FEDERAL COURT OF AUSTRALIA
Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2018] FCA 1556
File numbers:
VID 195 of 2009
NSD 596 of 2009
NSD 1124 of 2009
Judge:
JAGOT J
Date of judgment:
19 October 2018
Catchwords:
PATENTS – interlocutory injunctions – undertakings as to damages – enforcement of undertakings – interlocutory injunctions wrongly granted – adverse effects of operation of interlocutory injunctions – losses of opportunity to supply – standard of proof – some loss proved on balance of probabilities – possibilities and probabilities of supply – supply under PBS and on private market – losses reasonably foreseeable – direct and indirect losses – remoteness of damage – illegality of hypothetical profits – abuse of process – assessment of loss – discretionary considerations
DAMAGES – interlocutory injunctions – undertakings as to damages – enforcement of undertakings – assessment of loss
Legislation:
Evidence Act 1995 (Cth) ss 81, 87
Federal Court of Australia Act 1976 (Cth) ss 4, 51A
Federal Court Rules 2011 (Cth) rr 39.06
National Health Act 1953 (Cth) ss 84, 85, 85AD, 98B, 99, 99ACI, 99ADB, 99AEB, 99AED, 99AEG, 99AEH, 99AEI
National Health (Pharmaceutical Benefit) Regulations 1960 (Cth) reg 10A, 37, 37DPatents Act 1990 (Cth) ss 13, 128, 138
Therapeutic Goods Act 1989 (Cth) ss 3, 9A, 9D, 19B, 19D, 20, 23, 25, 26, 26C, 28, 30, 31A, 41JD, 42E
Therapeutic Goods Legislation Amendments (Copyright) Act 2011 (Cth) ss 25AA, 44B
Trade Practices Act 1974 (Cth) s 82
Therapeutic Goods Regulations 1990 (Cth) reg 9A
Cases cited:
Abbey Forwarding Ltd (in liq) v HM Revenue & Customs [2015] EWHC 225 (Ch); [2015] Bus LR 882
Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249
Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310
Asden Developments Pty Ltd (in liq) v Dinoris (No 3) [2016] FCA 788
AstraZeneca AB v KRKA dd Novo Mesto [2015] EWCA Civ 484
Badenach v Calvert [2016] HCA 18; (2016) 257 CLR 440
Barnes v Forty Two International Pty Ltd [2014] FCAFC 152; (2014) 316 ALR 408
Barratt Manchester Ltd v Bolton Metropolitan Borough Council [1998] 1 All ER 1
Batistatos v Newcastle City Council [2006] HCA 27; (2006) 226 CLR 256
Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618
Chaplin v Hicks [1911] 2 KB 786
Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-Operative Assurance Co of Australia Ltd [1931] HCA 53; (1931) 46 CLR 41
Columbia Pictures Industries Inc v Robinson [1987] Ch 38; [1986] 3 WLR 542
Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64
Commonwealth v SCI Operations Pty Limited [1998] HCA 20; (1998) 192 CLR 285
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 5] [2012] WASC 382; (2012) 92 ACSR 1
Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1
Coshott v Principal Strategic Options Pty Ltd [2004] FCAFC 50
CT Bowring & Co (Insurance) Ltd v Corsi & Partners Ltd [1994] 2 Lloyd’s Rep 567
De Mattos v Gibson (1860) 1 J & H 79
Elsinora Global Ltd v Deputy Commissioner of Taxation [2006] FCAFC 156; (2006) 155 FCR 413
Envirotech Australia Pty Ltd v Enviroclear Co Inc (1987) 10 IPR 657
European Bank Ltd v Robb Evans of Robb Evans and Associates [2010] HCA 6; (2010) 240 CLR 432
Ex parte Hall; In re Wood (1883) 23 Ch D 644
Fightvision Pty Ltd v Onisforou [1999] NSWCA 323; (1999) 47 NSWLR 473
Fink v Fink [1946] HCA 54; (1946) 74 CLR 127
Fitzgerald v FJ Leonhardt Pty Ltd [1997] HCA 17; (1997) 189 CLR 215
Gates v Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1
Graham v Campbell (1878) 7 Ch D 490
Griffith v Blake (1884) 27 Ch D 474
H K Frost Holdings Pty Ltd (in liq) v Darvall McCutcheon (a firm) [1999] FCA 795
Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125
James v Canadian Trust of the Church of Latter Day Saints [1998] OJ No 3924; (1998) 165 DLR (4th) 227
Jeffree v National Companies & Securities Commission (1989) 15 ACLR 217
Kinsela v Russell Kinsela Pty Ltd (In liq) (1986) 4 NSWLR 722
Les Laboratoires Servier v Apotex Inc [2008] EWHC 2347 (Ch); [2009] FSR 220
Les Laboratoires Servier v Apotex Inc [2014] UKSC 55; [2015] 1 AC 430
Lewis (as liquidator of Doran Constructions Pty Ltd) v Doran [2005] NSWCA 243; (2005) 219 ALR 555
Love v Thwaites (No 4) [2012] VSC 521
Love v Thwaites [2014] VSCA 56
Mal Owen Consulting Pty Ltd v Ashcroft [2018] NSWCA 135
Malec v J C Hutton Pty Limited [1990] HCA 20; (1990) 169 CLR 638
Metwally v University of Wollongong [1985] HCA 28; (1985) 60 ALR 68
National Australia Bank v Bond Brewing Holdings Ltd [1991] 1 VR 386
Nicholson v Permakraft (NZ) Ltd (in liq) [1985] 1 NZLR 242
Norris v Blake (No 2) (1997) 41 NSWLR 49
Norwest Refrigeration Services Pty Ltd v Rain Dawes (WA) Pty Ltd [1984] HCA 59; (1984) 157 CLR 149
Otzen v Beabout [1947] HCA 49; (1947) 75 CLR 116
Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; (2003) 196 ALR 257
Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589
Principal Strategic Options Pty Ltd v Coshott [2003] FCA 736
R v Portus, Ex parte Federated Clerks Union of Australia [1949] HCA 53; (1949) 79 CLR 428
Re an Arbitration between Pemberton and Cooper (1912) 107 LT 716
Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332
Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2009] FCA 595; (2009) 81 IPR 339
Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2010] FCA 1211; (2010) 88 IPR 459
Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (No 2) [2010] FCA 1212; (2010) 88 IPR 633
Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2010] FCA 1258
Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2011] FCAFC 132; (2011) 119 IPR 194
Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (No 3) [2011] FCAFC 165
Smith v Day (1882) 21 Ch D 421
Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No 3) [2012] FCA 504; (2012) 290 ALR 263
State Bank of New South Wales v Commissioner of Taxation (1995) 62 FCR 371
State Bank of New South Wales v Commonwealth Savings Bank of Australia [1984] HCA 41; (1984) 154 CLR 579
Sunburst Properties Pty Ltd (In Liq) v Agwater Pty Ltd & Ors [2005] SASC 335
Sykes v Midland Bank Executor & Trustee Co Ltd [1971] 1 QB 113
Tabet v Gett [2010] HCA 12; (2010) 240 CLR 537
Tomlinson v Ramsey Food Processing [2015] HCA 28; (2015) 256 CLR 507
Watson v Foxman (1995) 49 NSWLR 315
Warner-Lambert Company LLC v Apotex Pty Limited [2017] FCAFC 58; (2017) 249 FCR 17
Warner-Lambert Company LLC v Apotex Pty Limited (No 2) [2018] FCAFC 26; (2018) 129 IPR 205
Winkworth v Edward Baron Development Co Ltd [1987] 1 All ER 114
Date of hearing:
4 June 2018 – 13 July 2018
Date of last submissions:
2 October 2018
Registry:
New South Wales
Division:
General Division
National Practice Area:
Intellectual Property
Sub-area:
Patents and associated Statutes
Category:
Catchwords
Number of paragraphs:
1337
Counsel for Sigma Pharmaceuticals (Australia) Pty Ltd:
D Shavin QC with H M J Rofe QC and J J Hutton
Solicitor for Sigma Pharmaceuticals (Australia) Pty Ltd:
King & Wood Mallesons
Counsel for Wyeth:
A J L Bannon SC with S Lloyd SC, C Dimitriadis SC, S J Free, J S Cooke and S Fitzpatrick
Solicitor for Wyeth:
DLA Piper Australia
Counsel for Alphapharm Pty Ltd:
R P L Lancaster SC with P W Flynn
Solicitor for Alphapharm Pty Ltd:
King & Wood Mallesons
Counsel for Generic Health Pty Ltd:
R A Dick SC with D Barnett
Solicitor for Generic Health Pty Ltd:
King & Wood Mallesons
Counsel for Pharmathen S.A:
M Darke SC with F Ashworth
Solicitor for Pharmathen S.A:
Corrs Chambers Westgarth
Counsel for Alembic Pharmaceuticals Limited:
A B D Fox
Solicitor for Alembic Pharmaceuticals Limited:
Bird & Bird
Counsel for the Commonwealth:
P J Brereton SC with B R Kremer and P M Knowles
Solicitor for the Commonwealth:
Corrs Chambers Westgarth
ORDERS
VID 195 of 2009 BETWEEN: SIGMA PHARMACEUTICALS (AUSTRALIA) PTY LTD (ACN 004 118 594)
First Applicant
AND: WYETH
Respondent
AND BETWEEN: WYETH (and another named in the Schedule)
First Cross-Claimant
AND: SIGMA PHARMACEUTICALS (AUSTRALIA) PTY LTD (ACN 004 118 594) (and another named in the Schedule)
First Cross-Respondent
IN THE INTERLOCUTORY APPLICATION:
BETWEEN: SIGMA PHARMACEUTICALS (AUSTRALIA) PTY LTD (ACN 004 118 594)
First ApplicantGENERIC HEALTH PTY LTD (ACN 110 617 859)
Second ApplicantALEMBIC PHARMACEUTICALS LTD (and others named in the Schedule)
Third ApplicantAND: WYETH
First RespondentWYETH AUSTRALIA PTY LTD (ACN 000 296 211)
Second Respondent
JUDGE:
JAGOT J
DATE OF ORDER:
19 October 2018
THE COURT ORDERS THAT:
1.Until 5.00pm on 26 October 2018, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) and on the ground that it is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a), there be no disclosure (by publication or otherwise) of the reasons for judgment delivered on the date of this order in proceedings VID 195 of 2009, NSD 596 of 2009 and NSD 1124 of 2009 (Proceedings) to any person other than to the external solicitors and counsel for the parties in the Proceedings, including the external solicitors and counsel for the Commonwealth of Australia (despite the discontinuance of its interlocutory application).
