Novartis Pharmaceuticals Australia Pty Ltd v Bayer Australia Ltd - [2015] FCA 35

FEDERAL COURT OF AUSTRALIA
Novartis Pharmaceuticals Australia Pty Ltd v Bayer Australia Ltd [2015] FCA 35

Citation: Novartis Pharmaceuticals Australia Pty Ltd v Bayer Australia Ltd [2015] FCA 35

Parties: NOVARTIS PHARMACEUTICALS AUSTRALIA PTY LTD (ACN 004 244 160) v BAYER AUSTRALIA LIMITED (ACN 000 138 714)

File number: NSD 314 of 2013

Judge: ROBERTSON J

Date of judgment: 6 February 2015

Catchwords: TRADE PRACTICES – respondent’s conduct promoting new drug for the treatment, by intra-vitreal injection, of neovascular (wet) age-related macular degeneration (AMD) – incumbent drug and new drug in direct competition with each other as prescription-only medicines indicated for use in Australia for the treatment of wet AMD – each drug only available on prescription and administered only by ophthalmologists – each drug registered on the Australian Register of Therapeutic Goods and listed on the Schedule of Pharmaceutical Benefits – illegal to advertise prescription-only medicines to the general public – relevant class of addressees – whether pleaded representations conveyed – if so, whether that conduct misleading or deceptive or likely to mislead or deceive or false or misleading – relevance of “dominant message” – whether applicant’s loss of sales caused by respondent’s representations – assessment of any loss

Legislation:
Australian Consumer Law ss 18, 29, 236 and 237
National Health Act 1953 (Cth) s 85
Therapeutic Goods Act 1989 (Cth) ss 3, 7D, 23 and 25

Therapeutic Goods Regulations 1990 (Cth) r 9A and sch 12

Cases cited: Apotex Pty Ltd (formerly GenRx Pty Ltd) v Les Laboratoires Servier (No 2) [2008] FCA 607; (2008) 77 IPR 1
AstraZeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd [2005] FCA 1645
Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd [2006] FCAFC 22; [2006] ATPR 42-106
Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682
Australian Competition and Consumer Commission v Jewellery Group Pty Ltd [2012] FCA 848; (2012) 293 ALR 335
Australian Competition and Consumer Commission v Pest Free Australia Pty Ltd [2004] FCA 527
Australian Competition and Consumer Commission v Telstra Corporation Ltd [2004] FCA 987; (2004) 208 ALR 459
Australian Competition and Consumer Commission v Telstra Corporation Ltd [2007] FCA 1904; (2007) 244 ALR 470
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640
Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45
Global One Mobile Entertainment Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 134
Gould v Vaggelas (1984) 157 CLR 215
Instant Colour Pty Ltd v Canon Australia Pty Ltd [1996] FCA 763
National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] FCAFC 90; (2004) 49 ACSR 369; (2004) 61 IPR 420
Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723
Nick Scali Ltd v Super A-Mart Pty Ltd [2011] FCA 751
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505
Singtel Optus v Telstra [2004] FCA 859
Telstra Corporation Ltd v Optus Communications Pty Ltd [1996] FCA 1035; (1996) 36 IPR 515

Date of hearing: 7–11 April, 14–17 April and 4–6 June 2014

Note: The parts of these reasons that are masked are the subject of a non-publication order made on 6 April 2016 under s 37AF of the Federal Court of Australia Act 1976 (Cth) to operate until 11.59 pm on 25 March 2017.

Date of last submissions: 13 June 2014

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 367

Counsel for the Applicant: Dr A Bell SC with Ms E Holmes

Solicitor for the Applicant: Clayton Utz

Counsel for the Respondent: Mr R Lancaster SC with Ms K Richardson and Ms J Wright

Solicitor for the Respondent: Minter Ellison

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 314 of 2013

BETWEEN:
NOVARTIS PHARMACEUTICALS AUSTRALIA PTY LTD (ACN 004 244 160)
Applicant

AND:
BAYER AUSTRALIA LIMITED (ACN 000 138 714)
Respondent

JUDGE:

ROBERTSON J

DATE OF ORDER:

6 February 2015

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.On or before 20 February 2015, the parties are to identify which parts of the reasons they contend should not be published because of confidentiality and file a proposed form of orders.
2.The parties are to endeavour to agree the figure to be included in [366] of these reasons.
3.If the applicant wishes to contend that costs should not follow the event, it should file and serve by 20 February 2015 a written submission of no more than three pages in support of that contention. If the applicant files such a written submission, the respondent is to file and serve by 28 February 2015 its written submission of no more than three pages in response.
4.The proceedings be listed at 9.30 am on 6 March 2015 for the making of orders.

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 314 of 2013

BETWEEN:
NOVARTIS PHARMACEUTICALS AUSTRALIA PTY LTD (ACN 004 244 160)
Applicant

AND:
BAYER AUSTRALIA LIMITED (ACN 000 138 714)
Respondent

JUDGE:

ROBERTSON J

DATE:

6 FEBRUARY 2015

PLACE:

SYDNEY

REASONS FOR JUDGMENT
Introduction

These proceedings concern two medicines for the treatment, by intra-vitreal injection, of neovascular (wet) age-related macular degeneration (wet AMD or wAMD), a medical condition which results in loss of vision. Each medicine involves ongoing treatment.
Lucentis^® (Lucentis), the Novartis product, has been available for sale in Australia since 2007. It is only available on prescription and is, and has been since 2007, administered only by ophthalmologists. Its active ingredient is ranibizumab and it is sometimes referred to by that name.
Eylea^® (Eylea), the Bayer product, has been marketed and sold in Australia since 2012. It also is only available on prescription and is administered only by ophthalmologists. It too is administered via intra-vitreal injection. Its active ingredient is aflibercept and it is sometimes referred to by that name.
It is common ground that Lucentis and Eylea are in direct competition with each other as prescription-only medicines indicated for use in Australia for the treatment of wet AMD.
In February 2007, Lucentis was registered on the Australian Register of Therapeutic Goods and in August 2007 it was listed on the Schedule of Pharmaceutical Benefits (PBS Schedule).
On 7 March 2012, Eylea was registered on the Australian Register of Therapeutic Goods. On 1 December 2012, Eylea was listed on the PBS Schedule.
Novartis pleads that in approximately 46 acts of publication, which I list below, and in detailing conduct, Bayer made the following representations:
(a)that in clinical use, in accordance with the approved dosage, the Novartis product, Lucentis, is administered monthly for all patients (First Representation);
(b)that, for each and every patient, Lucentis will only be a clinically effective treatment if administered monthly (Second Representation);
(c)that the Lucentis Product Information specified, without qualification, that it was to be administered monthly (Third Representation);
(d)that in accordance with approved dosages, all Eylea patients receive fewer injections than all Lucentis patients (Fourth Representation).
In its reply submissions, Novartis said that the heart of the case centred on the Fourth Representation.
Bayer denies that the representations were conveyed but admits that, if they were, each is false — that is, an incorrect statement of fact — but denies that they were misleading or deceptive or likely to mislead or deceive.
Novartis claims that Bayer breached ss 18, 29(1)(a) and/or 29(1)(g) of the Australian Consumer Law, which sections were as follows:
18 Misleading or deceptive conduct
(1)A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2)Nothing in Part 3‑1 (which is about unfair practices) limits by implication subsection (1).
Note:For rules relating to representations as to the country of origin of goods, see Part 5‑3.
…
29 False or misleading representations about goods or services
(1)A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
(a)make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or
…
(g)make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; …
…
Section 29 was in Part 3‑1—Unfair practices: see s 18(2) above.
By way of example, the content of one of Bayer’s acts of publication, by baby banner (second form), was:
The central issues for decision are as follows:
(i)Were the four pleaded representations conveyed by the acts of Bayer? As I have said, Novartis pleaded approximately 46 acts of publication and detailing conduct, occurring on various dates up to mid-May 2013, but with one further publication in June 2013;
(ii)If so, was that conduct misleading or deceptive or likely to mislead or deceive, or false or misleading?
(iii)If so, what is the appropriate remedy, if any? In particular, has Novartis proved that it suffered loss or damage because of Bayer’s conduct and, if so, in what amount, and is other relief, in the form of declarations, injunctions and corrective advertising, appropriate?
It is necessary to approach these issues with an appreciation of the context, in particular the regulatory context, and the identification of the relevant class of addressees and the education, training, experience and state of knowledge of a (hypothetical) reasonable member of that class.
The words used and the acts of publication
The acts of publication were alleged to have been by poster, which was a large banner designed to stand on the floor, being approximately 2.13 m wide and 2.19 m high; by baby banner which was smaller than a poster, say for a desk top, being approximately 40 cm wide and 95 cm high; by detailing conduct which meant the detailing, i.e. communications by Bayer company representatives with ophthalmologists and/or optometrists, during which the ophthalmologists and/or optometrists were shown Detail Aids (on an iPad), which included words in terms substantially similar to those otherwise complained of by the applicant Novartis; advertisements in the journal Clinical & Experimental Ophthalmology and in mivision magazine; and by displaying and disseminating an attendee workbook at the Eylea product launch events in Sydney, Melbourne, Brisbane and Adelaide. Bayer accepts that it published magazine advertisements, published and had on display certain posters and baby banners at meetings and events, and that its sales representatives engaged in certain detailing conduct with an electronic document on an iPad. It also accepts that it provided the attendee workbook.
The magazine mivision is a monthly industry publication which is provided as a free subscription to ophthalmologists and optometrists and their practices in Australia and New Zealand 11 times a year on the first Monday of every month (except for January). In September 2012 the audited distribution for the magazine was 7265, made up of optometrists and optical shops (3793 recipients), ophthalmologists (1176 recipients) and ophthalmologists’ practices and staff (216 recipients). The journal Clinical & Experimental Ophthalmology is a clinical journal produced by the Royal Australian and New Zealand College of Ophthalmologists (RANZCO) and distributed to RANZCO members, ophthalmologists, as part of their membership.
I next set out the words used of which complaint is made.
It is alleged that, by displaying a poster, Bayer published, amongst other words, the following words:
“EYLEA^®HELPS YOU AND YOUR
PATIENTS WITH FEWER INJECTIONS
WHEN USED ACCORDING TO THE APPROVED
DOSAGE COMPARED TO MONTHLY RANIBIZUMAB ^{1, 2}
…
References: 1. EYLEA^® Product Information. 2. LUCENTIS^® Product Information.”
This was the form for the poster (first form), the baby banner (first form), the Detail Aid and the attendee workbook.
It is next alleged that Bayer caused advertisements to be published in the same form.
This was the form used for the advertisements (first form).
Another form (second form) is alleged as follows:
“EYLEA^®FOR YOU AND YOUR PATIENTS
WITH FEWER INJECTIONS WHEN USED
ACCORDING TO THE APPROVED DOSAGE
COMPARED TO MONTHLY LUCENTIS^{®1, 2}
…
References: 1. EYLEA Product Information. 2. LUCENTIS Product Information.”
This was the form for the poster (second form), the baby banner (second form) (see [10] above) and the advertisements (second form).
The references to first form are to “Eylea helps …” (larger font) “when used …” (smaller font), and the references to second form are to “Eylea helps/for you and your patients …”, “when used … ” (same font).
Next I set out in chronological order the numbered acts of publication contended for by the applicant.

Date Form of publication and event

1. 28 July 2012 Baby banner (first form) displayed by Bayer at the Sydney Eye Hospital Alumni Associate’s Ninth Biennial Conference held at the Sofitel Wentworth, Sydney

2. 3, 4 August 2012 Poster (first form) displayed at Bayer’s trade display booth at a meeting of the Queensland branch of RANZCO

3. 6 August 2012 Baby banner (first form) displayed by Bayer at an educational meeting held at Hobart Eye Surgeons, Hobart

4. September 2012 Advertisement (first form) in Volume 40, Issue 7 of the journal Clinical & Experimental Ophthalmology

5. October 2012 Advertisement (first form) in Issue 73 of mivision magazine

6. 24 October 2012 Attendee workbook (first form) displayed and disseminated at the Eylea product launch hosted by Bayer at Four Points by Sheraton, Sydney

7. 24 October 2012 Poster (first form) displayed at Eylea product launch at Four Points by Sheraton, Sydney (respondent denies and says it displayed the baby banner (first form))

8. 24 October 2012 Attendee workbook (first form) displayed and disseminated at the Eylea product launch hosted by Bayer at the Sebel & Citigate Albert Park, Melbourne

9. 24 October 2012 Attendee workbook (first form) displayed and disseminated at the Eylea product launch hosted by Bayer at the Sebel & Citigate King George Square, Brisbane

10. 24 October 2012 Attendee workbook (first form) displayed and disseminated at the Eylea product launch hosted by Bayer at Hotel Grand Chancellor on Hindley, Adelaide

11. 24 October 2012 Baby banner (first form) displayed by Bayer at the launch event at the Sebel & Citigate Albert Park, Melbourne

12. 24 October 2012 Baby banner (first form) displayed by Bayer at the Sebel & Citigate King George Square, Brisbane (not admitted by respondent)

13. 27 October 2012 Baby banner (first form) displayed by Bayer at a meeting attended by ophthalmologists at the Hotel Grand Chancellor, Hobart

14. November 2012 Advertisement (first form) in Volume 40, Issue 8 of the journal Clinical & Experimental Ophthalmology

15. November 2012 Advertisement (first form) in Issue 74 of mivision magazine

16. 24 to 28 November 2012 Poster (second form) displayed at Bayer’s trade display booth at a national meeting of RANZCO

17. December 2012 Advertisement (second form) in Issue 75 of mivision magazine

18. December 2012 Advertisement (first form) in Volume 40, Supplement S1 of the journal Clinical & Experimental Ophthalmology

19. December 2012 Advertisement (second form) in Volume 40, Issue 9 of the journal Clinical & Experimental Ophthalmology

20. January 2013 Advertisement (second form) in Volume 41, Issue 1 of the journal Clinical & Experimental Ophthalmology

21. 9, 10 January 2013 Baby banner (second form) displayed by Bayer at a training conference for registrar ophthalmologists held at the Sydney Eye Hospital

22. February 2013 Advertisement (second form) in Issue 76 of mivision magazine

23. 1, 2 February 2013 Baby banner (second form) displayed by Bayer at a meeting of the Tasmanian branch of RANZCO held at the Henry Jones Art Hotel, Hobart (not admitted by respondent)

24. 12 February 2013 Baby banner (second form) displayed by Bayer at an educational event held at the Lions Eye Institute, Nedlands, Western Australia

25. 26 February 2013 Baby banner (second form) displayed by Bayer at an optometrists’ referral meeting held at venue of the Victorian Eye Surgeons, Paisley Street, Footscray

