compensate not only its competitor, but also its competitor’s prospective customers, even in the rather special case of government-subsidised pharmaceutical products, and in circumstances in which the patent-holder gave fairly broad undertakings.
No hearing date has been set for the main trial, and the Commonwealth has made it clear that it will require a lengthy period in which to prepare its evidence, so I expect we will be waiting some time to find out how the cards will fall in this case.