2.By 4.00pm on 26 October 2018 any party wishing to claim that any part of the reasons for the judgment should be subject to a further confidentiality order is to notify the Associate to Jagot J and the other parties, as well as the Commonwealth, by email of the claim including:
(a)details of the matter claimed to be confidential;
(b)a short statement of the reasons the matter is said to be confidential; and
(c)a statement identifying whether the claimant consents to the confidentiality claim being determined by Jagot J on the basis of the email or seeks an oral hearing.
3.If no notice by email is received in accordance with order 2, the reasons for judgment will be published forthwith.
4.If notice is received in accordance with order 2, the reasons for judgment will be published forthwith with the claimed confidential matter redacted pending determination of the confidentiality claim.
5.The parties are to confer and, by 4.00pm on 2 November 2018, are to propose in a joint email (including agreed and disagreed matters) to the Associate to Jagot J further directions to enable the matter to be finalised.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 596 of 2009 BETWEEN: ALPHAPHARM PTY LTD (ACN 002 359 739)
ApplicantAND: WYETH
First RespondentWYETH AUSTRALIA PTY LTD (ACN 000 296 211)
Second RespondentAND BETWEEN: WYETH (and another named in the Schedule)
First Cross-Claimant
AND: ALPHAPHARM PTY LIMITED (ACN 002 359 739)
Cross-RespondentIN THE INTERLOCUTORY APPLICATION:
BETWEEN: ALPHAPHARM PTY LTD (ACN 002 359 739)
First ApplicantGENERIC HEALTH PTY LTD (ACN 110 617 859)
Second ApplicantPHARMATHEN S.A.
Third ApplicantAND: WYETH
First RespondentWYETH AUSTRALIA PTY LTD (ACN 000 296 211)
Second Respondent
JUDGE:
JAGOT J
DATE OF ORDER:
19 OCTOBER 2018
THE COURT ORDERS THAT:
1.Until 5.00pm on 26 October 2018, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) and on the ground that it is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a), there be no disclosure (by publication or otherwise) of the reasons for judgment delivered on the date of this order in proceedings VID 195 of 2009, NSD 596 of 2009 and NSD 1124 of 2009 (Proceedings) to any person other than to the external solicitors and counsel for the parties in the Proceedings, including the external solicitors and counsel for the Commonwealth of Australia (despite the discontinuance of its interlocutory application).
2.By 4.00pm on 26 October 2018 any party wishing to claim that any part of the reasons for the judgment should be subject to a further confidentiality order is to notify the Associate to Jagot J and the other parties, as well as the Commonwealth, by email of the claim including:
(a)details of the matter claimed to be confidential;
(b)a short statement of the reasons the matter is said to be confidential; and
(c)a statement identifying whether the claimant consents to the confidentiality claim being determined by Jagot J on the basis of the email or seeks an oral hearing.
3.If no notice by email is received in accordance with order 2, the reasons for judgment will be published forthwith.
4.If notice is received in accordance with order 2, the reasons for judgment will be published forthwith with the claimed confidential matter redacted pending determination of the confidentiality claim.
5.The parties are to confer and, by 4.00pm on 2 November 2018, are to propose in a joint email (including agreed and disagreed matters) to the Associate to Jagot J further directions to enable the matter to be finalised.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 1124 of 2009 BETWEEN: GENERIC HEALTH PTY LTD (ACN 110 617 859)
First ApplicantAND: WYETH
RespondentAND BETWEEN: WYETH (and another named in the Schedule)
First Cross-ClaimantAND: GENERIC HEALTH PTY LTD (ACN 110 617 859)
Cross-RespondentIN THE INTERLOCUTORY APPLICATION:
BETWEEN: GENERIC HEALTH PTY LTD (ACN 110 617 859)
First ApplicantALPHAPHARM PTY LTD (ACN 002 359 739)
Second ApplicantPHARMATHEN S.A.
Third ApplicantAND: WYETH
First RespondentWYETH AUSTRALIA PTY LTD (ACN 000 296 211)
Second Respondent
JUDGE:
JAGOT J
DATE OF ORDER:
19 OCTOBER 2018
THE COURT ORDERS THAT:
1.Until 5.00pm on 26 October 2018, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) and on the ground that it is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a), there be no disclosure (by publication or otherwise) of the reasons for judgment delivered on the date of this order in proceedings VID 195 of 2009, NSD 596 of 2009 and NSD 1124 of 2009 (Proceedings) to any person other than to the external solicitors and counsel for the parties in the Proceedings, including the external solicitors and counsel for the Commonwealth of Australia (despite the discontinuance of its interlocutory application).
2.By 4.00pm on 26 October 2018 any party wishing to claim that any part of the reasons for the judgment should be subject to a further confidentiality order is to notify the Associate to Jagot J and the other parties, as well as the Commonwealth, by email of the claim including:
(a)details of the matter claimed to be confidential;
(b)a short statement of the reasons the matter is said to be confidential; and
(c)a statement identifying whether the claimant consents to the confidentiality claim being determined by Jagot J on the basis of the email or seeks an oral hearing.
3.If no notice by email is received in accordance with order 2, the reasons for judgment will be published forthwith.
4.If notice is received in accordance with order 2, the reasons for judgment will be published forthwith with the claimed confidential matter redacted pending determination of the confidentiality claim.
5.The parties are to confer and, by 4.00pm on 2 November 2018, are to propose in a joint email (including agreed and disagreed matters) to the Associate to Jagot J further directions to enable the matter to be finalised.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
TABLE OF CONTENTS:
1 The claims
[1]
2 Summary of conclusions
[4]
3 Abbreviations, basic concepts and people
[29]
4 Basic facts
[31]
4.1 ARTG registration
[32]
4.2 The PBS scheme
[48]
4.3 Efexor-XR
[67]
4.4 Evelexa XR
[72]
4.5 Enlafax-XR
[77]
4.6 Generic Health venlafaxine
[82]
4.7 Other events
[87]
4.8 The parties
[104]
4.8.1 Wyeth
[104]
4.8.2 Sigma
[105]
4.8.3 Alphapharm
[111]
4.8.4 Generic Health
[115]
4.8.5 Pharmathen
[116]
4.8.6 Alembic
[117]
5 Principles relating to the undertakings
[119]
6 Principles relating to proof of loss by the generics – supply by them to pharmacists
[152]
7 Principles relating to proof of loss by the manufacturers/suppliers
[206]
8 Coherence of the above approaches
[214]
9 Remoteness of damage
[217]
10 Adverse effect of the interlocutory orders
[229]
11 Interlocutory injunctions not wrongly granted?
[234]
12 The effect of the final orders
[238]
12.1 Facts and contentions
[238]
12.2 Discussion
[242]
13 Some further matters relating to proof
[273]
14 The generics’ preclusion arguments
[287]
14.1 Wyeth’s contentions said to be precluded
[287]
14.2 The copyright issue
[296]
14.3 Supply by the generics
[317]
14.4 The s 19D issue
[331]
14.5 Conclusions
[333]
15 Sigma’s case
[334]
15.1 Sigma’s claim
[334]
15.2 Some uncontroversial facts
[335]
15.3 The competing cases – preliminary points
[355]
15.4 Events between 6 March and 22 May 2009 (and the evidence of Mr de Alwis and Mr Ellis)
[373]