26. March 2013     Advertisement (second form) in Issue 77 of mivision magazine

27. 5 March 2013 Baby banner (second form) displayed by Bayer at a referral meeting held at the Empire Grill, Geelong

28. 22, 23 March 2013 Poster (second form) displayed by Bayer at its trade display booth at a meeting of the New South Wales branch of RANZCO

29. April 2013 Baby banner (second form) displayed by Bayer at a Luxottica educational meeting attended by optometrists held at the Novotel in Darling Harbour, Sydney (not admitted by respondent)

30. April 2013       Advertisement (second form) in Volume 41, Issue 3 of the journal Clinical & Experimental Ophthalmology

31. April 2013 Advertisement (second form) in Issue 78 of mivision magazine

32. 3 April 2013 Baby banner (second form) displayed by Bayer at an educational meeting for Luxottica optometrists held at the Mercure Hotel, Perth

33. 5-7 April 2013    Poster (second form) displayed at Bayer’s trade display booth at the Australian Vision Convention, a meeting of the Optometrists’ Association of Australia held on the Gold Coast

34. 10 April 2013 Baby banner (second form) displayed by Bayer at an optometrist referral meeting held at the Norwest Eye Clinic, Norwest, NSW

35. 10 April 2013 Baby banner (second form) displayed by Bayer at an educational meeting attended by optometrists hosted by Outlook Eye Specialists held at the Vibe Hotel, Surfers Paradise

36. 10 April 2013 Baby banner (second form) displayed by Bayer at an educational meeting for Luxottica optometrists held at the Amora Hotel, Richmond, Melbourne (not admitted by respondent)

37. 16 April 2013 Baby banner (second form) displayed by Bayer at an educational meeting for Luxottica optometrists held at the Mercure Hotel, Geelong

38. 17 April 2013 Baby banner (second form) displayed by Bayer at an educational meeting attended by optometrists held by Luxottica at the Old Woolstore Hotel, Hobart, Tasmania

39. 26 April 2013 Baby banner (second form) displayed by Bayer at a referral meeting attended by optometrists held at the consulting rooms of the Northern Eye Consultants, Victoria

40. 29 April 2013 Baby banner (second form) displayed by Bayer at an educational meeting attended by optometrists held by Luxottica at the Lion Hotel, North Adelaide

41. 30 April 2013 Baby banner (second form) displayed by Bayer at a retinal meeting held at the University Club at the Crawley campus of the University of Western Australia

42. May 2013 Advertisement (second form) in Issue 79 of mivision magazine

43. 3 May 2013 Baby banner (second form) displayed by Bayer at an educational meeting attended by optometrists hosted by Central Queensland Eye held at the Mercure Hotel, Barney Point, Queensland

44. 7 May 2013 Baby banner (second form) displayed by Bayer at an optometrist referral meeting held at the Metwest Eye Clinic Blacktown, NSW

45. 14 May 2013 Baby banner (second form) displayed by Bayer at an educational meeting attended by optometrists held by Luxottica at the Mantra in Chatswood, NSW

46. June 2013 Baby banner (second form) displayed by Bayer at a Luxottica educational meeting attended by optometrists held at the Mantra Hotel in the Australian Capital Territory (not admitted by respondent)

Various Dates (Novartis)

Between May 2012

and May 2013 (Bayer)
Detailing Conduct (first form)

I note that the first form ceased to be published at or about the time Eylea was listed on the Pharmaceutical Benefits Scheme (PBS) and therefore became, practically, available for prescription. Novartis submitted that the first form applied at the critical time leading up to and through the national product launch, when minds were being won. On or about 15 May 2013, Bayer gave an undertaking that it would cease publishing or otherwise communicating the promotional material on a without admissions basis.
I consider at [227]–[233] below the disputed acts of publication.
The regulatory context
Under s 25(4) of the Therapeutic Goods Act 1989 (Cth) (the TGA), as in force at the relevant time, the Secretary had a discretion to register therapeutic goods after an evaluation under s 25. If the Secretary decided so to register the goods and they were “restricted medicine” as defined, he or she was required to approve product information in relation to the medicine. Section 3(1) of the TGA defined “product information” in relation to therapeutic goods to mean: “information relating to the safe and effective use of the goods, including information regarding the usefulness and limitations of the goods.”
Under s 7D(1) of the TGA, a form was approved for providing product information to accompany the application for registration in accordance with s 23(2)(ba) of the TGA. That form required product information set out under certain specified headings including clinical trials and dosage and administration.
Under the Therapeutic Goods Regulations 1990 (Cth) (the TG Regulations), by reg 9A the sponsor of therapeutic goods (specified in Part 1 of Schedule 10) must not supply the goods if the sponsor does not supply with the goods written information about the goods that meets the requirements for a patient information document set out in Schedule 12 to the TG Regulations. By reg 9A(2), information must be provided in the primary pack in which the therapeutic goods are supplied or in another manner that will enable the information to be given to a person to whom the goods are administered or otherwise dispensed.
Schedule 12 to the TG Regulations provided, so far as relevant:
A patient information document about a medicinal product must be:
…
•consistent with product information about the product.
A patient information document must include the following:
1. Identification
The name of the medicinal product, which is the name given to the product by the sponsor, including or followed by the non-proprietary name(s) of the active ingredient(s) and the dosage form or strength, or both, of the product.
A statement of the active ingredients expressed quantitatively and excipients expressed qualitatively, using their common names, in the case of each presentation of the product.
The pharmaceutical form and the contents by weight, volume or number of doses of the product, in the case of each presentation of the product, together with its identifying Australian Register number.
2. What the product is used for and how it works
The therapeutic indications, unless a competent authority determines that dissemination of such information may have serious disadvantages for the patient.
The pharmaco-therapeutic group, or type of activity, if there is a term that is easily comprehensible for the patient. If not, a simple description of what the medicinal product is for and how it works, in 1 or 2 sentences.
3. Advice before using the medicinal product
A list of factors that are useful to consider before taking the medicinal product, including, if appropriate:
•contraindications, including consideration of whether the patient has experienced previous allergic reactions
•precautions for use, taking into account the particular condition of certain categories of users, such as the elderly, children, infants, pregnant or breastfeeding women, persons with specific pathological conditions
•potential effects of the medicinal product on the ability to drive vehicles or to operate machinery
•interactions with other medicinal products or other forms of interaction (for example with alcohol, tobacco, foodstuffs) which may affect the action of the product
•special warnings, such as effects on sensitivity to sun exposure.
4. How to use the medicinal product properly
The necessary and usual instructions for proper use of the medicinal product, in particular:
•the dosage, together with an indication that this may not always apply and may be modified by the prescriber
•the method and, if necessary, route of administration
•the frequency of administration, specifying, if necessary, the appropriate time at which the medicinal product should or must be used
In addition, depending upon the nature of the therapeutic goods:
•the duration of treatment, if it should be limited
•the expected effect of using the medicinal product
•what to do if 1 or more doses have not been taken
•the way the treatment should be stopped, if stopping the treatment may lead to withdrawal or other adverse effects. …
In order for a medicine to be listed on the PBS, the company must lodge a submission with the Pharmaceutical Benefits Advisory Committee (PBAC) in accordance with the PBAC Guidelines: Guidelines for preparing submissions to the Pharmaceutical Benefits Advisory Committee. The Guidelines applicable at the relevant time ran for nearly 300 pages. The overview of a major submission required: section A to establish the context for the submission, including a description of the proposed drug, its intended use on the PBS, and the therapies that would be co-administered or substituted (the therapy likely to be most replaced by prescribers in practice being the “main comparator”); section B to provide the best available evidence comparing the clinical performance of the proposed drug with that of the main comparator, preferably from direct randomised trials, and details to be provided about the trials, the section concluding with a comparative therapeutic assessment of the proposed drug; section C to describe the methods used in pre-modelling studies to translate the results of the evaluation of the clinical studies to the context of the requested listing; section D to provide an economic evaluation focused on changes in health outcomes and in the provision of healthcare resources due to the proposed drug; section E to include financial analyses for the PBS/Repatriation Pharmaceutical Benefits Scheme and government health budgets; and section F (optional) to present any additional information of relevance to the major submission.
In the PBS Schedule the “dispensed price for maximum quantity” (the amount the Commonwealth government pays for the medicine so as to make it available at a government-subsidised price) was $1431.37 for Eylea and also for Lucentis. From 1 January 2013, the co-payment amount by a patient was $36.10 or, if the patient had a pensioner concession card, $5.90.
The Medicines Australia Code of Conduct edition 16 came into effect on 1 January 2010 (the Code). It stated it should be viewed as the minimum set of standards required to promote prescription products in Australia and did not in any way prohibit more stringent and comprehensive requirements being applied by individual companies. The Code complements the requirements of the TGA and the TG Regulations. Both Bayer and Novartis were members of Medicines Australia.
It was common ground that under the law in Australia it was illegal to advertise prescription-only medicines to the general public.
As I have said, Lucentis has been available for sale in Australia since 2007. It was approved by the Therapeutic Goods Administration and was registered on the Australian Register of Therapeutic Goods in February 2007. From August 2007, Lucentis was listed on the PBS Schedule.
The Product Information for Lucentis contained the following:
Treatment of Wet AMD
The recommended dose of Lucentis is 0.5 mg (0.05 mL) or 0.3 mg (0.03 mL) given as a single intravitreal injection.
Lucentis is given monthly. The interval between two doses should not be shorter than 1 month. Although less effective, treatment might be reduced to one injection every 3 months after the first three injections (e.g. if monthly injections are not feasible) but, compared to continued monthly doses, dosing every 3 months may lead to an approximate 5-letter (1-line) loss of visual acuity benefit, on average, over the following nine months. Patients should be evaluated regularly.
The Consumer Medicine Information for Lucentis stated:
The usual dose is 0.05mL or 0.03mL
(equivalent to 0.5mg or 0.3mg). The
interval between two doses should
not be shorter than one month.
If you are treated for wet age-related
macular degeneration, the injection is
given once a month. If given less
frequently, the full benefit may not
be obtained or benefits already
obtained might be lost (that is your
vision might be less sharp or even).
On 7 March 2012, Eylea was registered on the Australian Register of Therapeutic Goods.
Between March and April 2012, Bayer sales representatives attended an 8 week training course including training in relation to anatomy, macular degeneration and wet AMD treatment options. On 23 March 2012, there was a “Marketing strategy & activities 2012” presentation to Bayer sales representatives.
Between May 2012 and May 2013, there was detailing conduct.
Eylea was launched on 24 October 2012.
In December 2012, VIEW 1 and 2 year 1 trial results were published in Heier et al, ‘Intravitreal Aflibercept (VEGF Trap-Eye) in Wet Age-related Macular Degeneration’, Ophthalmology 2012; 119: 2537–2548. The summary objective, results and conclusions were stated as follows:
Objective: Two similarly designed, phase-3 studies (VEGF Trap-Eye: Investigation of Efficacy and Safety in Wet AMD [VIEW 1, VIEW 2]) of neovascular age-related macular degeneration (AMD) compared monthly and every-2-month dosing of intravitreal aflibercept injection (VEGF Trap-Eye; Regeneron, Tarrytown, NY, and Bayer HealthCare, Berlin, Germany) with monthly ranibizumab.
…
Results: All aflibercept groups were noninferior and clinically equivalent to monthly ranibizumab for the primary end point (the 2q4, 0.5q4, and 2q8 regimens were 95.1%, 95.9%, and 95.1%, respectively, for VIEW 1, and 95.6%, 96.3%, and 95.6%, respectively, for VIEW 2, whereas monthly ranibizumab was 94.4% in both studies). In a prespecified integrated analysis of the 2 studies, all aflibercept regimens were within 0.5 letters of the reference ranibizumab for mean change in BCVA; all aflibercept regimens also produced similar improvements in anatomic measures. Ocular and systemic adverse events were similar across treatment groups.
Conclusions: Intravitreal aflibercept dosed monthly or every 2 months after 3 initial monthly doses produced similar efficacy and safety outcomes as monthly ranibizumab. These studies demonstrate that aflibercept is an effective treatment for AMD, with the every-2-month regimen offering the potential to reduce the risk from monthly intravitreal injections and the burden of monthly monitoring.
On 1 December 2012, Eylea was listed on the PBS Schedule.
The product information for Eylea contained the following:
Pharmacodynamic effects
…
In patients treated with EYLEA (one injection per month for three consecutive months, followed by one injection every 2 months), retinal thickness decreased soon after treatment initiation, and the mean CNV lesion size was reduced, consistent with the results seen with ranibizumab 0.5 mg every month.
Dosage regimen
The injection volume is 50 μL of EYLEA (equivalent to 2 mg aflibercept).
EYLEA treatment is initiated with one injection per month for three consecutive months, followed by one injection every two months. (See CLINICAL TRIALS for dosing experience).
The clinical trials referred to were the VIEW 1 and VIEW 2 studies, which were summarised at pages 5 to 8 of the Eylea product information.
The Consumer Medicine Information for Eylea contained the following:
The recommended dose of EYLEA
is 50 μL (microlitre).
The interval between two doses
should not be shorter than one
month.
If you are being treated for wet
AMD:
The injection is given once a month
for the first 3 months followed by
one injection every 2 months.
The witnesses
The applicant relied on the evidence of the following witnesses:
(a)three affidavits of Ms Sweta Ghelani, affirmed 2 May 2013, 24 July 2013 and 30 August 2013;
(b)two affidavits of Dr Benjamin Waterhouse, sworn 14 August 2013 and 13 March 2014;
(c)two affidavits of Mr Paul Hodgkinson, sworn 23 August 2013 and 14 March 2014;
(d)four affidavits of Mr David Moore, health economist, affirmed 26 August 2013, 10 January 2014, 17 March 2014 and 12 April 2014; and
(e)three affidavits of Mr Tony Samuel, chartered accountant, affirmed 11 September 2013, 23 December 2013 and 17 March 2014.
The respondent relied on the evidence of the following witnesses:
(a)an affidavit of Dr Allan Ared, optometrist, affirmed 28 June 2013;
(b)two affidavits of Dr Paul Mitchell, retinal ophthalmologist, affirmed 28 June 2013 and 3 March 2014, the latter being supplemented by a report in the form of a letter to the respondent’s solicitors dated 10 April 2014;
(c)two affidavits of Dr Andrew Crawford, ophthalmologist, affirmed 28 June 2013 and 21 February 2014, and a report in the form of a letter dated 24 March 2014;
(d)an affidavit of Dr Jan Twomey, affirmed 8 November 2013;
(e)an affidavit of Ms Emel Elibol, affirmed 8 November 2013;
(f)an affidavit of Ms Radmila Grabovac, sworn 8 November 2013;
(g)an affidavit of Ms Naomi Leonard, sworn 8 November 2013;
(h)an affidavit of Ms Michele Doyle, sworn 8 November 2013;
(i)an affidavit of Mr John Burstow, sworn 8 November 2013;
(j)an affidavit of Mr Larry Hodges, affirmed 8 November 2013;
(k)an affidavit of Ms Cecilia Martinek, sworn 8 November 2013;
(l)two affidavits of Ms Susan Adams, affirmed 8 November 2013 and 19 December 2013;
(m)an affidavit of Ms Alena Reznichenko, affirmed 8 November 2013;
(n)an affidavit of Mr Andy Kuo, sworn 19 November 2013;
(o)an affidavit of Dr Philip Williams, economist, sworn 17 February 2014; and
(p)an affidavit of Mr Terence Potter, chartered accountant, sworn 14 February 2014.
Ms Ghelani was the marketing manager (wAMD) for Lucentis and had held that position since September 2012. In that role she was responsible for the oversight and coordination of the Lucentis marketing team. In July 2011, she began working as a member of the Lucentis cross-functional team in the role of Senior Brand Manager with her main responsibility being to optimise the commercial potential of Lucentis, including the development of marketing plans and sales material. In her affidavit of 24 July 2013, Ms Ghelani gave more detailed evidence of her experience as a pharmacist and in the marketing of pharmaceutical products. She has a Masters of Business (specialising in Marketing) from RMIT University, which she obtained in 2003. She said that as of April 2012, the International Council of Ophthalmology estimated on its website that there were approximately 763 ophthalmologists in Australia.
Much of her evidence was not controversial.
She gave her understanding of Lucentis as an anti-vascular endothelial growth factor (anti-VEGF) therapy and said that it was the only such therapy available for sale in Australia during the period 2007 to 2012. During the period 2007 to November 2012, Lucentis was the only anti-VEGF product available for sale in Australia which was registered on the Australian Register of Therapeutic Goods, listed on the PBS, and administered through intra-vitreal injection.
Ms Ghelani gave the monthly ex-factory sales of Lucentis by unit for the period January to November 2012. She then gave the sales figures for Lucentis for the period December 2012 to April 2013 following the launch of Eylea. It was in October 2012 that the Minister for Health announced that the proposed PBS listing for Eylea would be amended to allow the switching of existing Lucentis patients to Eylea. She also set out a table showing the relative market share (as measured by sales from wholesalers to pharmacies) for Lucentis and Eylea determined by reference to the data contained in a report by IMS, a company which provided industry market data. The figures for the monthly ex-factory sales of Lucentis by unit were substantially lower following the launch of Eylea and so was the share of the age-related macular degeneration (AMD) market in Australia held by Lucentis. A comparison of the monthly ex-factory sales of Lucentis by unit (vials) was 17,000 units in April 2012 against 8574 units in April 2013, and the market share for Lucentis in October 2012 was 99.9% (19,136 units) against 58.3% (9916 units) in February 2013, with Eylea having a market share in February 2013 of 41.7% (7090 units).
In her third affidavit, Ms Ghelani deposed that optometrists may detect evidence of wet AMD during a routine eye examination, and a patient who was having difficulty with their vision will often present to an optometrist, but optometrists may not diagnose or treat the condition. Consequently, they refer their patients to ophthalmologists who may make a diagnosis and then treat wet AMD, sometimes with intra-vitreal anti-VEGF injections such as Lucentis or Eylea. Both the Lucentis product information and the Eylea product information stated that the medicine must only be administered by a qualified ophthalmologist or physician experienced in administering intra-vitreal injections. The relevant entries on the PBS Schedule required that the intra-vitreal injections be administered by an ophthalmologist in order for reimbursement to be made. Consequently, Novartis focused its advertising, promotion and visits to optometrists on education in relation to identification of wet AMD, so as to facilitate diagnosis, and the importance of early referral to an ophthalmologist for definitive diagnosis and treatment as appropriate. For ophthalmologists, Novartis focused more directly on Lucentis and the science surrounding its features and would delve more deeply into the scientific literature in that regard.
Ms Ghelani deposed that after the initial scientific studies which established the safety and efficacy of Lucentis, many of the subsequent studies had attempted to determine whether, and the extent to which, the interval between injections of Lucentis could be extended beyond monthly.
In her oral evidence, Ms Ghelani said that most clinicians would know about the clinical trials in the product information document. She was speaking specifically of the ANCHOR and MARINA studies referred to in the Lucentis product information. She agreed that the exchange of scientific information with the clinician occurred very frequently. Ms Ghelani agreed that, in her perception, the ophthalmologists and optometrists she was visiting for Lucentis were aware in 2011 of Eylea on the horizon and that they were aware of clinical studies for Eylea either taking place or being reported as a precursor to the PBS launch of Eylea. Her understanding was that ophthalmologists and optometrists had their own sources of information about the coming of the Eylea product, including the obtaining by them of clinical study material and other scientific papers about aflibercept and its qualities. Before the first publication in issue in the proceedings, before July 2012, her understanding was that many ophthalmologists and optometrists already had a great deal of detailed information about the qualities of Eylea that was coming to market.
Ms Ghelani also agreed that Novartis’ marketing for Lucentis very regularly adopted the practice of footnoting a claim and the footnotes referred to product information documents as well as other clinical trials. She said whatever the claim, it must be supported by a form of evidence and it was usually either a clinical paper or the product information. It was her understanding that ophthalmologists and optometrists understood the procedure of footnoting product information documents.