15.5 The effect of the interlocutory injunction on Sigma?
[445]
15.6 Further observations
[471]
15.7 Summary of interim conclusions - Sigma
[473]
16 The sale of Sigma
[474]
16.1 Facts and contentions
[474]
16.2 Discussion
[491]
16.3 Conclusions
[503]
17 Alphapharm’s case
[504]
17.1 Alphapharm
[504]
17.2 Alphapharm’s claims
[505]
17.3 Mr Hurley
[509]
17.4 Evaluation of the probabilities and possibilities
[548]
17.5 Summary of interim conclusions – Alphapharm
[644]
17.6 Value of destroyed products
[645]
18 Generic Health’s case
[648]
18.1 Generic Health’s claims
[648]
18.2 Some uncontroversial facts
[652]
18.3 The competing cases – preliminary points
[661]
18.4 Mr Upiter
[667]
18.5 Generic Health’s own products
[679]
18.6 Generic Health’s supply to Sigma
[796]
18.7 Generic Health’s supply to other generics
[797]
18.8 Summary of interim conclusions
[798]
19 Other generics
[799]
19.1 The competing claims about other generics
[799]
19.2 Evidence
[802]
19.3 Discussion
[806]
19.4 Summary of interim conclusions – other generics
[821]
20 Alembic’s case
[822]
20.1 Alembic’s claim
[822]
20.2 Alembic - facts
[824]
20.3 Application of principles to Alembic’s case
[832]
20.4 Wyeth’s other answers to Alembic’s claims
[838]
20.5 Summary of interim conclusions – Alembic
[846]
21 Pharmathen’s case
[847]
21.1 Pharmathen’s claim
[847]
21.2 Pharmathen − facts
[848]
21.2.1 General
[848]
21.2.2 Agreements with Alphapharm
[851]
21.2.3 Agreements with Generic Health
[854]
21.3 Application of principles to Pharmathen’s case
[857]
21.4 Wyeth’s other answers to Pharmathen’s claims
[865]
21.5 Summary of interim conclusions – Pharmathen
[869]
22 Wyeth’s case
[870]
22.1 Wyeth’s contentions
[870]
22.2 The copyright issue
[874]
22.2.1 PIs and CMIs
[874]
22.2.2 Wyeth’s evidence
[883]
22.2.3 The problems with Wyeth’s evidence
[894]
22.2.4 Other problems for Wyeth about copyright
[901]
22.3 Wyeth’s generic defence strategy
[907]
22.4 The PBS listing issue
[934]
22.4.1 Posited factual context
[934]
22.4.2 Discussion
[938]
22.5 The s 19D issue
[980]
22.5.1 The statutory provisions, facts and contentions
[980]
22.5.2 Discussion
[992]
22.5.3 Conclusions
[1019]
22.6 Delay
[1020]
22.7 Discretion overall
[1030]
22.8 Conclusions
[1033]
23 Overview of approach to market shares
[1038]
24 Contemporaneous evidence relevant to generic market shares
[1041]
25 The econometric evidence
[1063]
25.1 Overview of the econometric evidence
[1063]
25.2 Discussion
[1116]
26 The industry evidence
[1155]
26.1 Ms McTavish and Mr Dick
[1155]
26.2 Mr Heine
[1199]
27 The accounting evidence
[1230]
27.1 General approach of accountants
[1230]
27.2 Supply prices to generics
[1232]
27.2.1 The approaches of Mr Samuel and Mr Meredith
[1232]
27.2.2 Disputes between generics and manufacturers/suppliers
[1240]
27.3 Mr Samuel’s alternatives 1 and 2
[1259]
27.4 Additional discounting for risk
[1268]
27.5 Residual value analysis
[1276]
28 Pharmathen
[1279]
29 The interest issue
[1282]
30 Calculations of loss based on the probabilities and possibilities
[1316]
31 Costs
[1332]
32 Conclusions
[1336]
SCHEDULE 1
SCHEDULE 2
SCHEDULE 3
SCHEDULE 4
SCHEDULE 5
JAGOT J:
The claims
These matters concern claims for compensation pursuant to undertakings given as the price of the grant of interlocutory injunctions restraining infringement of a patent ultimately found to be invalid. The patent is referred to as the method patent. It relates to an anti-depressant known as venlafaxine.
On 21 December 2011, having found the method patent to be invalid, the Full Court made orders consequential upon reasons for judgment, Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (No 3) [2011] FCAFC 165 as follows:
NSD 1533 of 2010
8. Any application that has or may be made by any person seeking an order for the payment of compensation pursuant to the undertaking as to damages given by the respondents to the Court on 3 June 2009 be remitted to the primary judge for determination.
NSD 1603 of 2010
8. Any application that has or may be made by any person seeking an order for the payment of compensation pursuant to the undertaking as to damages given by the respondents to the Court on 25 August 2009 be remitted to the primary judge for determination.
NSD 1644 of 2010
8. Any application that has or may be made by any person seeking an order for the payment of compensation pursuant to the undertaking as to damages given by the respondents to the Court on 10 November 2009 be remitted to the primary judge for determination.
Six claimants sought compensation pursuant to the undertakings. Three claimants were parties to the original proceedings, Sigma, Alphapharm and Generic Health. Where there is no need to distinguish between them I refer to these parties together as the generics. Three claimants were non-parties. Alembic and Pharmathen were manufacturers and suppliers of generic venlafaxine products to the generics. The Commonwealth was also a claimant but it settled its claim after the hearing. The remaining claimants relied on evidence and submissions of the Commonwealth, so it is necessary to refer to these despite the fact that the Commonwealth is no longer a claimant. Where there is no need to distinguish between the respondents I refer to them together as Wyeth.
Summary of conclusions
I have concluded that orders for compensation should be made in favour of each claimant.
My principal conclusions are as follows.
Each claimant has been adversely affected by the operation of one or more of the interlocutory injunctions. It is just that Wyeth be ordered to pay compensation to each claimant assessed by reference to the adverse effect of the interlocutory injunction or injunctions upon them.
The fact that I granted final injunctions on 8 November 2010 does not mean that the interlocutory injunctions were not wrongly granted. I made final orders on the basis of my conclusion that the method patent was valid. The Full Court held that the method patent was invalid. It follows that the interlocutory injunctions were wrongly granted.
The primary adverse effect of the interlocutory injunctions is that they prevented the generics from supplying their generic venlafaxine products to pharmacists until 8 November 2010. On 8 November 2010, when I granted final injunctions on the basis that the method patent was valid, the interlocutory injunctions were discharged and thus ceased to operate from that date. Because I granted final injunctions which also prevented supply of the products, the adverse effects of the operation of the interlocutory injunctions ceased on 8 November 2010. No claims on Wyeth’s undertakings beyond that date can be sustained. The claimed loss of opportunity to obtain a stay of my final orders, which was not pleaded, is not compensable as a matter of principle or fact.
The claimants claim for lost opportunities. The primary opportunity was to supply venlafaxine products. Because the opportunity to supply depended on a statutory approval which each of the generics held before the interlocutory injunctions were granted, the interlocutory injunctions necessarily deprived the generics of an opportunity of some value. This loss having been proved on the balance of probabilities, the extent of the generics’ losses is to be assessed by reference to the probabilities and possibilities which should be inferred from the evidence.
Only possibilities of a less than 1% likelihood may be disregarded. Only possibilities of a greater than 99% likelihood may be treated as certain. Accordingly, it is necessary to assess the possibilities of any generic having sought and obtained PBS listing of its products to enable supply under the PBS and the possibilities of any generic having supplied its products outside of the PBS on the private market if the interlocutory injunctions had not been granted. For the generics, this is the best way of identifying the adverse effect of the interlocutory injunctions upon them.
Because the opportunity of the manufacturers/suppliers to supply the products to the generics depended on the generics placing orders (which in turn depended on the generics being able to supply pharmacists), the manufacturers/suppliers had to prove on the balance of probabilities that they would have supplied products if not for the interlocutory injunctions. This having been proved on the balance of probabilities, the losses of the manufacturers/suppliers are also to be assessed by reference to all of the possibilities which should be inferred from the evidence.
The kinds of losses claimed were all reasonably foreseeable at the time the interlocutory injunctions were granted. Other than in one respect, the kinds of losses claimed were also the direct and natural consequence of the operation of the interlocutory injunctions. The claims of Generic Health and the derivative claims of Pharmathen for the lost opportunities to supply the products to other generic companies are too remote to be compensable and otherwise should not be permitted on a discretionary basis.
By the undertakings Wyeth submitted to such orders as the Court considers just to compensate a person adversely affected by the operation of the interlocutory injunctions. The undertakings do not extend to any adverse effect caused by the existence of the method patent or the litigation including all of the usual exigencies of litigation. Anticipating an interlocutory injunction is one of the exigencies of litigation. The fact that the grant of an interlocutory injunction against one person may lead another to anticipate that they also will be the subject of an interlocutory injunction does not make conduct taken in such anticipation an adverse effect of the interlocutory injunction as granted.
The approach which best reflects the terms of the undertakings is to assess what the position would have been if Wyeth had not prosecuted its applications for interlocutory relief on the days it did so and thus had not been granted the interlocutory injunctions. To go further and disregard the mere threat or anticipation of interlocutory relief by the generics would be to expand the scope of the undertaking so as to permit compensation to be granted for the mere existence of the method patent or the litigation which is impermissible. If, however, I am wrong about this, the only material difference from the hypothetical facts as I have found them would be one of timing in relation to the prospects of PBS listing and PBS supply. For Sigma, the relevant date for PBS listing of its products would change from 1 December 2009 to 1 August 2009. For Alphapharm and Generic Health, the relevant date would change from 1 March 2010 to 1 December 2009.
Subject to these matters, none of Wyeth’s answers to the claims for compensation should be accepted. In particular, Wyeth’s copyright claims involve an abuse of process and should not be permitted.
Discretionary considerations weigh heavily in favour of enforcement of the undertakings.
My primary conclusions about the probabilities and possibilities are the result of an evaluative process in which within the range of reasonable inferences from the evidence I have resolved remaining doubts in the claimants’ favour because Wyeth had the benefit and the claimants suffered the harm of the wrongly granted interlocutory injunctions. As a result of this process, and on the basis that at any given time, the probabilities and possibilities for each claimant must equal 100% or 1:
(1)Sigma’s lost opportunity of supply should be valued on the basis of the following hypothesised facts:
(a)from 1 May 2009 until 1 December 2009:
(i)Sigma would have supplied its products on the private market: 100%;
(ii)Sigma would have supplied its products under the PBS: 0%; and
(iii)Sigma would not have supplied its products at all: 0%.
(b)from 1 December 2009 until 8 November 2010:
(i)Sigma would have supplied its products on the private market: 80%;
(ii)Sigma would have supplied its products under the PBS: 20%; and
(iii)Sigma would not have supplied its products at all: 0%.
(2)Alphapharm’s lost opportunity of supply should be valued on the basis of the following hypothesised facts:
(a)from 22 July 2009 until 1 March 2010:
(i)Alphapharm would have supplied its products on the private market: 90%;
(ii)Alphapharm would have supplied its products under the PBS: 0%; and
(iii)Alphapharm would not have supplied its products at all: 10%.
(b)from 1 March 2010 until 8 November 2010 if Alphapharm was supplying its products on the private market (the 90% probability) and assuming the Sigma 20% possibility of PBS listing on 1 December 2009:
(i)Alphapharm would have continued to supply its products on the private market: 10%;
(ii)Alphapharm would have supplied its products under the PBS: 90%; and
(iii)Alphapharm would not have supplied its products at all: 0%.
(c)from 1 March 2010 until 8 November 2010 if Alphapharm was not supplying its products on the private market (the 10% possibility) and assuming the Sigma 20% possibility of PBS listing on 1 December 2009:
(i)Alphapharm would have supplied its products on the private market: 0%;
(ii)Alphapharm would have supplied its products under the PBS: 80%; and
(iii)Alphapharm would have continued to not supply its products at all: 20%.
(d)from 1 March 2010 until 8 November 2010 if Alphapharm was supplying its products on the private market (the 90% probability) and assuming the Sigma 80% probability of not PBS listing on 1 December 2009:
(i)Alphapharm would have supplied its products on the private market: 90%;
(ii)Alphapharm would have supplied its products under the PBS: 0% and
(iii)Alphapharm would not have supplied its products at all: 10%.
(e)from 1 March 2010 until 8 November 2010 if Alphapharm was not supplying its products on the private market (the 10% possibility) and assuming the Sigma 80% probability of not PBS listing on 1 December 2009:
(i)Alphapharm would have supplied its products on the private market: 0%;
(ii)Alphapharm would have supplied its products under the PBS: 0% and
(iii)Alphapharm would not have supplied its products at all: 100%.
(3)Generic Health’s lost opportunity of supply should be valued on the basis of the following hypothesised facts:
(a)from 10 November 2009 until 1 March 2010:
(i)Generic Health would have supplied its products on the private market: 80%;
(ii)Generic Health would have supplied its products under the PBS: 0% and
(iii)Generic Health would not have supplied its products at all: 20%.
(b)from 1 March 2010 until 8 November 2010 if Generic Health was supplying its products on the private market (the 80% probability) and assuming the Sigma 20% possibility of PBS listing on 1 December 2009:
(i)Generic Health would have continued to supply its products on the private market: 10%;
(ii)Generic Health would have supplied its products under the PBS: 90%; and
(iii)Generic Health would not have supplied its products at all: 0%.
(c)from 1 March 2010 until 8 November 2010 if Generic Health was not supplying its products on the private market (the 20% possibility) and assuming the Sigma 20% possibility of PBS listing on 1 December 2009:
(i)Generic Health would have supplied its products on the private market: 0%;
(ii)Generic Health would have supplied its products under the PBS: 80%; and
(iii)Generic Health would have continued to not supply its products at all: 20%.
(d)from 1 March 2010 until 8 November 2010 if Generic Health was supplying its products on the private market (the 80% probability) and assuming the Sigma 80% probability of not PBS listing on 1 December 2009:
(i)Generic Health would have supplied its products on the private market: 80%;
(ii)Generic Health would have supplied its products under the PBS; 0% and
(iii)Generic Health would not have supplied its products at all: 20%.
(e)from 1 March 2010 until 8 November 2010 if Generic Health was not supplying its products on the private market (the 20% possibility) and assuming the Sigma 80% probability of not PBS listing on 1 December 2009:
(i)Generic Health would have supplied its products on the private market: 0%;
(ii)Generic Health would have supplied its products under the PBS: 0% and
(iii)Generic Health would not have supplied its products at all: 100%.
Accordingly, I have concluded that the chance of Alphapharm and Generic Health obtaining PBS listing of their products depends on the chance that Sigma would have obtained PBS listing of its products, which I have assessed to be a possibility of 20%.
Compensation should be assessed generally as proposed by Mr Samuel in his calculations of 8 July 2018, based on the revised work of Professor Hausman, without any discount for risk, and should include interest at the rates specified in Interest on Judgments Practice Note (GPN- INT).
Mr Samuel’s approach needs to be the subject of further calculations by reference to my conclusions about the probabilities and possibilities. I have identified a method for the required calculations based on my conclusions which involves the following:
The probabilities and possibilities may be represented by:
PBS + PM + N = 1
Where:
PBS is the chance of the generic supplying under the PBS
PM is the chance of the generic supplying on the private market
N is the chance the generic would not have supplied its products at all.
Further if:
VPBS means the estimated profits from posited PBS supply.
VPM means the estimated profits from posited private market supply.
VN means the no supply position, which must always equal zero.
VT means the total profits from posited PBS and/or private market supply,
then:
Sigma’s lost profits would be calculated as follows:
Sigma VT for 1/5/09 to 1/12/09 = 1 x VPM + 0 x VPBS + 0 x VN.
Sigma VT for 1/12/09 to 8/11/10 = 0.80 x VPM + 0.2 x VPBS + 0 x VN.
Sigma total VT = Sigma VT for 1/5/09 to 1/12/09 + Sigma VT for 1/12/09 to 8/11/10.
Alphapharm’s lost profits would be calculated as:
Alphapharm VT for 22/7/09 to 1/3/10 = 0.9 x VPM + 0 x VPBS + 0.1 x VN.
Alphapharm VT for 1/3/10 to 8/11/10 = 0.666 x VPM + 0.178 x VPBS + 0.156 x VN.
Generic Health’s lost profits would be calculated as:
Generic Health VT for 10/11/09 to 1/3/10 = 0.8 x VPM + 0 x VPBS + 0.2 x VN.
Generic Health VT for 1/3/10 to 8/11/10 = 0.528 x VPM + 0.176 x VPBS + 0.296 x VN.
The calculations for Alphapharm and Generic Health which both involve dependent possibilities (Sigma PBS listing and prior private market supply) are explained in Schedule 5. As this issue of dependent possibilities was not explored in the hearing and my method may be incorrect, the parties will be given an opportunity to be heard in respect of this issue and other outstanding issues as identified.
Alphapharm should also be compensated for 90% of the cost of the products it had to destroy due to their limited shelf life when they were ultimately delivered to it. But for the Alphapharm interlocutory injunction Alphapharm would not have suffered this loss.
The compensation to the manufacturers/suppliers should be assessed on the same basis having regard to the supply prices from the manufacturers/suppliers to the generics that Mr Samuel proposed and otherwise reflecting the evidence they adduced about their capacity and costs.
Alembic should also be compensated for the ingredients it had to destroy as a result of the Sigma interlocutory injunction.
I consider that my approach to compensation appropriately reflects the terms and purpose of the undertakings which Wyeth gave as the price for the interlocutory injunctions to which, in the event, it was not entitled.
If, however, each lost opportunity of supply must be proved on the balance of probabilities it will be apparent from the conclusions above that each claimant would have succeeded in proving a lost opportunity of supply on the private market and would have failed to prove a lost opportunity of supply under the PBS. In that event, the compensation should be assessed by reference to 100% of the value of private market supply for the relevant periods up to 8 November 2010. As the claims of the manufacturers/suppliers are derivative they cannot do better than the generics.
Costs should be determined after all outstanding issues are resolved and in the usual course.
It is possible that I have not resolved an issue which needs to be resolved. If that is the case, the parties will be given an opportunity to draw such matters to my attention.
Abbreviations, basic concepts and people
Schedule 1 explains abbreviations and basic concepts. It is based on the two statements of agreed facts in evidence. Those statements, excluding annexures, are in Schedules 2 and 3.
Schedule 4 identifies the people who are referred to in these reasons for judgment.
Basic facts
In this section I record only those facts which set the context for the claims.
ARTG registration
The ARTG registrations of the generics’ products obtained before the interlocutory injunctions were granted are fundamental to my conclusions.
Details about ARTG registration are set out in the statement of agreed facts in Schedule 2 on which the following section is based.
A product containing the active pharmaceutical ingredient venlafaxine hydrochloride must be registered on the ARTG before it can be imported into, manufactured or supplied in, or exported from, Australia.
Section 9A(1) of the Therapeutic Goods Act provides that:
The Secretary is to cause to be maintained a register, to be known as the Australian Register of Therapeutic Goods, for the purpose of compiling information in relation to, and providing for evaluation of, therapeutic goods for use in humans.
Section 3(1) of the Therapeutic Goods Act contains definitions, including relevantly, of “sponsor” in relation to therapeutic goods.
By s 23, a person may make an application to the Secretary for registration or listing of therapeutic goods.
By s 25(3), after an evaluation, the Secretary must decide to register or not to register the goods.
Division 1 of Pt 3-2 of the Therapeutic Goods Act provides for a range of civil penalties and criminal offences in relation to therapeutic goods.
The person or company holding the registration of a pharmaceutical product registered on the ARTG is called the sponsor of the relevant product. A sponsor may offer to supply, and supply, that therapeutic product to pharmacies, pharmaceutical distributors/wholesalers, government authorities and private or public hospitals in Australia when the product has been registered on the ARTG.
To register a therapeutic product on the ARTG the sponsor must obtain approval from the TGA.
If a pharmaceutical product is approved by the TGA, the brand name and the active ingredient of the product are entered on the ARTG, along with the name of the sponsor, the approved indication(s), the dosage form and the pack sizes for which the product may be supplied.
A sponsor wishing to supply a bioequivalent version (generic product) of a pharmaceutical product which is already registered on the ARTG (originator product) may make an application that does not include all the information that was required of the originator to register the originator’s product.
A sponsor of a generic product may rely on the safety and efficacy data submitted by the originator in respect of the originator product if the sponsor of the generic product demonstrates that the generic product is “essentially similar” or bioequivalent to the originator product.
In order to demonstrate bioequivalence a sponsor of the generic product should normally conduct clinical bioavailability studies comparing the generic product to the originator product. The sponsor of the generic product is required to conduct such a study or studies with the Australian originator product or demonstrate that the comparator used in the studies against which the generic product is compared is identical to the Australian originator product.
Once a pharmaceutical product is registered on the ARTG, it can be sold, offered for sale and otherwise supplied in Australia, including to pharmacies.
Pharmacists may dispense a generic product registered on the ARTG which is equivalent to the originator product (called a generic equivalent) when a doctor prescribes the originator product by brand name but does not identify on the prescription that substitution is not permitted and the patient consents, prescribes a different generic equivalent by brand name but does not identify on the prescription that substitution is not permitted and the patient consents, prescribes the product by its active pharmaceutical ingredient (API) name, such as venlafaxine, or prescribes the generic equivalent by its brand name.