More generally in relation to the product information document, her working assumption in her role was that the marketing of Lucentis had as one of its main facts that it conveyed to ophthalmologists what the approved product information document said about dosage and administration.
Ms Ghelani was taken in cross-examination to a Novartis marketing document prepared some time in the period April to July 2011 which contained the statement “A MONTHLY REGIMEN OF LUCENTIS DEMONSTRATED THE BEST VA OUTCOMES IN THE CLINICAL TRIALS”, with a footnote reference to a study published in 2009. She accepted that it was her understanding that the intention of the statement was to encourage a monthly regimen of Lucentis because it gave the best results and that if doctors took up the suggestion of a monthly regimen it would be good for sales as patients who are dosed monthly consume more vials and are materially more profitable to Novartis than patients who have intra-vitreal injections less frequently.
Ms Ghelani agreed that at the conferences there was a variety of information, including clinical studies and product information, which was available to conference delegates and that material was distributed as ophthalmologists or optometrists expressed an interest in it or they would sometimes pick it up. It was standard practice to have such material for people to pick up. As part of the Code, the product information must be available on the stand and the sponsor may also have available a clinical paper.
Ms Ghelani was taken to a Novartis document dated February 2013 referring to most clinics where clinicians practice (centres) having trialled aflibercept (at different rates), “mainly switching existing LUC[entis] patients not responding and/or patients who cannot be extended out further than 4–5 weeks [with or without] fluid on the retina”. Ms Ghelani accepted that in this analysis in the summary, the point was being made that two reasons were put forward for clinics switching existing Lucentis patients. She added there was a third reason given being extending out further than four or five weeks. She said that: “[i]n some cases as the extension occurs, sometimes the fluid returns. But in some cases clinicians may have wanted to extend the patient out further for other reasons, such as where they lived, or impact on carers to bring them into the clinic. So there potentially are other reasons other than purely efficacy.” She added it may be fluid was one of the reasons that the clinician did not want to extend the patients out but it may also be that the clinician just wished to extend the patient out further if they could and the clinician would have a clinical discussion with the patient around: “you might not get as great vision, but we’re going to extend you out to eight weeks because we know that you are coming from Dubbo into the clinic, and that’s a long way for someone to come for an injection in the eyeball.” She said her understanding of the reason an ophthalmologist would regard an existing Lucentis patient as not being able to be extended, and therefore should be switched, was that it could be the visual acuity outcomes were not as great or it could be fluid. She said that she knew that ‘treat and extend’ was the most predominant regimen in Australia and that had been verified by a number of quantitative sources of data as well, but accepted that she had not addressed that question or brought forward material to support it in her affidavits. In re-examination, she said that the Commonwealth’s drug utilisation sub committee in 2012 showed that in the first year, Lucentis patients were on 7.42 injections, which, she said, clearly indicated that those patients were not being dosed monthly. She also referred in re-examination to a touch responder pad of about 100 retinal specialists at a weekend conference, held usually in June of most years. Their response was that around 80% of clinicians used treat and extend, 10% use a PRN (i.e. as required) and the balance would be monthly.
She agreed that the marketing document attributed the switching as mainly being for the two reasons of non-responsiveness of Lucentis patients to Lucentis, on the one hand, and those who could not be extended without fluid on the retina on the other. She added another reason as well, being just simply not being able to extend the patient out. The same document set out qualitative feedback from the top ten prescribing doctors and in the headline stated that usage of aflibercept was mostly in non-responders and patients on four weekly Lucentis. Ms Ghelani said there were varying definitions as to what constituted a non-responder. She agreed that the reasons that Novartis was provided at the time by these clinicians were good clinical reasons for adopting Eylea as a treatment for wet AMD. The same document contained a statement that the sales of aflibercept for the first few months from December 2012 were identical to Lucentis at launch for the first few months from August 2007. The document also contained pages setting out “qualitative field insights and Novartis response”, being information that had become apparent to Novartis employees, predominantly the sales team, reporting back to Novartis. The document described three complaints and none of them was to the effect that Bayer’s advertising said of Lucentis that it was administered monthly for all patients. Ms Ghelani’s recollection was that there was no complaint at all about any reference to monthly Lucentis. In re-examination she was asked whether her thinking changed from the views there expressed and she said that what changed was that the switching did not just stop at patients at four weeks but patients at 5 to 11 plus weeks were being switched to Eylea and this was not anticipated: certainly people eight weeks and more were not anticipated by Novartis in its marketing assumptions. Novartis did not anticipate that clinicians would switch patients who had been extended and who were not having high volumes of injections.
Ms Ghelani was taken in cross-examination to a printout of the digital screens from the iPad sales aid deployed by sales and marketing representatives of Novartis in their meetings one-on-one with ophthalmologists and optometrists. She accepted that in Novartis’ promotion to ophthalmologists Novartis always put the particular mandatory statement as to the ANCHOR and MARINA trials, which involved Lucentis administered on a fixed monthly basis. The sales aid also included the statement “less than monthly dosing* can sustain VA improvements in some patients vs baseline at 12 months … *Lucentis^® is given monthly. Although less effective, treatment might be reduced to one injection every three months after the first three injections (e.g. if monthly injections are not feasible).” Ms Ghelani did not accept that the iPad sales aid involved the regular frequent presentation to ophthalmologists of the proposition coming from Novartis that Lucentis was given monthly. She said she thought the page was about less than monthly dosing sustaining VA improvements but Novartis had “put the mandatory there because we want to be clear about what’s in our label”. She accepted that what she called “the mandatory” was something that appeared frequently and regularly in the sales aid iPad material that Novartis was providing to ophthalmologists in 2012 and 2013.
Ms Ghelani agreed that the Consumer Medicine Information for Lucentis included the words: “[i]f you are treated for wet age-related macular degeneration, the injection is given once a month. If given less frequently, the full benefit may not be obtained or benefits already obtained might be lost (that is your vision might be less sharp or even)” and was included in that Consumer Medicine Information at all times during 2012 and 2013.
Ms Ghelani was taken to a March 2013 report and accepted that, as there stated at that time, the uptake of Eylea in Australia was similar to Japan on the basis of comparing units and the uptake in Australia was similar to the United States on the basis of comparing patients. She accepted that the uptakes in Japan and in Australia in those initial months were similar and the uptakes in the United States and Australia were not dissimilar.
Subject to one exception, I accept Ms Ghelani’s evidence. In particular, I give weight to her understanding that most clinicians would know about the clinical trials in the product information document; that the exchange of scientific information with the clinicians occurred very frequently; her perception that the ophthalmologists and optometrists she was visiting for Lucentis were aware in 2011 of Eylea on the horizon and that they were aware of clinical studies for Eylea either taking place or being reported as a precursor to the PBS launch of Eylea; and her understanding that ophthalmologists and optometrists had their own sources of information about the coming of the Eylea product, including the obtaining by them of clinical study material and other scientific papers about aflibercept and its qualities, such that before 28 July 2012, the date of the first publication in issue in the proceedings, many ophthalmologists and optometrists already had a great deal of detailed information about the qualities of Eylea that was coming to market.
I also accept Ms Ghelani’s evidence as to the role of optometrists in relation to the detection of wet AMD, that is, that a patient having difficulty with their vision will often present to an optometrist, but optometrists may not diagnose or treat the condition. Consequently they refer their patients to ophthalmologists who may make a diagnosis and then treat wet AMD, sometimes with intra-vitreal anti-VEGF injections such as Lucentis or Eylea. This evidence is entirely consistent with that of Dr Ared, an optometrist called by the respondent. It establishes, and I so find, that any impact of the respondent’s conduct on optometrists is at best indirect because optometrists do not make any choice between Lucentis and Eylea. My finding is confirmed by Ms Ghelani’s evidence that Novartis focused its advertising, promotion and visits to optometrists on education in relation to identification of wet AMD, so as to facilitate diagnosis, and the importance of early referral to an ophthalmologist for definitive diagnosis and treatment as appropriate.
The exception to my acceptance of Ms Ghelani’s evidence, to which I have referred at [63] above, is that I do not accept that the Novartis sales aid was about less than monthly dosing sustaining VA improvements: in my opinion the statements in the sales aid should be taken as conveying, to those who read them, that the product information stated that Lucentis was given monthly and, although less effective, treatment might be reduced to one injection every three months after the first three injections (e.g. if monthly injections are not feasible).
Dr Jan Twomey was the medical director for Bayer Healthcare Pharmaceuticals, a division of Bayer, since August 2010. She graduated from medicine at Flinders University at the end of 1991. She had full general registration as a medical practitioner and had held this continuously since 1993. In 2004, she was appointed Acting Medical Director for the phase 1 clinical trials unit at GlaxoSmithKline Limited for a short period before holding the position of Associate Medical Director at Wyeth Limited, now part of Pfizer Limited. In August 2005, she was appointed Area Medical Director/Director of Global Clinical Operations for Australia and New Zealand at Schering Plough and held that position until February 2010. As Medical Director she was responsible for: Medical Affairs (which was responsible, amongst other things, for compliance review of all promotional material for pharmaceutical products); Medical Information (which was responsible for providing medical information requested by internal staff, healthcare professionals and consumers); Pharmacovigilance; Regulatory Affairs; and Clinical Operations.
Dr Twomey had ultimate autonomy and authority to review, reject and, if appropriate, approve marketing materials. She said it was her practice to approve marketing materials only if she was satisfied that they complied with all applicable Australian or New Zealand medical and compliance requirements, including the scientific veracity of any such campaigns. This involved ensuring such promotional materials met the relevant requirements set out in the Code and the TGA and the TG Regulations.
Dr Twomey said that clinical papers and academic articles formed an important part of the way that Bayer promoted prescription medicines, including Eylea, to doctors and educated doctors on the mechanism of action, efficacy and dosage strength and regimen for medicines. She said that part of the training of Bayer’s Eylea sales representatives included training given by Bayer’s medical affairs department on eye diseases and the structure and mechanism of action of Eylea, including the associated clinical trials and academic papers. As part of the training, sales representatives were instructed to take copies of clinical papers and academic articles to meetings with ophthalmologists or arrange for a copy to be sent to a doctor who asked for a paper or article the sales representative did not have to hand.
Dr Twomey listed a number of such clinical papers and academic articles which were referred to in the process of preparing the marketing materials for Eylea, including:
(a)VEGF-Trap: A VEGF blocker with potent antitumor effects, 99(17) Proceedings of the National Academy of Sciences of the United States of America (2002), August 2002, Holash et al (2002) (Holash et al);
(b)VEGF Trap complex formation measures production rates of VEGF, providing a biomarker for predicting efficacious angiogenic blockade, 104(47) Proceedings of the National Academy of Sciences of the United States of America (2007), November 2007, Rudge et al (Rudge et al);
(c)Predicted biological activity of intravitreal VEGF Trap, 92 British Journal of Ophthalmology (2008), March 2008, Stewart et al;
(d)VEGF Trap-Eye for Exudative AMD, Retinal Physician (2009), April 2009, Heier (Heier);
(e)Binding and neutralization of vascular endothelial growth factor (VEGF) and related ligands by VEGF Trap, ranibizumab and bevacizumab, Angiogenesis (2012), February 2012, Papadopoulos et al (Papadopoulos et al);
(f)Intravitreal aflibercept injection for neovascular (wet) age-related macular degeneration, 13(4) Expert Opinion on Pharmacotherapy (2012), March 2012, Ohr et al (Ohr et al);
(g)Intravitreal aflibercept (VEGF Trap-Eye) in wet Age-related macular degeneration, 119(12) Ophthalmology (2012), December 2012, Heier et al (Heier et al, elsewhere referred to as the VIEW study);
(h)Different antivascular endothelial growth factor treatments and regimens and their outcomes in neovascular age-related macular degeneration: a literature review, 0:1-11 British Journal of Ophthalmology (2013), August 2013, Lanzetta et al (Lanzetta et al);
(i)Visual and anatomical outcomes of intravitreal aflibercept in eyes with persistent subfoveal fluid despite previous treatments with ranibizumab in patients with neovascular age-related macular degeneration, 33(8) The Journal of Retinal and Vitreous Diseases (2013), September 2013, Kumar et al (Kumar et al); and
(j)Conversion to aflibercept for chronic refractory or recurrent neovascular age-related macular degeneration, American Journal of Ophthalmology (1 July 2013), Yonekawa et al (Yonekawa et al).
Dr Twomey said she was responsible for approving and overseeing the approval of the marketing and educational materials for the Eylea campaign. She said this included a wide range of materials. She summarised examples of some of those materials, all of which were approved either by her or by staff within the medical department acting under her supervision. Her summary included: the first Detail Aid (from about May 2012 to around late June 2013); the second Detail Aid (from or around late June 2013); a document titled ‘Attendee Workbook’ that was to be made available for ophthalmologists attending the Eylea product launches in Sydney, Melbourne, Brisbane and South Australia on 24 October 2012; various speeches and presentations made at the Eylea product launches on 24 October 2012; and a large pull-up banner for use by the territory managers. I have reproduced this banner at [110] below.
Dr Twomey gave her understanding of the term ‘me too’. She said it referred to a medicine that was a copy of an existing drug with only minimal differences — i.e. structurally very similar, with a very similar mechanism of action, dosing regimen, method of administration and therapeutic effect to the existing medicine. In particular, it offered no real clinical advantage or disadvantage over the existing medicine. She said that Eylea was not a ‘me too’ medicine in relation to Lucentis, in particular: it had a different active ingredient; it had a different mechanism of action; and it had a different dosing regimen.
In cross-examination, Dr Twomey agreed that the clinical papers she had listed — set out at [69](g), (h), (i) and (j) above — post-dated the particular set of marketing materials she had referred to in her affidavit and so were not referred to or considered for the purposes of approving those marketing materials. She said she had identified those four papers because they had been used in ongoing preparation of marketing materials.
Dr Twomey was asked about the term ‘me too’. She agreed it was a term used in pharmaceuticals but did not have a technical or fixed meaning. She agreed that one would not describe a generic drug as a ‘me too’ drug: it would be called a generic drug. She agreed that ‘me too’ was an expression used to describe similar drugs, but minds could legitimately differ in terms of the spectrum of similarity. She said that some people might have a different interpretation of whether a drug is ‘me too’ or not and agreed that the core concept was similarity and the area for different opinions was on the extent of similarity.
Very little of Dr Twomey’s affidavit evidence was challenged in cross-examination. There was some question as to how much of the materials for the Eylea campaign Dr Twomey approved or was responsible for approving. In her affidavit, at [39], she said she was responsible for approving and overseeing the approval of the marketing and educational materials for the Eylea campaign and said that she summarised examples in the following paragraphs. But the details of her approval or responsibility for or oversight of the approval of most of the material at issue in these proceedings was not tested. Her evidence was given in a matter of fact and responsive manner. I accept Dr Twomey’s evidence. In particular, I find that the emphasis of the training of Bayer’s sales representatives given by Bayer’s medical affairs department was on eye diseases and the structure and mechanism of action of Eylea, including the associated clinical trials and academic papers. I also find that Eylea was not a ‘me too’ drug in the sense that it was not relevantly the same as Lucentis: it had a different active ingredient; it had a different mechanism of action; and it had a different standard dosing regimen.
The Bayer sales representatives
I come now to the written and oral evidence of the sales representatives called by Bayer.
The first Bayer sales representative to give oral evidence was Ms Radmila Grabovac, the territory manager for the city of Melbourne and north-west Victoria. She had tertiary qualifications in business marketing. There were approximately 140 ophthalmologists in her territory and of those about 45 were injectors. She was given extensive product training on Eylea, and on anatomy and macular degeneration. She also gave evidence that she read textbooks on her own as well as having face-to-face training. She spent most of April and May 2012 in training including a few weeks in Sydney, training as a team with other territory managers. She also received training on how to use a presentation about Eylea on her iPad (Detail Aid). She said that she was aware that the proceedings involved a dispute about two pages of the Detail Aid (the disputed pages). She also referred to a database used by Bayer, called Cortex, to record sales calls. She said that whenever she made a sales call to an ophthalmologist or optometrist, she entered details of the call into Cortex. It was her practice to put in “the main crux” of her discussion with the doctor, anything interesting that they mentioned and the objective of the next call. She exhibited these notes to her affidavit. She said that she only used the Detail Aid in an arranged face-to-face meeting, called a “sit down call”, and then where she had the opportunity unless there was a time restriction or the ophthalmologist made it clear they were not interested in seeing it. She said that in the time between approximately May and September 2012 the only other information she had to use was the Eylea product information. After using the Detail Aid once or twice in the first or second call with a doctor, she did not generally use it again. Occasionally she used it to stress or explain a particular point in relation to clinical information or to answer administration questions on storage or vial size, for example. She estimated that the number of ophthalmologists to whom she showed the Detail Aid was between 63 and 72, but that figure may have been too high. She said it was rare for her to show the disputed pages to ophthalmologists, and an ophthalmologist would only have seen those slides by accident and in passing on one of the rare occasions when she opened the Detail Aid during the actual sales call instead of having it already open at the MOA (mode of action) tab where it was her practice to have the Detail Aid ready. She estimated that this would have happened with a maximum of 3 to 4 ophthalmologists. She did not think that any doctor would have seen only the disputed pages. Once the VIEW study clinical paper was published in December 2012/January 2013, she said it was her practice to build on the information about that study in the Detail Aid by referring to the actual VIEW study clinical paper and handing it out. She also handed out other clinical studies to ophthalmologists in sales calls. Those studies included: Ohr et al; Holash et al; Kumar et al; and Yonekawa et al.