The PBS scheme
It is necessary to understand some aspects of the PBS scheme. The scheme is explained in the statement of agreed facts in Schedule 2 on which the following section is based.
The PBS scheme is established in Pt VII of the National Health Act. The existence and management of the PBS by the Commonwealth is fundamental to the health and well-being of all Australians.
The PBS Schedule is a list of all of the pharmaceutical products available to be dispensed to patients through the PBS at a Commonwealth-subsidised price. The PBS Schedule is usually updated and published on a monthly basis. A pharmaceutical product can only be listed on the PBS Schedule after the product has been registered on the ARTG.
Section 85(1) of the National Health Act provides for the Commonwealth to provide benefits “in respect of pharmaceutical benefits” (defined in s 84(1) to mean, insofar as relevant, a drug the subject of a declaration under s 85(2)). Section 85(2) provides that the drugs and medicinal preparations in relation to which Pt VII applies are those, relevantly, “declared by the Minister, by legislative instrument, to be drugs and medicinal preparations to which this Part applies”. By s 85(3) the Minister may by legislative instrument determine, by reference to strength, type of unit, size of unit or otherwise, the form or forms of a listed drug (listed drug being defined in s 84(1) to mean “a drug or medicinal preparation in relation to which a declaration under subsection 85(2) is in force”). By s 85(6) the Minister may, by legislative instrument, determine a brand of a pharmaceutical item. In practice these declarations and determinations are made by a delegate of the Minister within the relevant branch of the Department of Health.
As Efexor-XR had been PBS listed since 1999 (for the 150mg and 75mg strengths) and since 2005 (for the 37.5mg strength), the relevant power for the listing of the generic brands of extended release venlafaxine was s 85(6) of the National Health Act.
Division 3C of Pt VII of the National Health Act, inserted in 2007, contains the guarantee of supply provisions. By s 99AEB:
The responsible person for a guaranteed brand of a guaranteed item must supply the guaranteed brand of the guaranteed item during the guaranteed period for the guaranteed brand of the guaranteed item.
Section 99AEB applied to the PBS listing of a generic version of Efexor-XR. As a result, by ss 99AED, the responsible person in respect of any such brand “must supply” the brand until the first of 24 months beginning on the day that the brand is listed, the listing of another new brand of the drug, another brand of the drug offering a price reduction is accepted by the Minister, or the delisting of the brand. By s 99AEG, the responsible person must notify the Minister as soon as practicable if the responsible person for a brand subject to a guarantee of supply fails to supply or is unable to supply the brand or forms the belief that they will fail to supply or be unable to supply the brand. By s 99AEH if the responsible person for a guaranteed brand fails to supply, or is unable to supply the brand on one or more occasions, the Minister may cancel the PBS listing for the brand.
As the Commonwealth explained in its submissions:
There are no requirements in the NHA [National Health Act] concerning the information that has to be provided in support of an application to list a generic brand of a listed drug on the PBS, although any new therapeutic good (including a generic brand of a drug) must be registered on the ARTG before it can be generally marketed in Australia. At the relevant times, an application for listing a generic brand was not required to be considered by the PBAC [the Pharmaceutical Benefits Advisory Committee established under s 100A], but rather just sent to the Pharmaceutical Evaluation Branch (“PEB”) within the Department.
The administrative requirements of the PEB for applications to list generics that were followed at all material times…have been largely the same since 2007. For any such applications which would result in a change to the price subsidised by the Commonwealth for a drug (i.e. the listing of a first generic brand of a listed drug), there were three application deadlines and three listing dates (1 April, 1 August and 1 December) per year. Once a first generic had been listed, subsequent applications for listing of another generic of that medicine could occur on the first day of any month.
The guidelines provided that applications required: a letter of application (for which there was no specified form); a completed “Application to list a Drug or Medicinal Preparation as a Pharmaceutical Benefit” (“PB11”) form; a completed “Request for Price Alteration” (“PB11a”) form; a copy of the letter from the TGA approving the entry of the product in the ARTG; a copy of the current Certificate of Medicine Registration or Certificate of Listing for the product issued by the TGA; a copy of the current Product Information (“PI”) approved by the TGA, if applicable (but only until 30 August 2009); a copy of the primary pack label or final artwork; and “written assurance” that “sufficient stock of the product to meet anticipated demand will be available at the time of listing on the PBS”.
Section 85AD of the National Health Act provided for the Commonwealth and the supplier of a medicine to enter into a supply agreement agreeing the maximum price the supplier would charge a pharmacist. If a price agreement was in force then the maximum price in the agreement was defined by s 98B(3) to be the APP (approved price to pharmacists) of that medicine. By reg 37D of the National Health (Pharmaceutical Benefit) Regulations 1960 (Cth), the maximum price a manufacturer could supply the medicine to a wholesaler was the APP less the amount of the wholesale mark-up. From 1 October 2012 the Approved Ex-Manufacturer Price or AEMP, the maximum wholesale price at which a manufacturer could supply to a wholesaler, replaced the APP. The AEMP was also agreed between the Commonwealth and the supplier of the medicine.
Section 99 of the National Health Act provides that a pharmacist who has provided a pharmaceutical benefit “is entitled to be paid by the Commonwealth”:
(a)where the prescription for the supply of the pharmaceutical benefit was an entitlement card prescription, and the supply was not an early supply of a specified pharmaceutical benefit - an amount equal to the Commonwealth price of the pharmaceutical benefit as at the time of the supply; and
(b)in any other case - the amount (if any) by which the Commonwealth price of the pharmaceutical benefit, as at the time of the supply, exceeded the amount (without any allowable discount) that the pharmacist or approved medical practitioner was entitled to charge under subsection 87(2) or (3).
The PBS Schedule lists the price at which a PBS-listed medicine may be dispensed at retail pharmacy level (the PBS price, also referred to as the Commonwealth price), which is referred to in the PBS Schedule as the dispensed price for maximum quantity (DPMQ) (the maximum quantity is also specified for each product on the PBS Schedule). At all relevant times until October 2012 the PBS price comprised:
(1)the approved price to pharmacist, which is the maximum price allowed to be charged to the dispensing pharmacist for the medicine under the National Health Act and related legislation (the National Health Legislation) which in turn comprised:
(a)the ex-manufacturer price, which is the maximum price allowed to be charged by the sponsor or manufacturer of the medicine under the National Health Legislation;
(b)the wholesaler mark-up, which is the maximum mark-up that can be charged by a wholesaler under the National Health Legislation;
(2)the pharmacist mark-up, which is the maximum mark-up that can be charged by a pharmacist under the National Health Legislation (giving effect to the Fourth and Fifth Community Pharmacy Agreement between the Commonwealth of Australia and the Pharmacy Guild of Australia); and
(3)a dispensing fee charged by pharmacies under the National Health Legislation (giving effect to the Fourth and Fifth Community Pharmacy Agreement between the Commonwealth of Australia and the Pharmacy Guild of Australia).
When a patient buys a PBS listed medicine they must pay the patient co-payment amount which is different for general patients compared to concessional patients. At 1 August 2009, this was $5.30 for concessional patients and $32.90 for general patients. The PBS scheme also provided for a “safety net” so that if the amount a patient had paid exceeded the safety net threshold in any given year, concessional patients paid $0 and general patients paid the concessional co-payment amount ($5.30) for the remainder of the year. As required by s 99 of the National Health Act, the Commonwealth would pay the pharmacist the difference between the Commonwealth price and the amount the patient had paid. This amount represented the PBS subsidy.
Part VII, Division 3A of the National Health Act, sets out price reductions which apply to pharmaceutical products that are already listed on the PBS Schedule, when the first PBS listing of one or more generic versions of that product (first generic equivalents) occurs. For the period between 1 January 2009 and 31 January 2011, a PBS listing of the first generic version of an originator product would have triggered a 12.5% price reduction in the APP of the originator brand provided certain circumstances were met and any exceptions did not apply. In the present case, in respect of generic venlafaxine products, the relevant circumstances were met and the exceptions did not apply. The new APP would also have been applied to any other generic equivalent version subsequently listed unless the APP was otherwise further reduced by the time of their listing.
As the Commonwealth explained, there were other potential statutory price reductions once the 12.5% price reduction had occurred. Further 2% price reductions may automatically follow on nominated days. For example, if a generic brand of venlafaxine had been listed on 1 August 2009 or 1 December 2009, a 2% statutory price reduction would have occurred on 1 August 2010 under s 99ACI.
There were also price disclosure price reductions. Under s 99ADB and reg 37 information had to be given to the Department which formed the basis for calculation of the Weighted Average Disclosed Price (or WADP) for a pharmaceutical item. The Commonwealth explained:
The WADP was calculated according to a formula which took into account:
(a)the volume of supplies of the particular brands the subject of price disclosure; and
(b)the extent to which the responsible persons of those brands offered discounts and other incentives which resulted in the price actually paid by pharmacists being less than the AEMP and the applicable wholesale mark-up.
If the WADP calculated, and recorded in a determination, by the Minister was more than 10% below the current AEMP, then the AEMP was reduced to the WADP. The AP2P was also reduced in accordance with a formula set out in regulation 37C. The effect of the price disclosure regime was, therefore, to effect price reductions to the cost of drugs resulting in the subsidy paid by the Commonwealth under the PBS more closely reflecting the price actually paid for a drug by a pharmacist.
Until 1 December 2010, the responsible person for existing listed brands could elect to comply with the price disclosure requirements for those brands: section 99ADE. Once made, the election could not be revoked by the responsible person (section 99ADE(5)) but the Minister could (at the responsible person's request) determine to revoke the election (with prospective effect) if the listing of the generic brand that triggered the price disclosure regime was varied or revoked: section 99AEL. From 1 December 2010, price disclosure was mandatory for all brands of all drugs listed on the F2 formulary.
PDPRs took effect according to a cycle that depended on when the first generic brand was listed. For venlafaxine:
(a)if the first generic brand had listed on 1 August 2009, the first PDPR could have occurred on 1 August 2011, and then subsequent PDPRs could have occurred on 1 August 2012 and 1 April 2014; and
(b)if the first generic brand had listed on 1 December 2009, the first PDPR could have occurred on 1 April 2012, and then subsequent PDPRs could have occurred on 1 April 2013 and 1 April 2014.
By operation of Commonwealth policy , there have been only three occasions per year on which a product whose listing on the PBS would result in a reduction in the APP of a pharmaceutical product could be listed on the PBS (that is, included on the PBS Schedule), on 1 April, 1 August and 1 December. To obtain listing on these dates, the application to list must be submitted by certain dates. An application to list a first generic equivalent on the PBS on 1 April must be filed by 1 December of the preceding year. An application to list a first generic equivalent on the PBS on 1 August must be filed by 1 May of that year. An application to list a first generic equivalent on the PBS on 1 December must be filed by 1 September of that year. Thereafter, a second or subsequent generic equivalent could be listed on the PBS on the first day of any month, provided that the application for listing is made by the 15th of the month which is three calendar months before the listing date.
A pharmacist may dispense products privately, that is, not through the PBS, even where the products are PBS listed. Prescription products which are not listed on the PBS are dispensed privately. If a pharmacist dispenses a product privately the patient bears the full purchase price of the product as no Commonwealth subsidy is paid under the PBS.
The PBS Price and the ex-manufacturer price are maximum values, and a sponsor or manufacturer may elect to reduce the actual price it charges the pharmacist, at any time, by offering its products at a discount to the ex-manufacturer price component of the PBS Price.
In the case of PBS listed medicines that are purchased by a pharmacist at the listed APP, the profit made by a pharmacist on the sale of those medicines comprises the set pharmacist mark-up and the dispensing fee. However, where a pharmacist is able to purchase a PBS listed medicine at a price below the listed APP, an additional profit is earned which reflects the difference between their cost of goods and the listed APP. The greater the difference between the actual cost of goods and the listed APP, the greater the profit margin for the pharmacist.
Efexor-XR
Wyeth was the patentee of Australian Patent No 567524 for the compound, venlafaxine hydrochloride, a selective noradrenaline re-uptake inhibitor used for the treatment of depression and related illnesses. The compound patent reached the end of its term and expired on 6 December 2008.
Wyeth was also the patentee of Australian Patent No 2003259586 granted on 11 May 2007 for an “extended release formulation” of venlafaxine hydrochloride, which is referred to as the method patent. The method patent would reach the end of its term and expire in 2017.
Wyeth Australia was the sponsor of pharmaceutical products, Efexor-XR in 37.5mg, 75 mg and 150mg formulations. Efexor-XR is an extended release formulation of venlafaxine hydrochloride. The 75 mg and 150mg formulations of Efexor-XR were listed on the PBS in 1999. The 37.5mg formulation of Efexor-XR was listed on the PBS in December 2005. The Efexor-XR products were the only products listed on the PBS containing venlafaxine hydrochloride as the active pharmaceutical ingredient until 1 April 2012.
Efexor-XR was the leading anti-depressant brand in Australia in terms of units sold and value of sales. Annual sales of Efexor-XR were in the order of $114 million.
On 1 February 2009 Wyeth’s product Pristiq, in which the active pharmaceutical ingredient was desvenlafaxine (a metabolite of venlafaxine), was listed on the PBS. Desvenlafaxine was the subject of Australian Patent No 2002250058 which will reach the end of its term and expire in 2022.
Evelexa XR
Sigma was the sponsor of registrations on the ARTG on 5 March 2009 of Evelexa XR 150 venlafaxine (as hydrochloride) 150mg extended release capsule, Evelexa XR 75 venlafaxine (as hydrochloride) 75mg extended release capsule, and Evelexa XR 37.5 venlafaxine (as hydrochloride) 37.5mg modified release capsule.
The Evelexa XR products were registered on the ARTG on the basis of being essentially similar to the corresponding Efexor-XR products and are substitutable (including on the PBS) for those products.
Sigma commenced proceeding VID 195 of 2009 on 1 April 2009 against Wyeth and Wyeth Australia challenging the validity of the method patent. On 1 May 2009 Wyeth filed a cross claim in proceeding VID 195 of 2009 alleging infringement and threatened infringement of the method patent including an application for an interlocutory injunction.
On 3 June 2009 Sundberg J granted the Sigma interlocutory injunction which was as follows:
Pending the determination of the proceeding or further order the cross-respondent whether by itself, its directors, officers, servants, agents or otherwise be restrained from marketing, taking orders for, selling, supplying, offering to supply or otherwise exploiting in Australia the products listed on the Australian Register of Therapeutic Goods under the name Evelexa-XR or any other product comprising the same generic modified release formulation of venlafaxine hydrochloride, without the licence of or authority of the cross-claimants.
The Sigma interlocutory injunction was granted:
Upon the cross-claimants by their Counsel undertaking:
(a)to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by any operation of the order below or any continuation (with or without variation) thereof, and
(b)to pay the compensation referred to in (a) to the person there referred to.
Enlafax-XR
Alphapharm was the sponsor of registrations on the ARTG on 30 April 2009 of Enlafax-XR venlafaxine 150mg modified release capsule and Enlafax-XR venlafaxine 75mg modified release capsule.
The Enlafax-XR products were registered on the ARTG on the basis of being essentially similar to the corresponding Efexor-XR products and are substitutable (including on the PBS) for those products.
Alphapharm commenced proceeding NSD 596 of 2009 on 19 June 2009 challenging the validity of the method patent. On 23 July 2009 Wyeth and Wyeth Australia Pty Ltd filed a cross-claim in proceeding NSD 596 of 2009 alleging infringement and threatened infringement of the method patent including an application for an interlocutory injunction.
On 25 August 2009 I granted the Alphapharm interlocutory injunction which was as follows:
1Pending the determination of the proceeding or further order, Alphapharm Pty Limited (whether by itself; its directors, officers, servants, agents or otherwise) be restrained from infringing claims 4 and 27 (insofar as claim 27 is dependent on claim 4) of Australian Patent No 2003259586 (the method patent), including without limitation by, during the term of the method patent and without the licence or authority of Wyeth, importing, marketing, taking orders for, selling, supplying, offering to supply in Australia the Enlafax-XR Products or any other product comprising the same generic modified release formulation of venlafaxine hydrochloride for use by persons for the Registered Indications or otherwise exploiting the invention the subject of the method patent.
2Alphapharm Pty Limited be restrained from applying to list the Enlafax XR Products on the Schedule of Pharmaceutical Benefits.
The Alphapharm interlocutory injunction was granted:
UPON the cross-claimants by their counsel undertaking:
(a)to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by any operation of the orders below or any continuation (with or without variation) thereof; and
(b)to pay the compensation referred to in (a) to the person there referred to; and
(c)until further order, not to make any application to de-list Efexor-XR from the Pharmaceuticals Benefits Scheme.
Generic Health venlafaxine
Generic Health was the sponsor of registrations on the ARTG on 6 August 2009 of (as now known) Venlafaxine Sandoz XR venlafaxine (as hydrochloride) 150mg modified release capsule, (as now known) Venlafaxine Sandoz XR venlafaxine (as hydrochloride) 75mg modified release capsule, Venlafaxine GENERICHEALTH XR venlafaxine (as hydrochloride) 150mg modified release capsule, and Venlafaxine GENERICHEALTH XR venlafaxine (as hydrochloride) 75mg modified release capsule, as well as (as now known) Apo-Venlafaxine XR venlafaxine (as hydrochloride) 150mg modified release capsule and (as now known) Apo-Venlafaxine XR venlafaxine (as hydrochloride) 75mg modified release capsule, and (as now known) Venlexor XR venlafaxine (as hydrochloride) 150mg modified release capsule (as now known) Venlexor XR venlafaxine (as hydrochloride) 75mg modified release capsule.
The Generic Health venlafaxine products were registered on the ARTG on the basis of being essentially similar to the corresponding Efexor-XR products and are substitutable (including on the PBS) for those products.
Generic Health commenced proceeding NSD 1124 of 2009 on 6 October 2009 challenging the validity of the method patent. On 9 November 2009 Wyeth and Wyeth Australia Pty Ltd filed a cross-claim in proceeding NSD 1124 of 2009 alleging infringement and threatened infringement of the method patent including an application for an interlocutory injunction.
On 10 November 2009 I granted the Generic Health interlocutory injunction which, pending further order, was as follows:
(a)Generic Health Pty Ltd (whether by itself its directors, officers, servants, agents or otherwise), be restrained from infringing claims 4 and 27 (insofar as claim 27 is dependent on claim 4) of the Patent, including without limitation by, during the term of the Patent and without the licence or authority of the respondent, importing, marketing, taking orders for, selling, supplying, offering to supply in Australia any products the subject of ARTG registration numbers 151874, 151875, 151876, 151877,151878, 151880, 151884, 151885 (the GH Products) or any product comprising the same generic modified release formulation of venlafaxine hydrochloride for use by persons for major depression and social anxiety disorder or otherwise exploiting the invention the subject of the Patent;
(b)Generic Health Pty Ltd (whether by itself, its directors, officers, servants, agents or otherwise) be restrained from selling or assigning its rights in the registrations for the GH Products or any product comprising the same generic modified release formulation of venlafaxine hydrochloride the subject of the Patent without notifying the purchaser or assignee of the restraints placed upon Generic Health Pty Ltd by operation of these orders in relation to the GH Products; and
(c)that Generic Health Pty Ltd make it a condition of any purchase or assignment of the rights in the registrations for the GH Products, that the purchaser or assignee provides undertakings, without admission of liability, in the following terms to the respondent:
…
(d)Generic Health Pty Ltd be restrained from applying to list the GH Products on the Schedule of Pharmaceutical Benefits.