In her oral evidence, Ms Grabovac said there was a national sales manager and there were eight representatives who reported to the national sales manager directly. Each of them worked solely in relation to the selling of Eylea. During her training she was not provided with a sales manual or any document identifying key selling messages and there were not key selling messages she took into the field. She was familiar with the phrase but said “we were not given key selling messages for the Eylea role”. She said she had a training manual that looked at anatomy, clinical papers, a lot of clinical information because “our role was to provide clinical information to doctors.” She disagreed that her role was to sell as many products as possible. She said there were no specific messages she was given to give the doctors regarding Eylea. The training was based around product information, the VIEW study, predominantly, and that was the main crux of the information that the sales representatives were giving to doctors. She denied that she had in mind when she met doctors in the field a key selling message or key selling messages in respect of Eylea. When taken to a reference to “key selling messages” in the notes of one of her sit down calls, on 10 May 2013, Ms Grabovac said “key selling messages” would have referred to reducing the burden for patients, which appeared in the VIEW study in several cases, reducing the burden for patients with less injections, and that would be supported with information, and perhaps she would have spoken about less visits and less chance of an adverse event, which was also highlighted and supported by the VIEW study and product information. She said she believed she would have spoken about key selling messages but there would have been a lot of other clinical information that was delivered and she believed that she spoke about the way the doctor treated and also the growth of his practice and how he managed patients. Ms Grabovac was next taken to another reference in her Cortex notes to key selling messages. She was asked what the key selling messages were and she said that to the best of her recollection “I would have assumed that it would be reducing — perhaps reducing the burden, which is also in the VIEW paper; providing, perhaps, less injections, as demonstrated in the VIEW study; perhaps less cost for the patient. And … Less visits … and less cost.” She agreed that the benefits she had identified all resulted from fewer injections. She agreed that one of her responsibilities was to grow sales. She also agreed that when she actually had a product, at the beginning of December 2012, she did have a sales target and one of her responsibilities was to achieve that sales target. She said she did not remember a clear marketing message being given based on anything outside the clinical information. She said she was told to discuss information that was in the product information and the VIEW paper because there was not a product for the first year. She denied that she had been seeking to convince ophthalmologists about the benefits of fewer injections of the product since at least May or June 2012. She said the discussion she had with ophthalmologists initially, from what she recalled, was information gathering, discussing the product information and developing relationships. She was taken to her Cortex notes for a sit down call on 3 July 2012 with an ophthalmologist. She agreed that what she did with that ophthalmologist, after discussing the MOA, efficacy and administration was to discuss the benefits of Eylea for patients and less injections. She agreed that what she was doing from July 2012, as one facet of what the role entailed, was laying the platform for future sales. She also agreed that one of the ways she sought to lay the platform was to impart the message of less injections. She said the comparison was with Lucentis, because in the VIEW study that was the comparison.
Ms Grabovac was next taken to a sit down sales call for an ophthalmologist on 21 May 2012. The notes recorded: “[w]ent through MOA, efficacy, admin and discuss benefits to the patient of less injections but with optimal treatment.” After first denying that she was seeking to convince ophthalmologists of the merits of Eylea over Lucentis, she accepted that that was one of the components of her discussions. She said she would never say to a doctor “Eylea helps you and your patients with fewer injections” without drawing reference to a clinical paper or product information because that was actually contrary to Medicines Australia. She agreed it was part of her task to talk about clinical equivalence based on the VIEW study because the VIEW study did demonstrate clinical non-inferiority to the current standard of treatment and it was equivalent in efficacy and safety.
Ms Grabovac said she called on optometrists on a couple of occasions only, although she went to lots of meetings where ophthalmologists were presenting to optometrists. She agreed that some optometrists wanted to know about treatment options for discussion with their patients. She also accepted that she spent time with an optometrist and she had a hope of a referral meeting. She said the reason there were referral meetings was not always about education of Eylea: it was relationship building and it was also educational support for doctors, ophthalmologists and their referrers. She accepted that she would be happy for optometrists to discuss the product because optometrists on occasion have close relationships with ophthalmologists.
Ms Grabovac was asked for her understanding on whether ophthalmologists were not in fact required to administer either Eylea or Lucentis in accordance with what was said about dosing in the product information. She was aware of the practice of treating other than on guidelines. She said this seemed to be the practice of therapy that was tailored specifically towards the needs of the patient in terms of interval. She needed to discuss Eylea treatment intervals on label which was what was approved in TGA guidelines. If the doctor chose to treat at different intervals, that was his or her choice. Some doctors did PRN, some did treat and extend, and some treated on label, whether it be monthly or two monthly. It was really a tailor-made approach for each patient based on the discussion and the evaluation the doctor would make with his or her patient. It was their choice how they treated their patient. Some had the discussion that they extended out over eight or 12 weeks. There was a range of practices.
In relation to the Detail Aid (iPad) Ms Grabovac’s evidence was that it was rare for her in sales calls to show the disputed pages (which were under the “Home” and “Summary” tabs). To the question whether the mode of action of Eylea was being explained to explain why there were fewer injections required with Eylea, Ms Grabovac answered “On occasion, yes”. She could not estimate the number of such occasions.
It is not a straightforward matter to evaluate Ms Grabovac’s evidence. Plainly she was nervous and uncomfortable giving evidence and volunteered that it was her first time in a court. Also she had some difficulties in understanding the more complex questions she was asked. On occasions she appeared reluctant to accept the obvious and was overly cautious in her answers. She was overly keen, in my view, to emphasise the informational aspects of her work rather than the selling of Eylea. But I find that she was truthful and I accept her evidence. In particular, I find that in her dealings with ophthalmologists and optometrists Ms Grabovac did not refer to fewer injections in the abstract but with reference to the product information, or a clinical paper, and the VIEW study paper once it became available. As to the disputed pages of the Detail Aid, I find that three or four ophthalmologists saw those pages in passing in the course of Ms Grabovac’s visits but in the context of the balance of the pages.
The second Bayer sales representative to give oral evidence was Ms Elibol. In her affidavit she said her sales territory was eastern Victoria. She replaced Ms Reznichenko as the Eylea territory manager for eastern Victoria when Ms Reznichenko was promoted. (Ms Reznichenko also gave evidence, which I consider below.) Ms Elibol said there were approximately 128 ophthalmologists in her territory and she shared approximately 15 of those with Ms Grabovac. She has a Bachelor of Science, a Diploma of Health — Medical Laboratory, and a Graduate Diploma in Business Systems. She said she had two weeks of training, including formal training from Bayer. She was shown how to use the Detail Aid on the iPad. From December 2012 to January 2013 she said the vast majority of her time spent with ophthalmologists and clinic support staff was spent answering logistical questions from doctors and clinic support staff such as: (a) How do I obtain Eylea? (b) How do I write a prescription for Eylea? (c) How many repeats do I need to prescribe? (d) How do I fill out the Medicare form? (d) What temperature is it stored at? and (e) What is Eylea’s shelflife/expiry date? Ms Elibol also annexed to her affidavit her Cortex notes. Her Cortex summary showed that she visited a total of 60 ophthalmologists and had at least one sit down call with each ophthalmologist during the period from 7 May 2012 to 21 June 2013. She said she did not recall using the Detail Aid at all during her first six months with Bayer from October 2012 to March 2013. She estimated she had used the Detail Aid approximately 3 to 4 times in sit down calls with ophthalmologists since March 2013. She did not recall ever using the “Summary” or “Home” tabs or the disputed pages within them. She said it was her practice only to use the Detail Aid in a reactive way, that is, if an ophthalmologist had a question. It was her practice to use the product information and clinical and academic papers about Eylea to answer any questions asked of her by ophthalmologists. She said she used the following clinical and academic papers as they became available: Holash et al; Ohr et al; Heier et al; Kumar et al; Yonekawa et al; and Lanzetta et al.
Ms Elibol estimated that approximately half the ophthalmologists in her territory injected for wet age-related macular degeneration. She said she did not conduct sales calls on optometrists and therefore did not show the Detail Aid to any optometrist.
In cross-examination, Ms Elibol was asked whether the statement “Eylea helps you and your patients with fewer injections” was the key marketing message for the sale of Eylea. She said she could not really answer that with a full yes or no because when she spoke about key messages she spoke about higher binding affinity, different molecule, that the eight weekly dose gave the same results as the four weekly dose. She said the key message of fewer injections with Eylea did not make sense to her. She said she would not discuss and say just there were fewer injections with Eylea. That needed an explanation. It depended entirely on the doctor and what the doctor was interested in: whether he or she wanted to know about the molecule, the mode of action, the trial design, the type of patients he was treating. The relevant transcript was as follows:
Q… So what you needed to do in order for ophthalmologists to consider switching over to your company’s product, EYLEA, was to point to some key difference in the products which he or she might find persuasive, a persuasive reason to change their existing practices. Do you agree with that?
A Because you mentioned key differences – I’ve pointed out key differences, because there has been patients that don’t respond to Lucentis that can respond to EYLEA because of difference in molecule design, difference in higher binding affinity, longer duration. So it’s - - -
Q Yes. Yes. Longer duration – can I ask you about longer duration? … If you pointed out longer duration, what you’re pointing out is that there would need to be fewer injections, because it lasts longer? Is that right?
A Yes, because it has got a higher binding affinity. It has got a lower dissociation constant … So once it binds, it doesn’t let go.
Q        Yes. So did – can I just suggest to you - - -?
A But not in all patients. I’ve got to just – it’s not in all patients. It’s just what’s in the study…
Q But you did point out from time to time, can I suggest to you, to ophthalmologists, that this product requires fewer injections than Lucentis?
A Whenever I have pointed that out, it has been in reference to the VIEW trial or to the product information.
Q        Yes. Yes. Yes. I’m just asking whether you did point that out?
A        Yes. It’s in the trial – yes … It’s mentioned several times in the trial.
QYes. But you did point it out regularly, did you not, in your interactions with ophthalmologists, that EYLEA meant fewer injections for the ophthalmologist’s patients?
A Did I mention it regularly? … How would you define regularly? Sorry. Because I really concentrate on – I concentrate on my trial design, I talk about, again, the molecule design, it’s a human fusion protein, I – it’s level 1 evidence, the type of patients that were involved in the trial, how it might work for some patients where Lucentis doesn’t respond. So – I mean, I wouldn’t just go in there and just talk about fewer injections, fewer injections – it would have to come after a discussion.
QYes. And you’re not saying, are you, to his Honour that you never told a single ophthalmologist that EYLEA meant fewer injections – “Helps you and your patients with fewer injections”?
A        Have I not – have I - - -
Q        You’re not saying, are you, that you never said that to an ophthalmologist?
A        No, I have said it.
…
Q Just focusing on the words, “EYLEA helps you and your patients with fewer injections.” Is it your evidence, Ms Elibol, that that statement – just that statement, “EYLEA helps you and your patients with fewer injections,” is misleading?
A Just that sentence, is that misleading? “EYLEA helps you and your patients with fewer injections.”
…
A        What’s my belief? Like, what I think it is?
Q        Yes. Yes?
A “EYLEA helps you and your patients with fewer injections,” I would like to know what is that compared to, personally, myself, if I saw that statement. Fewer injections compared to what?
Q        Yes. Well – Lucentis?
A Okay. Fewer – in what way, I would want to know. Like, fewer injections in what way? How do you – what do you mean by fewer injections? That’s what I would want to know.
Q        All right. Thank you. Because that statement may be misleading?
A        Well, it just wouldn’t - - -
…
Q The statement, “EYLEA helps you and your patients with fewer injections,” just that statement?
A And so don’t look at the other thing – when you used according to – don’t look at that?
Q        Yes. Yes?
A        It wouldn’t make sense to me.
Q        Right. Why?
A        Because I - - -
Q        Because you don’t know what it’s comparing it to?
A        Yes. Like – yes. Comparing it to and how dosing - - -
Q All right. Well, just let me ask you this: it would be obvious, wouldn’t it – no. I will just leave that. I will leave that topic.
Ms Elibol was asked whether it was her understanding that a key message to communicate to physicians was that Eylea had comparable efficacy and safety to ranibizumab with fewer injections and she answered “Yes”.
Ms Elibol was asked whether she became aware of the summary results of the VIEW extension study soon after she started with Bayer. She said only from what she heard a few times from doctors from what they had heard from Novartis.
I found Ms Elibol to be a frank, forthright and truthful witness. I accept her evidence. In particular, I find that whenever she pointed out that Eylea required fewer injections than Lucentis it was with reference to the VIEW trial or to the product information. As to her use of the disputed pages, I find that she did not show the disputed pages to the ophthalmologists she visited and those ophthalmologists would not have seen those pages during her visits to them.
Ms Susan Adams was the third Bayer sales representative to give oral evidence. She was employed by Bayer as an Eylea territory manager between May 2012 and July 2013. Her territory was southern New South Wales and the ACT. Her customer base was made up of all the retinal specialists in her territory and some general ophthalmologists who managed patients with wet AMD. She has a Bachelor of Science and a Diploma of Education. She said she did not receive the same level of formal training as the rest of the team because she joined late and already had a very good knowledge of the treatment of wet AMD from her previous employment. She received an iPad with information about Eylea on it (Detail Aid) and she thought she received some training on the iPad but did not remember the details. She also exhibited to her affidavit her Cortex notes. She said that she made sales calls on 86 different ophthalmologists. She listed 24 where she was fairly confident that she did not show the Detail Aid to them and of the remaining 62 ophthalmologists she could not recall how many had seen the iPad presentation, although it was certainly not all. She said that the retinal specialists she dealt with were very well informed about Eylea and the timelines for its availability from data presented at congresses, international educational meetings and journal papers. She said their general reaction to Eylea was that they were pleased to have more than one drug available so as to have an alternative to Lucentis. She said she was told by some ophthalmologists that between “about 10% and 30% of their patients” were confined to monthly Lucentis and could not be “stretched out”. She was informed by retinal specialists that they were looking forward to the possibility of being able to extend treatment for these patients with Eylea. In relation to the Detail Aid she said to the best of her recollection she did not open the “Summary” tab but ophthalmologists may have seen pages under the “Home” tab when she was opening up the presentation, but that was rare and never intentional. To the best of her recollection, no doctor only saw the disputed pages. Ms Adams made a second affidavit as to her possession and use of the two baby banners.
In cross-examination, Ms Adams was first asked about the use of the poster and the baby banners.
As to her period in a sales role, she agreed that she had key performance indicators and agreed there were specific sales targets in terms of units sold. She agreed that one of the aspects of her job was to secure as many new or initiating patients to use Eylea and another aspect was to convince ophthalmologists to use Eylea instead of Lucentis with their existing cohort of patients. She said her approach was not to seek to achieve switches irrespective of whether the patients were being treated on a four weekly interval or an inject-and-extend basis or a PRN basis. She said she was not out to switch all patients, that was not her approach to the role. She agreed that in her training, her briefing from people from marketing involved discussion of such things as a key selling message. The witness was asked the following questions and gave the following answers:
Q … the key selling message was that EYLEA helps you and your patients with fewer injections?
A        When used according to the approved dosage.
Q        Well, I – yes, I - - -?
A        Yes. It’s not just - - -
Q I see you looking at the poster. My proposition, I – what I’m putting to you was that marketing people explained to you that the key selling message was that EYLEA – EYLEA’s key point of differentiation from Lucentis was that it involved delivery of fewer injections?
A        Compared to the standard of care, which is monthly Lucentis.
Q        Well, fewer injections than Lucentis?
Q        No, compared to the standard of care.
Q Right. You knew, didn’t you, from your long experience in this very specific AMD field, that many ophthalmologists did not inject on a monthly basis beyond the initial three months. Correct?
A        Yes.
Q        Yes. Thank you. Many engaged in the inject-and-extend method?
A        Yes.
Q        Yes?
A        I would say there would be quite a few, yes.
Q Yes. And extended their patients out for the interval between injections. Extended out - - -?
A        If appropriate, yes.
Q        - - - if appropriate, sometimes to eight or more weeks. Correct?
A        Yes.