The Generic Health interlocutory injunction was granted upon:
The respondent’s and Wyeth Australia Pty Ltd’s undertaking, by their counsel:
(a)to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by any operation of the orders below or any continuation (with or without variation) thereof; and
(b)to pay the compensation referred to in (a) to the person there referred to; and
(c)until further order, not to make any application to de-list Efexor-XR from the Pharmaceuticals Benefits Scheme.
Other events
On 19 August 2009 I listed the proceedings between Sigma, Alphapharm and Wyeth for hearing, on a provisional basis, starting on 8 March 2010. On 28 August 2009 I vacated this order and listed the proceedings for hearing from 12 to 30 April 2010. Although the proceedings involving Generic Health had not been commenced at that time, Generic Health was aware of the hearing dates by no later than September 2009. Subsequently, orders were made by which the proceedings involving Generic Health were also to be heard at the same time as the proceedings involving Sigma and Alphapharm.
On 15 October 2009, Pfizer Inc acquired Wyeth and Wyeth Australia Pty Ltd. The sale process had commenced much earlier in or around January 2009. Pursuant to the sale arrangements Pfizer Australia Pty Ltd, a subsidiary of Pfizer Inc, acquired all of Wyeth Australia’s products.
Ranbaxy Australia Pty Ltd was the sponsor of registrations on the ARTG on 22 January 2010 of Venlafaxine Ranbaxy venlafaxine (as hydrochloride) 150mg modified release capsules, Venlafaxine Ranbaxy venlafaxine (as hydrochloride) 75mg modified release capsules, and Venlafaxine Ranbaxy venlafaxine (as hydrochloride) 37.5mg modified release capsules.
I heard the proceedings between 15 April and 31 May 2010.
Spirit Pharmaceuticals Pty Ltd was the sponsor of registrations on the ARTG on 30 July 2010 of Elaxine SR 150 venlafaxine (as hydrochloride) 150mg modified release capsule, Elaxine SR 75 venlafaxine (as hydrochloride) 75mg modified release capsule, and Elaxine SR 37.5 venlafaxine (as hydrochloride) 37.5mg modified release capsule.
SC Pharma Pty Ltd was the sponsor of registrations on the ARTG on 30 July 2010 of Stada Venlafaxine SR venlafaxine (as hydrochloride) 150mg modified release capsule, Stada Venlafaxine SR venlafaxine (as hydrochloride) 75mg modified release capsule, Stada Venlafaxine SR venlafaxine (as hydrochloride) 37.5mg modified release capsule, Venlafaxine SR SCP venlafaxine (as hydrochloride) 150mg modified release capsule, Venlafaxine SR SCP venlafaxine (as hydrochloride) 75mg modified release capsule, and Venlafaxine SR SCP venlafaxine (as hydrochloride) 37.5mg modified release capsule.
On 23 September 2010 I provided the draft reasons for judgment to the parties to review for the purpose of identifying any confidential information which ought not to be disclosed in the published reasons. These draft reasons were in the same terms as the reasons for judgment published subsequently in which I decided the method patent was valid and that the generic parties should be subject to final injunctions.
On 8 November 2010 I made orders consequential on reasons for judgment published on that day, Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2010] FCA 1211; (2010) 88 IPR 459. I dismissed the challenges to the validity of the method patent, made final orders restraining each of Sigma, Alphapharm and Generic Health from infringing the method patent, and discharged the interlocutory injunctions and released Wyeth and Wyeth Australia from each of the undertakings which they had given in order to secure the interlocutory injunctions. I also refused applications by Sigma and Alphapharm to stay the final injunctions pending their foreshadowed appeals: Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (No 2) [2010] FCA 1212.
First Sigma, and then Alphapharm and thereafter Generic Health appealed against the orders I made on 8 November 2010.
On 12 November 2010 Jacobson J refused Sigma’s further application to stay the final injunctions against it pending hearing of the appeal which it had filed: Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2010] FCA 1258.
Pfizer Australia was the sponsor of registrations on the ARTG on 10 December 2010 of Venlafaxine Wyeth venlafaxine (as hydrochloride) 150mg modified release capsule, Venlafaxine Wyeth venlafaxine (as hydrochloride) 75mg modified release capsule, Venlafaxine Wyeth venlafaxine (as hydrochloride) 37.5mg modified release capsule, Altven venlafaxine (as hydrochloride) 150mg modified release capsule, Altven venlafaxine (as hydrochloride) 75mg modified release capsule, and Altven venlafaxine (as hydrochloride) 37.5mg modified release capsule.
On 28 January 2011 Sigma’s ARTG registration for Evelexa XR was transferred to its parent company, Sigma Company Limited. This was done as part of the arrangements for the sale of Sigma to Aspen Asia Pacific Pty Ltd, after which Sigma’s named was changed to Aspen Pharma Pty Ltd. Aspen Asia acquired the shares in Sigma pursuant to a share sale agreement completed on 31 January 2011. Apart from Evelexa XR and one other product, all generic pharmaceutical products owned or in-licensed by Sigma or its subsidiaries (including Arrow Pharmaceuticals Pty Ltd, Chemists’ Own Pty Ltd and Herron Pharmaceuticals Pty Ltd), including the associated intellectual property rights and ARTG registrations were transferred with the shares in Sigma.
Generic Health was the sponsor of registrations on the ARTG on 25 March 2011 of Apotex-Venlafaxine XR venlafaxine (as hydrochloride) 75 mg modified release capsule, Apotex-Venlafaxine XR venlafaxine (as hydrochloride) 150 mg modified release capsule, Chemmart Venlafaxine XR venlafaxine (as hydrochloride) 75 mg modified release capsule, Chemmart Venlafaxine XR venlafaxine (as hydrochloride) 150 mg modified release capsule, Terry White Chemists Venlafaxine XR venlafaxine (as hydrochloride) 75 mg modified release capsule, Terry White Chemists Venlafaxine XR venlafaxine (as hydrochloride) 150 mg modified release capsule.
On 28 October 2011 the Full Court delivered judgment to the effect that the appeal should be allowed as the method patent was invalid: Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2011] FCAFC 132; (2011) 119 IPR 194. On 11 November 2011 the Full Court made orders allowing the appeal and setting aside the orders I made on 8 November 2010 to the effect that each of Sigma Pharmaceuticals Australia, Alphapharm and Generic Health be restrained from infringing the method patent. On 21 December 2011 the Full Court made further orders including a declaration that claims 1 to 17 of the method patent are invalid and an order revoking those claims. The Full Court also set aside other orders I made insofar as necessary including the release of Wyeth and Wyeth Australia from the undertakings as to damages. The Full Court stayed two of its orders (revoking the claims and requiring rectification of the Register of Patents to reflect the revocation) to permit Wyeth and Wyeth Australia to seek special leave to appeal from the High Court, Wyeth and Wyeth Australia giving certain further undertakings.
Wyeth and Wyeth Australia applied for special leave to appeal to the High Court on 2 December 2011.
On 1 April 2012, following applications made in November and December 2011, the following generic equivalents to Efexor-XR were listed on the PBS:
(1)Apotex 75mg and 150mg products under brand names Apo-VenlafaxineXR, ChemmartVenlafaxineXR, and Terry White Chemists Venlafaxine XR;
(2)Generic Health 75mg and 150mg products under brand name Venlafaxine GENERICHEALTH XR;
(3)Alphapharm 75mg and 150mg products under brand name Enlafax-XR;
(4)Spirit Pharmaceuticals Pty Limited 37.5mg, 75mg and 150mg products under brand name Elaxine SR;
(5)Sandoz Pty Limited 75mg and 150mg products under brand name Venlafaxine Sandoz XR;
(6)Ascent Pharma Pty Ltd 75mg and 150mg products under brand name Venlexor XR; and
(7)Ranbaxy Australia Pty Ltd 37.5mg, 75mg and 150mg products under brand name Venla RBX.
The High Court refused to grant special leave to Wyeth’s application on 11 May 2012.
The parties
Wyeth
On 15 October 2009, Pfizer Inc. completed its acquisition of Wyeth LLC and Wyeth Australia Pty Limited (ACN 000 296 211), the respondents in the proceedings.
Sigma
On 19 December 2005, Sigma Company Limited (ACN 004 132 923) merged with Arrow Pharmaceuticals Limited (ACN 008 417 403). The merged company was renamed Sigma Pharmaceuticals Limited (ACN 008 417 403) (now known as Sigma Healthcare Limited) and listed on the ASX.
At that time, Sigma Pharmaceuticals Limited became the parent company of Sigma Company Limited (ACN 004 132 923).
Sigma Pharmaceuticals (Australia) Pty Ltd (004 118 594), referred to in these reasons as Sigma, is the applicant in proceeding no. VID195/2009. Sigma was the subsidiary of Sigma Company Limited.
On 31 January 2011, Sigma Company Limited sold Sigma to Aspen Asia Pacific Pty Ltd (ACN 146 444 484) under a share sale agreement between, Sigma Pharmaceuticals Limited, Sigma Company Limited (as vendor), Aspen Asia Pacific Pty Ltd (as purchaser) and Aspen Pharmacare Holdings Limited (a South African registered company and the ultimate parent company of Aspen Asia Pacific Pty Ltd).
Sigma was renamed Aspen Pharma Pty Ltd on 31 January 2011.
On 31 August 2015 Sigma’s generic business was sold to Arrow Pharmaceuticals Limited. Sigma’s claims extend to alleged losses up to 31 August 2015.
Alphapharm
Alphapharm Pty Ltd is the applicant in proceeding no. NSD596/2009. Alphapharm is an (indirect) subsidiary of Mylan, Inc.
Mylan N/V is the ultimate holding company of Mylan, Inc.
Mylan Ireland Limited (Mylan Ireland) is also an (indirect) subsidiary of Mylan, Inc.