For his first report, Mr Samuel was instructed to calculate the loss and damage suffered by Novartis under 25 loss scenarios. The only difference between each scenario was the units he was instructed were lost during 1 November 2012 to 31 July 2013 (the Historical Loss Period) and 1 August 2013 to 31 December 2016 (the Future Loss Period). In each case the lost units had been calculated by Mr Moore and set out in Appendix E to Mr Moore’s report. Each loss scenario was calculated on the assumption that the units recorded in the Moore report had been and would now be lost as a result of Bayer’s false, misleading and deceptive advertising.
The summary of Mr Samuel’s methodology in his first report was as follows:
(a)the appropriate methodology for calculating the loss and damage was to calculate the difference between the net cash flows Novartis would have received absent the false, misleading and deceptive advertising (the counterfactual or hypothetical scenario) and the net cash flows Novartis actually received and would now receive as a result of the false, misleading and deceptive advertising (the actual scenario);
(b)the most appropriate way to calculate that difference was to multiply the unit sales that were lost by the net cash per unit that would have been made by Novartis on each additional unit it would have sold;
(c)the best estimate of the net cash per unit in any one month during the Historical Loss Period was the actual profit per unit made by Novartis in that month, adjusted for timing of cash flows; and
(d)the lost cash flows were discounted to allow for the uncertainty inherent in forecasting hypothetical cash flows and a discounted cash flow approach was appropriate. Under this approach, the cash flows were discounted back to 1 November 2012 as Mr Samuel was instructed that Novartis lost sales of Lucentis from November 2012.
The summary of his conclusions as to the quantum of loss and damage in Mr Samuel’s first report was as follows:
Scenario 1
In my opinion, the loss suffered by Novartis before interest and tax gross up is XXXXX X comprising XXXXX XX for the Historical Loss Period and XXXXX XX for the … Future Loss Period.
The lost sales volumes were as set out in Mr Samuel’s instruction letter. Sales per lost unit were based on the average net sales and Mr Samuel’s instruction that the net sales for the Future Loss Period should be based on the actual net sales achieved. He also assumed an average net sales price during the Future Loss Period of XXX being the average net sales price per unit XXXXX XX XXXXX XXXXX XXXX The cost per unit of XXXX was based on XXXXX X XXXXX XXX XXXXX X XXXXX XXXX XXX and Mr Samuel’s instruction that the cost of sales applicable to the Future Loss Period should be based on the average cost of sales for the period December 2012 to July 2013. A discount rate of 10.73% applied to lost cash flows in the Hisotrical Loss Period and a rate of 13.43% applied to lost cash flows in the Future Loss Period. Assuming any award to Novartis was taxed as income, it would be necessary to gross up any after-tax calculation of loss to allow for the tax consequence of the award. The tax gross up on the loss in scenario 1 was XXXXX XXXX at a tax rate of 30%. A further amount would need to be added for interest on the award. Mr Samuel estimated the amount from November 2012 to 31 August 2013 to be XXXXX XX
As to the other 24 scenarios, the assumption that varied for each loss scenario was the number of lost unit sales. All other assumptions were the same as used for scenario 1.The table set out the loss calculated for each of the scenarios including the tax gross up and interest components. The total principal loss varied from XXXXX XXXX in scenario 1, to a low of XXXXX XXXXX in scenario 2, and up to XXXXX XXXX in scenario 25. With the tax gross up the figures were XXXXX XXX in scenario 1, XXXXX XXX in scenario 2, and XXXXX XXX in scenario 25.
XXXX XXXXX XXXXX X XXXXX XXXX XX XXXXX XXXXX XX XXXXX XXX XX XXXXX XXXXX X XXXXX XXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXX XXX XXXXX XXXXX XXXXX XXXXX XXXXX XX XXXXX XX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XX XXXXX XXXXX XXXXX XXXXX XX XXXXX XXX XXXXX XX XXXXX XXX XXXXX XXX XXXXX XX XXXXX X XXXXX XXXXX X XXXXX XXXXX XXXXX XXXXX X XXXXX XX XXXXX XXXXX XXXXX XXXXX XXXXX XXX XXXXX XXXXX X XXXXX XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXXXX X XXX
In his second report, Mr Samuel updated aspects of his first report having regard to the second report of Mr Moore and to Mr Samuel’s instructed assumptions. The additional assumption was that the representations were conveyed and were misleading and deceptive and likely to mislead and deceive.
The corresponding calculations in Mr Samuel’s second report as updated were that in scenario 1 the loss suffered by Novartis before interest and tax gross up was XXXXX XXX comprising XXXXX XXXX for the Historical Loss Period and XXXXX XXX for the Future Loss Period. The tax gross up on the loss in scenario 1 was XXXXX XX The total loss assuming tax gross up but before interest was therefore XXXXX xX. The corresponding figures in scenario 2 were a total principal loss of XXXXX xX and, assuming tax gross up but before interest XXXXX XX. In scenario 25 in table 1 in Mr Samuel’s second report the figures were the same as in Mr Samuel’s table 1 in his first report.
Mr Samuel’s third report was in response to instructions to: provide his opinion on the views expressed in the report of Mr Michael Potter (whose report had been filed on behalf of the respondent); update any aspect of his second report which he considered necessary having regard to the third report of Mr Moore, the report of Mr Potter and the two affidavits of Mr Hodgkinson; calculate Novartis’ loss on the assumption that Mr Potter’s opinion as to the effect of the supply agreement was correct; and calculate Novartis’ loss having regard to the third report of Mr Moore and the report of Mr Potter on the assumption that the cost of sales per unit for the Historical Loss Period and the Future Loss Period were from XXX to XXX at intervals of XXX up to XXX.
Using the same methodology as in his first report, Mr Samuel updated his loss calculations as a result of the updated figures contained in the third report of Mr Moore. In scenario 1, Mr Samuel’s opinion was that the loss suffered by Novartis before interest and tax gross up was XXXXX XX, comprising XXXXX XX for the Historical Loss Period and XXXXX XX for the Future Loss Period. The tax gross up was XXXXX XXX The total loss assuming tax gross up but before interst, was therefore XXXXX XX In scenario 2, the total principal loss was XXXXX XX and the tax gross up was XXXXX XX giving a total, before interest, of XXXXX XX In scenario 25, the total principal loss was XXXXX XXX and the tax gross up XXXXX XX giving a total, before interest, of XXXXX XX.
In his third report, Mr Samuel also calculated the loss using Mr Potter’s methodology, updated for the lost units calculated in the third report of Mr Moore.XX XXXX XXXXX XX XXXXX X XXXXX XXX XXXX XXXXX XX XX XX X XXX XX X XX X XX XXXXX XX XXXXX XXX XXXXX XXXXX XXXXX XXXXX XX XXXXX XXXXX XXXXX XXXX XXXX XXXXX XXXXX XXXXX X XXXXX XXXX XXXXX XXXX XXXXX X
Mr Potter, an expert accountant called by the respondent, was asked for his opinion on two matters.
Question 1: What is the effect of the Supply Agreement on the quantum of loss and damage calculated by Mr Samuel?
Question 2: Irrespective of his opinion in respect of Question 1, calculate Novartis’ alleged loss using Mr Samuel’s loss methodology, but on the assumption that the cost of sale per unit for both the Historical and Future Loss Periods range XXXXX XXXXX X
As to Question 1, Mr Potter agreed that damages could be assessed on an incremental basis, as Mr Samuel had done, but disagreed with Mr Samuel’s application of the methodology as it did not take into account the terms of the supply agreement. Whereas Mr Samuel concluded that the supply agreement was not relevant to the assessment of damages, Mr Potter considered that, from an accounting perspective, the supply agreement was relevant to the assessment of the damage claimed to have been suffered by Novartis for the reasons that:
(a)the damages claim related to the incremental sales that were assumed would have been made by Novartis in circumstances where the alleged misleading and deceptive advertising of Bayer had not occurred;
(b)the impact of obtaining additional sales was that Novartis would generate an additional operating margin on those sales;
XXXXX XXX XXXXX X XXXXX XXX X XXXXX XXXXX XXXXX XXXX XXXXX XXXX XXXXX XX XXXXX X XXXXX XXX XXXXX X XXXXX XXX XXXXX X XXXXX XXXX X XXX X XX X XXXXX XXXXX XX XXXXX XXXX X XXXXX XXXXX XX XXXXX XXXXX X XXXXX XXXX X XXXXX XXXX X XXXXX XXXXX X XXXXX XXXX X XXXXX XXX X XXXXX XXXX X XXXXX X X XXXXX XX XXXXX XX X XXXXX XXXXX X XXXXX XX X XXXXX X X XXXXX XXXXX XXXXX X X XXXXX XXXXX XXX XXXXX XXXXX X XXXXX XXXXX XXX X XXXXX XXX X XXXXX XX X XXXXX XX X XXXXX X XXXXX XXXXX XX XXXXX X XXXXX XXXXX XXXXX XX XXXXX XX XXXXX XXXX XXXXX XX XXXXX X
XX XXXX XXXXX XXXX X XXXXX XXX XXXXX XXX XXXXX XXXX X XXXXX XXXXX XX XXXXX XX XXXXX XXX X XXXXX XXX X XXXX X XXXXX X X XXXXX XX XX XXX XX XXXXX XX XXXXX XXX XXXXX XX XXXXX X X XXXXX XXX XX XXXXX XX XXXXX XXX XX XXXXX XXXX XXXX XXXXX X XXXXX XXXX XXXXX XXXXX XX XXXXX XX XXXXX XXXX XXXXX XXXXX XXXXX XXXX XXXXX XX XXX XX XXXX X XXX X XXX X XXXXX X X X X X XXXXX XXXXX XXXXX XXXXX XXXXX X XXXXX XXX XXXXX XXX XXXXX XXX XXXXX XXXXX XXXXX XXXX XXXXX XXXXX XXX XXXXX XXXXX X XXXXX XXX XXXX XXXXX XXXXX X X XXXXX XXXX XXXXX XXXXX XXXXX XXX XXXXX X XXX X XXXXX XXXXX XX XXXXX X XXXXX XX XXXXX XXXX XXXX XXXXX X XXXXX XXXX XXXXX X XXXXX XX X XXXXX X X XXXXX XXX XXXXX XXXX XXXXX XXX X XXXXX XX X XXXXX XXXXX X X XXXXX X X XXXXX XXXXX X XXXXX XXXXX X XXXXX XXXXX X XXXXX XXXXX X XXXXX XXXXX X X XXXXX XX XXXXX XXXXX X XXXXX XXXX
As to the second matter, Mr Potter had an alternate calculation of damage claimed to have been suffered by Novartis under Mr Samuel’s method (on the assumption that the supply agreement did not apply) but adopting a range of alternate costs per unit ranging from XXXXX X to XXX increasing at intervals of XXX and also a scenario using a cost per unit of XXX in respect of the amount that Novartis would pay XXXXX XXXXX for Lucentis. The quantum of damage in scenario 1 was in the range of XXXXX XXXXX XXXXX XXXXX XXXXX X XXX XXXXX (calculating that Novartis would have reported a loss of XXXXX XX assuming a cost of XXX per unit for Lucentis, meaning that no damage was suffered). The cost per unit for Lucentis had a material impact on the calculation of the damage suffered, adopting the loss model prepared by Mr Samuel.
The joint report of Mr Samuel and Mr Potter, directed by the Court, noted three matters on which they agreed. First, as set out above, Mr Samuel assessed damages on an incremental basis, meaning the incremental profit that would have been made on the lost sale had Novartis made the sale. Mr Potter agreed that damages could be assessed on an incremental basis, although he did not prefer this approach. Secondly, Mr Potter did not comment on the assumptions that Mr Samuel had made or been instructed to make regarding the integers applied in the damages model but had accepted those assumptions for the purposes of preparing an alternative assessment of loss and also adopted the damages model. Thirdly, each expert had reviewed and agreed with the mathematical accuracy of each other’s calculations.
The joint report of Mr Samuel and Mr Potter noted a large number of matters, some 11 issues or sub-issues, on which they disagreed but they said the only significant matter on which they disagreed was the application of the supply agreement to the calculation of damages. XXXXX XXXXX X XXXXX XXXXX XXXXX XXXXX X XXXXX XXX XXXXX XXXXX XXXXX XXX X XXXXX XXXXX XXX X XXXXX XXXXX X XXXXX X XXXXX X X XXXXX XXXXX X XXXXX X X XXXXX XXXX X XXXXX XX X XXXX X XXXXX XXX XXXXX XXXXX XXXX XXXXX XXXX X XXXXX XXXXX XXXXX XXXX XXXXX XX XXXXX XX XXXXX XXXX XXXXX XXX XXXXX XXXXX XXX XXXXX XXXXX XXXXX XX XXXX XXXXX XXXXX XX XXXXX XXXX XXXXX XXXX XXXXX XXX X XXXXX XXX XXXXX XXXXX XXXXX XXXXX X XXXXX XXX XXXXX XXXXX XXXXX XXXXX XXXXX XX XXXXX XX XXXXX XXXX XXXX XXXXX XXXX XXXXX XXXXX X XXXXX XXXXX XXXXX XXXX XXXXX XXXXX X XXXXX XXXXX X XXXXX XXXXX XX XXXXX XXXXX XX XXXXX XXXXX XXXXX XXXX XXXXX XXXXX XXXXX XXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXX XXXXX XXXXX XX XXXXX XXXXX XXXXX XXX XXXXX XXXXX XXXXX XXXXX X XXXXX XXX XXXXX XXXX XXXXX X XX XXXXX XXXXX XX X XXXXX XXXXX X XXXXX X XXXXX XXXXX XXX X XXXXX XXXXX XXXXX X XXXX X XXXXX XXXX XXXXX XXX X XXXXX XXXXX X XX XXXX XXXXX X XXXXX XXXXX XXXXX X XXXXX XXXXX X XXX XXXXX XXXXX XXXXX XXXX XXXXX XX XXXXX XXXX XXXXX XX XXXXX X XXXXX XXXXX X XXXXX XXXX XX XXXXX XXXXX XXXXX XXXX XXXXX XXXXX X X XXXXX XXXXX XXXX XX XXXXX XXXXX X XXXXX XX XXXXX X XXXXX X XXXXX XXXX XXXXX XXXX XXXXX XX XXX XXXXX XXXXX XX XXXXX XXXXX XXXXX XXXXX XX XXXXX XXXX XXXXX XXXXX XXX XXXXX XXXXX XX XXXXX XXXXX XXXXX XXXX XXXXX XXXXX X XXX XXXXX XXXX X XXXXX XXXXX X XXXXX XXXXX XXXXX XXXX XXXX XXXXX XXX XXXXX XXXXX XX XXX XXXXX XXXXX XXXX X XXXXX XXXXX X X XXXXX XXXX XXXXX XXXXX XXXXX XXXXX X XXXXX XXXXX X X XXXXX XXXXX X XXXXX XXXXX X X XXXXX XXXXX XXXXX XXX
XX XXXXX X XXXXX X X XXXXX XXX X XXXXX XX X XXXXX XXXXX X X XXXXX XX X XXXXX X X X X XXXXX XXXXX X X XXXXX XXX XXXXX X XXXXX XX X XXXXX X XXXXX XXXX XXXXX XXXX XXXXX XXXX XXXXX XXXXX X XXXXX XX XXXXX XX XXXX X XX XXXXX XXXXX XX XXXXX X X XXXXX XXXXX X X XXXXX XXXXX X XXXXX XXXXX XXX X XXXXX X X XXXXX XX X XXXXX XXXXX X XXXXX XXXX X XXXXX XXXX X XXXXX XXX X XXXXX XXXXX XXX X XXXXX XXXXX X XXX XXXXX XX XX XXXXX XXXXX X XXXXX XX XXXXX XXXXX X XXXXX XXXXX XX X XXXXX XXXX X XXXXX XX X XXXXX XXXXX X XXXXX XXXXX X X XXXXX XX X XXXXX XX X XXXXX XXXX XXXXX XXXXX X XXXXX XXX XXXXX X X XXXXX XXXXX XXXXX X XXXXX XX XXXXX XXXXX XXXX X XXXXX XXXXX X XXXXX X X XXXXX X X XXXXX X
The oral evidence of Mr Samuel and Mr Potter was given concurrently with both experts first giving a brief summary of their evidence, an overview of the joint report and a summary of the issues that remained in dispute. It is not necessary to set out the detail of it, although I should note that the issues between these experts became clearer in the course of it. XX XXXXX XXXXX X XXXXX XXXX XXXXX XXXXX XXXXX X X XXXXX XXXXX XX X XXXXX XXXXX X XXXXX X XXXXX XXXX XXXXX XXX XXX X X XX X X XXXXX XXXXX XXXXX X X XXXXX XXXXX XX XXXXX XXXX X XXXXX XXXXX X X XXXXX XX X XXXXX XXXXX XX X XXXXX XXXXX XXXX X XXXXX XXXXX X XXXXX XXXXX X XXXXX XXXXX X X XXXXX XXXXX X X XXXXX XXX XXXXX XXXX XXXXX XXXX X XXXX X XXXXX XX XXXXX XXXXX X XXXXX XXXXX X XXXXX XXXXX XXX XXXXX XXXXX XXX X XXXXX XXXXX XX X XXXXX XXXXX XXXX X XXXXX XXXXX XXXX XXXXX XX XXX XXXXX XXX XXXXX X XXXXX XXXXX XX XXXXX XXX XXXXX XX X XXXXX XXXXX X XXXXX XXXXX X XXXXX XXXXX X XXXXX XXX XXXXX XXX XXXXX XXXXX XXXXX XXX XXXX X XXXXX XXXXX X X XXXXX XXXXX XX XX XXXXX XXX XXXXX XXX X XXXXX XXXXX XX XXX XXXXX XX XXXXX XXXX XXXXX XXXXX XXX XXXXX XXX X XXXXX XXXXX XXXXX XX XXXXX XX XXXXX XXXX XXXX XXXXX XXXXX X XXXXX XXXXX X XXXXX XXXX X XXXXX XXXXX X XXXXX XXXX X XXXXX XXXXX X XXXXX XXXXX X X XXXXX XXXXX XX
Mr Potter agreed that had the hypothetical incremental sales in fact taken place they would have been accounted for in exactly the same way as the sales that did take place and also agreed that, at the point of each of the sales taking place, Novartis had the benefit of a profit margin of approximately XXX.
Mr Potter and Mr Samuel appeared to agree that Mr Hodgkinson’s evidence that the cost reimbursement related more to expenses than it did to products did not matter.
As I have said, the essential difference between Mr Samuel and Mr Potter was the point at which the supply agreement should be applied. XXXXX XX XXX XXXX XXXXX X XXXXX X XXXXX X XXXXX XXX XXXXX XX XXX XXXXX XXXXX X XXXX XXXXX XXXXX X XXXX XXXXX XXXX XXXXX XXX XXXXX XXXXX XXXX XXXXX XXXX XXXXX XX XXXXX XX XXXXX XXXXX XXXX XXXXX XXXX XXXXX XXXXX XXXXX XXXXX X XXXXX XXXX XXX XXXXX XXX XXXXX XXXXX X XXXXX XXXXX XXXX XXXXX XX XXXX XXXXX XXXXX X XXXXX XXXXX XXXX XXXXX XXXXX XXX XXXXX X XXXXX XXXX XXXXX XXX XXXXX XXXXX X XXXXX . XXXXX XXXXX XXXXX XX XXXXX XXXXX XXXXX X XXXXX XXXXX X XXXXX XXXXX XXXXX X XXXX XXXXX
XXXXX X XXXXX XXX XXXXX X XXXXX XXX XXXXX XXXXX XX XXXXX XX XXXX XXXXX XXXXX XXX XXXXX XXXX XXXXX XXXXX XX XXXXX XXXXX XXXXX XX XXXXX XX XXXXX X XXXXX XXXXX XXXXX XX XXXXX XX XXXX XXXXX X XXXXX XXXX XXXXX XXX XXXXX XXX XXXXX X XXXXX X XXXX XXXX XXXXX XXX XXXXX XX XXXXX X XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX X XXXXX XXXXX XXXXX XXXXX XXXX XXXXX XXX XXXX XXXXX XXXXX XXXXX X XXXXX XXXX XXXXX XX XXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXX XXXXX XXXX XXXXX X XXXXX X X XXXXX XXXXX XXXX XXXXX XXXXX XXX XXXXX XXXXX XXX XXXXX XXXX XXXXX XX XXXXX XXXXX X XXXXX XXXXX X XXXXX X XXX XXX XXXX XXXXX X XXXXX XXX XXXXX XXX XX XXXXX X XXXXX XXXXX XXXX XXXXX X XX XXXXX XXX XXXXX X XXXXX XX XXXXX XXXXX X XXXXX XXXX XXXXX XXX XXXXX XXXXX XXX XXX XXXXX XXXXX XXXXX XXX XXXXX XXXXX XX XXXXX XXXXX X XXXXX X XXXXX XXXXX XXXXX XXXX XXXXX XXX XX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX X XXX XXXXX XX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX X XXXXX XXXXX XX XXX XXXXX XXXXX XX XXXXX XXXXX X XXXXX XXX XXXXX XXXXX XXX XXXXX X XXXXX XXXXX XXXXX XXXXX XX XXXXX XXXXX X XXXXX XXXXX X XXXXX XXXXX . XXXXX XX XXXXX XXXX XXXXX X XXXX XXXXX XXXXX XXXXX XXXXX XXXXX I prefer the evidence and conclusions of Mr Samuel. XXXX XXXXX XX XXXXX XXXXX XXX XXXX XXXXX XX XXXXX XXXXX XXXXX X XXXXX XXXXX X XXXX
As I have said, the calculations of the accountants are, however, based on the numbers of “lost units” of Lucentis set out by Mr Moore in his reports. The real issue is the calculation of lost units.
Novartis submitted that the normal approach to damages in cases of comparative advertising which is misleading or deceptive is to assess the impact of the advertising campaign in the market. The quantum of the loss is assessed by calculating the value of the sales that the applicant would have made had the misleading or deceptive advertising not occurred. In the present case, Novartis’ loss and damage is its loss of profits arising from the fact that patients who would otherwise have been prescribed Lucentis were prescribed Eylea, the cause of which was the contravening conduct.
As I have said, Mr Moore developed an economic model of sales of Lucentis and Eylea which was his modified version of the BDM. In his modelling of the anticipated impact of the entry of Eylea into the market, Mr Moore set the lower end at 10% and the upper limit at 350%. He then selected a point estimate of 75% as the most likely peak boost to sales. Subsequently, as I have set out, Mr Moore factored in a wider range of materials, arrived at a 150% boost to sales but discounted it to 90% in light of the affidavit evidence of the Bayer sales representatives.
The applicant submitted that this was far from guesswork. The applicant submitted the evidence demonstrated that Mr Moore was eminently qualified to undertake the task of calculating the volume of lost sales caused by Bayer’s contravening conduct. Mr Moore used a paper on which Bass was a co-author and which in turn referred to an analysis of 213 studies in which the BDM was applied, to arrive at an average q/p ratio of 12.7, which he described as a point estimate of the empirically measured average. Moreover, the applicant submitted, Mr Moore took great care to ensure that he read not only the Bass paper, but also the underlying meta-analysis and cited both. Mr Moore used those integers to model 25 different scenarios of the impact of the message providing a percentage boost to sales. In the applicant’s submission, the criticisms made by Dr Williams and in cross-examination of Mr Moore concerning his reliance on, and deployment of, key literature studies were demonstrated to be without foundation. The applicant submitted that Mr Moore provided careful and considered responses under cross-examination and Mr Moore’s evidence was of great assistance to the Court and was effectively uncontested as Bayer did not identify any alternative studies or proffer or develop any alternate loss model.

The total loss figure of XXXXX X (scenario 1) was based on the direct effect of 90% but with a q/p ratio of 12.7.
The respondent submitted that Novartis had failed to prove that the impugned conduct caused it to suffer the loss or damage which it alleged it had or will in future suffer. Bayer referred to a number of considerations which it submitted supported this conclusion.
First, Bayer submitted that Novartis had not adduced any direct evidence that it had lost any Lucentis sales because of the representations. Novartis had been unable to procure evidence from a single ophthalmologist (or optometrist, pharmacist, executive or salesperson) that supported an alleged connection between the impugned conduct and a single lost sale.
Secondly, even if the representations were to arise from the promotional materials, Bayer submitted that they would have no relevant impact or effect on the prescribing by ophthalmologists of either Eylea or Lucentis. The impugned promotional activities could not be supposed to have changed the mind of, or materially influenced, a specialist doctor by a single sentence in an advertisement. Bayer submitted the impugned conduct was an inconsequential aspect of a much wider process of dissemination by Bayer and others of medical information to ophthalmologists.
Thirdly, Bayer submitted, Novartis had itself identified a series of reasons which explained Eylea’s gain in market share in Australia and the reduction in sales of Lucentis after Eylea became available. Novartis’ contemporaneous internal documents considered that there were three key products differentiations: (a) the retention of fluid on the retina associated with Lucentis; (b) patients who were considered to be non-responders to Lucentis; and (c) patients on Lucentis who could not be extended out further than four or five weeks. Bayer also referred to ophthalmologists becoming familiar with Eylea and its characteristics by being provided with free samples of Eylea.
Fourthly, Bayer submitted, the uptake of Eylea was consistent with other markets. Novartis acknowledged in its internal analysis, Bayer submitted, that the rate of uptake of Eylea in Australia was similar to the experience in other countries. A comparison of sales rates indicated that the growth of sales in Australia was not atypical and in need of an explanation or cause outside the usual range of ordinary market forces.
Fifthly, Bayer submitted, ophthalmologists had detailed knowledge of the comparative science in the VIEW clinical study: it was to be expected that the results of the VIEW clinical study would lead to a rapid gain of market share by Eylea. The VIEW study was the centrepiece of the launch of Eylea on 24 October 2012. It also featured extensively in the Eylea product information. Ophthalmologists gave presentations at educational events which contained extensive information about the VIEW study. Bayer undertook a nationwide detailing campaign in which its sales representatives built on the positive clinical information in the VIEW study. 522 ophthalmologists were visited by Bayer’s sales representatives between May 2012 and June 2013 with the total number of sales visits being 4170, of which 3235 were sit down sales calls. The primary focus of the Detail Aid was the results of the VIEW study data. Furthermore, ophthalmologists knew Eylea was coming and had their own sources of information about it, including clinical study material and other scientific papers.
Sixthly, Bayer submitted, Novartis itself was the source of extensive information to ophthalmologists over many years that Lucentis is given monthly. The regularly deployed approved Lucentis product information said as much. The Lucentis patient information document, included in every box of Lucentis, stated that for wet AMD the injection of Lucentis was given once a month. A brochure disseminated to ophthalmologists said that a monthly regimen of Lucentis demonstrated the best visual acuity outcomes in the clinical trials. Novartis sales representatives conveyed the same information including by means of the Novartis eDetailer.
Seventhly, large amounts of other information about Lucentis and Eylea were available to, and provided to, the relevant addressees.
Bayer also submitted the reports of Mr Moore were deeply flawed and could not be accepted as reliable or accurate. The entire premise of his reports was an assumption that the pleaded case involved representations which could be taken together to be a “fewer injections” representation. The basis of Mr Moore’s analysis was different from, and inconsistent with, Novartis’ pleaded case. What Mr Moore purported to assess was not the effect of the representations but the promotional effect of a different and much broader message. Mr Moore’s incorrect premise infected the whole of his three reports. Also, he seemed to assume that pharmaceuticals could be marketed directly to patients in Australia, as they can be in New Zealand. An additional vice in Mr Moore’s analysis, Bayer submitted, was that the four pleaded representations were not the only meanings that could be attributed to the promotional material, which meant that a “fewer injections” message must include both legitimate and illegitimate meanings on Novartis’ case. Mr Moore’s reports were incapable of measuring the effect of the impugned representations in the marketplace for this additional reason. Bayer next submitted that large parts of Mr Moore’s reports were based on an assumption that Eylea had no actual advantage over Lucentis because it was either a ‘me too’ product, akin to a generic, or was otherwise therapeutically similar to Lucentis. Bayer submitted that the incorrect assumption that Lucentis was a ‘me too’ product was not made out and Mr Moore’s assumption, which represented the foundation of his reasoning, was entirely inconsistent with the evidence. Bayer also submitted that Mr Moore’s early foothold assumption was not made out. Next Bayer submitted that Mr Moore’s assumption that Novartis’ loss should be calculated out to December 2016 was unsupportable. Ophthalmologists learned through experience with the product they prescribed and made repeated prescribing decisions over time. Given Bayer’s undertaking on or about 15 May 2013, it was entirely unrealistic to suggest the period of any loss suffered by Novartis would extend even to 2015, let alone until the end of 2016. If ophthalmologists had been misled by the promotional material one would expect to see a swing in sales back to Lucentis after the cessation of the relevant promotional activities but there had been no such swing.
Bayer also submitted that the methodology used by Mr Moore was deeply flawed for other reasons. Mr Moore applied his own personally modified version of the BDM and in doing so misunderstood and misapplied the BDM in a number of ways, Bayer submitted. First, Lucentis did not follow an S-curve adoption pattern when launched in 2007 but, like Eylea, had a sharp uptake in its first few months after launch. Secondly, the central proposition of the BDM was that adoption had not yet occurred and in this respect Mr Moore assumed that each time an ophthalmologist prescribed Eylea it was like the purchase of a new product. However, “purchasing” decisions for Eylea were made regularly and repeatedly over time by the same ophthalmologist. Thirdly, Mr Moore applied the BDM to a specific product within a product category but the model only applied to the generic demand for a product category. Fourthly, applying the BDM in the real world to forecast adoption rates involved guesses of the key parameters. On top of that, Mr Moore made three extensive mathematical “modifications” to the model, which modifications were not supported by any published paper or article and were inconsistent with the model itself. Fifthly, the Mahajan, Muller and Bass article made it clear that before applying the model in the real world key questions arose as to the number of samples being offered to the market. Mr Moore agreed that he had no evidence or understanding about the scale of sampling undertaken by Bayer in relation to Eylea. The adjustment factors that Mr Moore employed to move from his estimate of Eylea factual sales to Eylea counterfactual sales were not derived from any statistical analysis that he had undertaken. The adjustment factors involved pure guesswork by Mr Moore. No reasoning was given to justify the lower limit figure of a 10% boost in sales and no reasoning was exposed as to how the figure of 350% was arrived at. Mr Moore exposed no reasoning as to why he selected 75% but confirmed that it was purely his opinion. Neither the Sweeny Study nor the Dunn Study supported Mr Moore’s assertion that his choice of a 75% boost in sales (within the range of a 10% to 350% boost in sales) was consistent with the findings of those studies. The Azoulay Study provided no support for the 75% figure chosen by Mr Moore. Mr Moore’s explanation of the increase from 75% to 90% was entirely inadequate as the explanation of an increase that was a very significant factor in the eventual assessment of the alleged number of “lost sales”.
In Novartis’ reply submissions, the rate and extent of Eylea’s gain of market share was emphasised. It also submitted that the existence of a number of causal elements in play in relation to a shift to Eylea did not mean that the misleading and deceptive conduct was not a contributing cause. The critical point was the impact of misleading and deceptive conduct on sales. It was in this context that Mr Moore’s evidence was especially significant because his analysis sought to identify what proportion of total lost sales were a result of the misleading conduct. Novartis submitted that the more similar the products and the more established the incumbent, the more difficult market penetration would be. Significant market penetration by a new entrant in such circumstances must be accounted for by way of some actual or perceived advantage. There was no material advantage but the potent source of the perceived advantage was the impugned publications. They must have contributed significantly to what Mr Moore opined, by reference to other published work and his own experience, was an atypical rate and depth of market penetration by Eylea.
Novartis submitted that the figure of 75% provided by Mr Moore was not an opinion given in the abstract or in a vacuum, indeed it was conservative. Mr Moore’s use of the 12.7 q/p ratio was also conservative. Novartis recognised that the Court may disagree with Mr Moore’s best estimate and therefore presented an additional 24 scenarios that could be used by the Court to estimate damages if it formed the opinion that other figures were more appropriate. Novartis submitted that Mr Moore’s evidence was not the only evidence before the Court which demonstrated the impact of the misleading conduct. Eylea’s entry into the Australian market was faster and deeper than any of the 103 other pharmaceuticals analysed in the Dunn Study. There was also market research evidence by Novartis that supported the view that the impugned publications had a potent impact on the market. Further, patients who were switched from Lucentis to Eylea included not only non-responders but also patients who were receiving very infrequent dosing of Lucentis.
In my view, the live issue is the number of sales Novartis had lost as at 31 March 2014 and would lose because of the conduct of Bayer, assuming the representations were made and assuming some causation. The monetary value of those lost sales may then be calculated in accordance with my findings as to the effect of the supply agreement between Novartis and Novartis Pharma AG and the evidence of Mr Samuel.
The difficulty lies in assessing on the balance of probabilities the causative effect of the conduct. As Mr Moore’s evidence, taken at its highest, demonstrates, no precision is available and the range is very wide.
Given the circumstances in which a patient’s condition is revisited and the individualised professional judgment of an ophthalmologist would be re-applied for each prescription decision and that the ophthalmologist would at that point, if not before, have actual experience of Lucentis or Eylea or both, I am not persuaded that the effect of Bayer’s conduct would continue far past the time the false representations ceased to be made in mid-May 2013. In my opinion, any causative effect of the representations would have ceased by the end of December 2013. This would permit prescriptive conduct by an ophthalmologist based on experience in relation to his or her patients, that conduct being no longer affected, on this hypothesis, by the impugned conduct.
I then turn to the circumstances in which this particular drug was introduced into Australia. I take into account: the influence of the overseas information, including the VIEW studies, and the consequent expectations of ophthalmologists; the state of knowledge of ophthalmologists apart from the impugned conduct, in particular the Lucentis product and other information and the ophthalmologists’ prescribing practices in terms of frequency of injection in the years Lucentis had been available for prescription; that pharmaceuticals in general are goods that need to be used by prescribers and trialled with patients before the physician is satisfied about their effects, such that prescribers will learn over time how they work; the similarity between the content of the VIEW studies and the impugned conduct, that is, that the falsity of the material, on the present hypothesis, consisted of divorcing the results of the VIEW studies from the VIEW studies themselves and from the Lucentis product information; the provision of samples of Eylea to ophthalmologists; the rate of uptake of Eylea in the overseas markets of Japan and the United States, which was not dissimilar to the rate in Australia (although there was no evidence as to what advertising of Eylea had occurred in those countries); and regard should also be had to the rate of penetration of the market of Lucentis from when it first became available in Australia.
These particular considerations must affect markedly what might otherwise flow from the modelling conducted by Mr Moore. A particular difficulty, in my view, with Mr Moore’s evidence was its focus on “fewer injections” rather than on the representations which, on the present hypothesis, were false. Also, in my view, there was an overemphasis on generalised models without sufficient attention being paid to the particular circumstances surrounding the introduction of Eylea. As to the Azoulay Study, I find to be unconvincing the similarities between that study and the introduction of Eylea to which Mr Moore referred and which I have set out in the last three sentences of [284] above. Rather, as I have set out at [308] above, the study did not deal with significant aspects particular to the introduction of Eylea. As to the Mahajan et al paper, I adopt the criticisms I have set out at [302]-[303] above and I do not regard that application of the BDM as providing support for Mr Moore’s conclusions. That is, I find to be unpersuasive the application of the BDM to yield an estimate rather than a guess by reference to the commencement of a patient on a new course of treatment and by reference to a specific product within a product category. As to the Dunn Study, in my opinion Mr Moore’s use of it as I have set out at [285] above involves a clear case of preferring theory to empirical data. Much more relevant to the adoption of Eylea were: the facts as to the adoption of Lucentis; the facts relevant to the adoption of Eylea in the United States and Japan; the perceived differences between Eylea and Lucentis; and the amount of information available about Eylea apart from the impugned conduct which went also to the profession’s expectations surrounding Eylea’s introduction. Also, as I have noted at [305] above, Mr Moore accepted that the aim of the study was not to apply the BDM to individual medicines and the conclusions expressed in the study were retrospective not predictive.
I also find that Mr Moore’s definitions of ‘me too’ drugs played an important part in his analysis but his application of the concept in his assessment of Novartis’ lost sales discounted perceived differences between Lucentis and Eylea, those differences being in relation to the retention of fluid on the retina associated with Lucentis; patients who were considered to be non-responders or sub-optimal responders to Lucentis; and patients on Lucentis who could not be extended out further than four or five weeks. His application of the ‘me too’ concept also discounted that: Eylea had a different active ingredient; it had a different mechanism of action; and it had a different standard dosing regimen. This makes unreliable, in my view, Mr Moore’s estimates of Novartis’ lost sales of Lucentis. The point is not the content of the expression ‘me too’ but Mr Moore’s assumption that there were no relevant differences between Lucentis and Eylea. The Sweeny Study, on which Mr Moore relied, was directed to the entry of a generic pharmaceutical into a market.
In light of these matters, a figure of a 20% boost to sales should be used, up to the end of December 2013. Further, I would assess the internal influence, that is the behaviour of the ophthalmologists due to the influence of existing adopters, as not having been established and the q/p ratio to be zero.
Damages should therefore be calculated as per Mr Moore’s scenario 2 using the historical loss figure but with future loss limited to the end of December 2013. That figure is XXXXX XXX plus a tax gross up of XXXXX XX; it does not include a sum for pre-judgment interest.
Conclusion
Having made my reasons available to the parties I will stand the matter over for four weeks to enable them to identify which parts of the reasons should not be published because of confidentiality and to arrive at a proposed form of orders. The parties should also agree the figure to be included, even if not published, in the immediately preceding paragraph of these reasons. At that time I will make final orders dismissing the application. If the applicant contends that costs should not follow the event, it should file and serve within 14 days of the date of these reasons a written submission of no more than three pages in support of that contention. The respondent should file and serve within 21 days of the date of these reasons its written submission of no more than three pages in answer to any such submission of the applicant.

I certify that the preceding three hundred and sixty-seven (367) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson.
Associate:
Dated: 26 March 2015

Citation:	Novartis Pharmaceuticals Australia Pty Ltd v Bayer Australia Ltd [2015] FCA 35
Parties:	NOVARTIS PHARMACEUTICALS AUSTRALIA PTY LTD (ACN 004 244 160) v BAYER AUSTRALIA LIMITED (ACN 000 138 714)
File number:	NSD 314 of 2013
Judge:	ROBERTSON J
Date of judgment:	6 February 2015
Catchwords:	TRADE PRACTICES – respondent’s conduct promoting new drug for the treatment, by intra-vitreal injection, of neovascular (wet) age-related macular degeneration (AMD) – incumbent drug and new drug in direct competition with each other as prescription-only medicines indicated for use in Australia for the treatment of wet AMD – each drug only available on prescription and administered only by ophthalmologists – each drug registered on the Australian Register of Therapeutic Goods and listed on the Schedule of Pharmaceutical Benefits – illegal to advertise prescription-only medicines to the general public – relevant class of addressees – whether pleaded representations conveyed – if so, whether that conduct misleading or deceptive or likely to mislead or deceive or false or misleading – relevance of “dominant message” – whether applicant’s loss of sales caused by respondent’s representations – assessment of any loss
Legislation:	Australian Consumer Law ss 18, 29, 236 and 237 National Health Act 1953 (Cth) s 85 Therapeutic Goods Act 1989 (Cth) ss 3, 7D, 23 and 25 Therapeutic Goods Regulations 1990 (Cth) r 9A and sch 12
Cases cited:	Apotex Pty Ltd (formerly GenRx Pty Ltd) v Les Laboratoires Servier (No 2) [2008] FCA 607; (2008) 77 IPR 1 AstraZeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd [2005] FCA 1645 Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd [2006] FCAFC 22; [2006] ATPR 42-106 Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 Australian Competition and Consumer Commission v Jewellery Group Pty Ltd [2012] FCA 848; (2012) 293 ALR 335 Australian Competition and Consumer Commission v Pest Free Australia Pty Ltd [2004] FCA 527 Australian Competition and Consumer Commission v Telstra Corporation Ltd [2004] FCA 987; (2004) 208 ALR 459 Australian Competition and Consumer Commission v Telstra Corporation Ltd [2007] FCA 1904; (2007) 244 ALR 470 Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 Global One Mobile Entertainment Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 134 Gould v Vaggelas (1984) 157 CLR 215 Instant Colour Pty Ltd v Canon Australia Pty Ltd [1996] FCA 763 National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] FCAFC 90; (2004) 49 ACSR 369; (2004) 61 IPR 420 Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723 Nick Scali Ltd v Super A-Mart Pty Ltd [2011] FCA 751 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505 Singtel Optus v Telstra [2004] FCA 859 Telstra Corporation Ltd v Optus Communications Pty Ltd [1996] FCA 1035; (1996) 36 IPR 515
Date of hearing:	7–11 April, 14–17 April and 4–6 June 2014
Note:	The parts of these reasons that are masked are the subject of a non-publication order made on 6 April 2016 under s 37AF of the Federal Court of Australia Act 1976 (Cth) to operate until 11.59 pm on 25 March 2017.
Date of last submissions:	13 June 2014
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	367
Counsel for the Applicant:	Dr A Bell SC with Ms E Holmes
Solicitor for the Applicant:	Clayton Utz
Counsel for the Respondent:	Mr R Lancaster SC with Ms K Richardson and Ms J Wright
Solicitor for the Respondent:	Minter Ellison

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 314 of 2013

BETWEEN:	NOVARTIS PHARMACEUTICALS AUSTRALIA PTY LTD (ACN 004 244 160) Applicant
AND:	BAYER AUSTRALIA LIMITED (ACN 000 138 714) Respondent

JUDGE:	ROBERTSON J
DATE OF ORDER:	6 February 2015
WHERE MADE:	SYDNEY

JUDGE:	ROBERTSON J
DATE:	6 FEBRUARY 2015
PLACE:	SYDNEY

Date	Form of publication and event
1.	28 July 2012	Baby banner (first form) displayed by Bayer at the Sydney Eye Hospital Alumni Associate’s Ninth Biennial Conference held at the Sofitel Wentworth, Sydney
2.	3, 4 August 2012	Poster (first form) displayed at Bayer’s trade display booth at a meeting of the Queensland branch of RANZCO
3.	6 August 2012	Baby banner (first form) displayed by Bayer at an educational meeting held at Hobart Eye Surgeons, Hobart
4.	September 2012	Advertisement (first form) in Volume 40, Issue 7 of the journal Clinical & Experimental Ophthalmology
5.	October 2012	Advertisement (first form) in Issue 73 of mivision magazine
6.	24 October 2012	Attendee workbook (first form) displayed and disseminated at the Eylea product launch hosted by Bayer at Four Points by Sheraton, Sydney
7.	24 October 2012	Poster (first form) displayed at Eylea product launch at Four Points by Sheraton, Sydney (respondent denies and says it displayed the baby banner (first form))
8.	24 October 2012	Attendee workbook (first form) displayed and disseminated at the Eylea product launch hosted by Bayer at the Sebel & Citigate Albert Park, Melbourne
9.	24 October 2012	Attendee workbook (first form) displayed and disseminated at the Eylea product launch hosted by Bayer at the Sebel & Citigate King George Square, Brisbane
10.	24 October 2012	Attendee workbook (first form) displayed and disseminated at the Eylea product launch hosted by Bayer at Hotel Grand Chancellor on Hindley, Adelaide
11.	24 October 2012	Baby banner (first form) displayed by Bayer at the launch event at the Sebel & Citigate Albert Park, Melbourne
12.	24 October 2012	Baby banner (first form) displayed by Bayer at the Sebel & Citigate King George Square, Brisbane (not admitted by respondent)
13.	27 October 2012	Baby banner (first form) displayed by Bayer at a meeting attended by ophthalmologists at the Hotel Grand Chancellor, Hobart
14.	November 2012	Advertisement (first form) in Volume 40, Issue 8 of the journal Clinical & Experimental Ophthalmology
15.	November 2012	Advertisement (first form) in Issue 74 of mivision magazine
16.	24 to 28 November 2012	Poster (second form) displayed at Bayer’s trade display booth at a national meeting of RANZCO
17.	December 2012	Advertisement (second form) in Issue 75 of mivision magazine
18.	December 2012	Advertisement (first form) in Volume 40, Supplement S1 of the journal Clinical & Experimental Ophthalmology
19.	December 2012	Advertisement (second form) in Volume 40, Issue 9 of the journal Clinical & Experimental Ophthalmology
20.	January 2013	Advertisement (second form) in Volume 41, Issue 1 of the journal Clinical & Experimental Ophthalmology
21.	9, 10 January 2013	Baby banner (second form) displayed by Bayer at a training conference for registrar ophthalmologists held at the Sydney Eye Hospital
22.	February 2013	Advertisement (second form) in Issue 76 of mivision magazine
23.	1, 2 February 2013	Baby banner (second form) displayed by Bayer at a meeting of the Tasmanian branch of RANZCO held at the Henry Jones Art Hotel, Hobart (not admitted by respondent)
24.	12 February 2013	Baby banner (second form) displayed by Bayer at an educational event held at the Lions Eye Institute, Nedlands, Western Australia
25.	26 February 2013	Baby banner (second form) displayed by Bayer at an optometrists’ referral meeting held at venue of the Victorian Eye Surgeons, Paisley Street, Footscray
26.	March 2013	Advertisement (second form) in Issue 77 of mivision magazine
27.	5 March 2013	Baby banner (second form) displayed by Bayer at a referral meeting held at the Empire Grill, Geelong
28.	22, 23 March 2013	Poster (second form) displayed by Bayer at its trade display booth at a meeting of the New South Wales branch of RANZCO
29.	April 2013	Baby banner (second form) displayed by Bayer at a Luxottica educational meeting attended by optometrists held at the Novotel in Darling Harbour, Sydney (not admitted by respondent)
30.	April 2013	Advertisement (second form) in Volume 41, Issue 3 of the journal Clinical & Experimental Ophthalmology
31.	April 2013	Advertisement (second form) in Issue 78 of mivision magazine
32.	3 April 2013	Baby banner (second form) displayed by Bayer at an educational meeting for Luxottica optometrists held at the Mercure Hotel, Perth
33.	5-7 April 2013	Poster (second form) displayed at Bayer’s trade display booth at the Australian Vision Convention, a meeting of the Optometrists’ Association of Australia held on the Gold Coast
34.	10 April 2013	Baby banner (second form) displayed by Bayer at an optometrist referral meeting held at the Norwest Eye Clinic, Norwest, NSW
35.	10 April 2013	Baby banner (second form) displayed by Bayer at an educational meeting attended by optometrists hosted by Outlook Eye Specialists held at the Vibe Hotel, Surfers Paradise
36.	10 April 2013	Baby banner (second form) displayed by Bayer at an educational meeting for Luxottica optometrists held at the Amora Hotel, Richmond, Melbourne (not admitted by respondent)
37.	16 April 2013	Baby banner (second form) displayed by Bayer at an educational meeting for Luxottica optometrists held at the Mercure Hotel, Geelong
38.	17 April 2013	Baby banner (second form) displayed by Bayer at an educational meeting attended by optometrists held by Luxottica at the Old Woolstore Hotel, Hobart, Tasmania
39.	26 April 2013	Baby banner (second form) displayed by Bayer at a referral meeting attended by optometrists held at the consulting rooms of the Northern Eye Consultants, Victoria
40.	29 April 2013	Baby banner (second form) displayed by Bayer at an educational meeting attended by optometrists held by Luxottica at the Lion Hotel, North Adelaide
41.	30 April 2013	Baby banner (second form) displayed by Bayer at a retinal meeting held at the University Club at the Crawley campus of the University of Western Australia
42.	May 2013	Advertisement (second form) in Issue 79 of mivision magazine
43.	3 May 2013	Baby banner (second form) displayed by Bayer at an educational meeting attended by optometrists hosted by Central Queensland Eye held at the Mercure Hotel, Barney Point, Queensland
44.	7 May 2013	Baby banner (second form) displayed by Bayer at an optometrist referral meeting held at the Metwest Eye Clinic Blacktown, NSW
45.	14 May 2013	Baby banner (second form) displayed by Bayer at an educational meeting attended by optometrists held by Luxottica at the Mantra in Chatswood, NSW
46.	June 2013	Baby banner (second form) displayed by Bayer at a Luxottica educational meeting attended by optometrists held at the Mantra Hotel in the Australian Capital Territory (not admitted by respondent)
Various Dates (Novartis) Between May 2012 and May 2013 (Bayer)	Detailing Conduct (first form)