Generics (UK) Ltd is an indirect subsidiary of Mylan, Inc. Mylan Ireland took the place of Generics (UK) Ltd under the agreements for supply to Alphapharm with Pharmathen.
Generic Health
Since September 2010, Generic Health Pty Ltd has been a subsidiary of Lupin Limited. Lupin Holdings B.V., which is wholly owned by Lupin, currently holds 100% of the issued capital of Generic Health.
Pharmathen
Pharmathen S.A., a company incorporated in Greece, is the holding company of the Pharmathen group of companies and is also known as Pharmathen Pharmaceuticals S.A.
Alembic
On 24 January 2011, Alembic Limited was demerged and its obligations in relation to the manufacture and supply of pharmaceutical products were transferred to Alembic Pharma Limited.
On 12 March 2011, Alembic Pharma Limited changed its name to Alembic Pharmaceutical Limited.
Principles relating to the undertakings
The terms of the undertakings which Wyeth gave on the grant of the interlocutory injunctions were the same in each case, namely:
to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by any operation of the orders below or any continuation (with or without variation) thereof.
The undertakings reflect the Court’s then Practice Note No 3 which refers to the “usual undertaking as to damages”. The description, the “usual undertaking as to damages”, in turn, reflects the principles most conveniently described by Brooking J in National Australia Bank v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 599-602 including the following:
When a court of equity is asked to grant an interim or interlocutory injunction it will consider whether it should take steps, as it ordinarily will, to protect the party enjoined against the danger of injury resulting from the injunction. It has been doing this for the past 200 years.
…
The power of a court of equity to require, as a condition of the grant of an injunction, that a bond be given, or that an undertaking (which may or may not be required to be buttressed by security) be given, is an inherent power which derives from the court's discretion to grant or refuse the injunction sought, a power exercised for the purpose of effecting justice between the parties… By giving the undertaking the litigant has put himself under the power of the court; the order later made in an appropriate case for an inquiry and payment of the damages is an appendage to the undertaking…
It is because damage flowing from the act of the court is not - unless one of the recognised causes of action exists - compensable in damages that equity requires its undertaking or bond or other appropriate safeguard. Time and again we are told that this is equity's way of avoiding injustice. It is never said that equity insists on an undertaking or bond merely in order to prevent arguments and provide a summary remedy. Implicit in the judgments is the idea that without the undertaking there will be no remedy, so that injustice will result…
Equity has its own means - an anticipatory one - of avoiding injustice, by refusing to grant an injunction or appoint a receiver by interim or interlocutory order except on terms. The applicant can take the order or leave it, but if he takes it he does so on terms which make clear, once recourse is had to the authorities, the extent to which he is at risk in relation to damages.
It was the Court’s making of the interlocutory orders which called forth the undertakings from Wyeth. By the undertakings Wyeth obtained the interlocutory orders and by the undertakings Wyeth submitted to the making of such order, if any, as the Court may consider to be just for the payment of compensation to any person “adversely affected by any operation of the [interlocutory] orders…or any continuation (with or without variation) thereof”.
In Coshott v Principal Strategic Options Pty Ltd [2004] FCAFC 50 at [18] the Full Court referred to Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249 as authority for these propositions:
(a)the court has a discretion not to enforce an undertaking as to damages, but unless the respondent has been guilty of conduct that would render it inequitable to enforce the undertaking it will be just, speaking generally, for an applicant who fails on the merits to recompense the respondent for the damage suffered by him or her as a result of the making of the interlocutory order (see Gibbs J at 311 – 312);
(b)it is necessary to draw a distinction between results which are caused by the making of the interlocutory order and those which flow from the fact of the litigation itself (see Barwick CJ at 310; Gibbs J at 312 and Stephen J at 315);
(c)generally speaking, the damages must be confined to loss which is the natural consequence of the interlocutory order under the circumstances of which the applicant for the order had notice (see Gibbs J at 312 and the authorities there cited and Stephen J at 319);
(d)the making of the interlocutory order must have been a cause without which the damage would not have been suffered (Gibbs J at 313 and Stephen J at 320); and
(e)the onus of proof in respect of the damage claimed lies on the respondent who asserts that he or she sustained damage by reason of the making of the interlocutory order (see Gibbs J at 313 and Stephen J at 316 and 320).
74.As shown in the ARTG public summaries in Attachment 10, the Apotex Products are indicated for treatment of major depression, including prevention of relapse and recurrence where appropriate.
75.The ARTG records that the following products (Ascent Products) were entered on the Register on 6 August 2009 (see public summaries of ARTG entries in Attachment 11):
75.3(as now known) Venlexor XR venlafaxine (as hydrochloride) 150mg modified release capsule blister pack under number 151874 (Venlexor XR 150); and
75.4(as now known) Venlexor XR venlafaxine (as hydrochloride) 75mg modified release capsule blister pack under number 151885 (Venlexor XR 75).
76.As at 6 August 2009, Generic Health was the sponsor of each of the Ascent Product registrations.
77.Ascent Pharma Pty Ltd is now the sponsor of each of the Ascent Product registrations.
78.Venlexor XR 150 was registered on the ARTG on the basis of being essentially similar to Efexor- XR 150, and is substitutable (including on the PBS) for Efexor-XR 150.
79.Venlexor XR 75 was registered on the ARTG on the basis of being essentially similar to Efexor- XR 75, and is substitutable (including on the PBS) for Efexor-XR 75.
80.As shown in the ARTG public summaries in Attachment 11, the Ascent Products are indicated for "treatment of major depression, including prevention of relapse and recurrence where appropriate, social anxiety disorder".
81.On 6 October 2009, Generic Health commenced proceeding NSD 1124 of 2009.
82.On 9 November 2009, Wyeth and Wyeth Australia Pty Ltd filed a cross claim in proceeding NSD 1124 of 2009.
83.On 10 November 2009, Jagot J made the orders in NSD 1124 of 2009 set out in Attachment 12, including order 1 (Generic Health Interlocutory Injunction).
84.In respect of order 1 referred to in the preceding paragraph, Wyeth and Wyeth Australia Pty Ltd gave the undertakings set out in Attachment 12.
85.On 8 November 2010, Jagot J made the orders in NSD 1124 of 2009 set out in Attachment 13.
Appeal Proceedings
86.On 9 November 2010, Sigma filed an application in relation to order 7 of the orders made by Jagot J in proceeding VID 195 of 2009 on 8 November 2010.
87.On 12 November 2010, in relation to Sigma's application referred to in the preceding paragraph, Jacobson J made the orders set out in Attachment 14.
88.Sigma, Alphapharm and Generic Health appealed Jagot J's decision to the Full Federal Court and, on 28 October 2011, the Full Federal Court delivered its judgment.
89.On 11 November 2011, the Full Federal Court made the orders in NSD 1533 of 2010, NSD 1603 of 2010 and NSD 1644 of 2010 set out in Attachments 15, 16 and 17 respectively.
90.On 21 December 2011, the Full Federal Court made the orders in NSD 1533 of 2010, NSD 1603 of 2010 and NSD 1644 of 2010 set out in Attachments 18, 19 and 20 respectively.
91.Wyeth and Wyeth Australia Pty Ltd filed applications for special leave to appeal the Full Court's judgment to the High Court of Australia on 2 December 2011, which were amended on 27 February 2012.
92.On 11 May 2012 the High Court refused to grant Wyeth and Wyeth Australia Pty Ltd special leave to appeal (see Attachment 21).
Australian venlafaxine hydrochloride market
93.Immediately prior to 5 March 2009, Efexor-XR (Wyeth’s modified release venlafaxine hydrochloride) was:
93.3the only brand of modified release venlafaxine hydrochloride on the ARTG;
93.4the only brand of modified release venlafaxine hydrochloride on the PBS; and
93.5the leading anti-depressant brand in Australia in terms of units sold and value of sales.
94.The ARTG records that the following products (Ranbaxy Products) were entered on the Register on 22 January 2010 (see public summaries of ARTG entries in Attachment 22):
94.3Venlafaxine Ranbaxy venlafaxine (as hydrochloride) 150mg modified release capsules blister pack under number 149455;
94.4Venlafaxine Ranbaxy venlafaxine (as hydrochloride) 75mg modified release capsules blister pack under number 149454; and
94.5Venlafaxine Ranbaxy venlafaxine (as hydrochloride) 37.5mg modified release capsules blister pack under number 149432.
95.Ranbaxy Australia Pty Ltd is the sponsor of each of the Ranbaxy Product registrations.
96.The ARTG records that the following products (Spirit Products) were entered on the Register on 30 July 2010 (see public summaries of ARTG entries in Attachment 23):
96.3Elaxine SR 150 venlafaxine (as hydrochloride) 150mg modified release capsule blister pack under number 160301;
96.4Elaxine SR 75 venlafaxine (as hydrochloride) 75mg modified release capsule blister pack under number 160300; and
96.5Elaxine SR 37.5 venlafaxine (as hydrochloride) 37.5mg modified release capsule blister pack under number 160299.
97.Spirit Pharmaceuticals Pty Ltd is the sponsor of each of the Spirit Products.
98.The ARTG records that the following products (SC Pharma Products) were entered on the Register on 30 July 2010 (see public summaries of ARTG entries in Attachment 24):
98.3Stada Venlafaxine SR venlafaxine (as hydrochloride) 150mg modified release capsule blister pack under number 160295;
98.4Stada Venlafaxine SR venlafaxine (as hydrochloride) 75mg modified release capsule blister pack under number 160294;
98.5Stada Venlafaxine SR venlafaxine (as hydrochloride) 37.5mg modified release capsule blister pack under number 160293;
98.6Venlafaxine SR SCP venlafaxine (as hydrochloride) 150mg modified release capsule blister pack under number 160298;
98.7Venlafaxine SR SCP venlafaxine (as hydrochloride) 75mg modified release capsule blister pack under number 160297; and
98.8Venlafaxine SR SCP venlafaxine (as hydrochloride) 37.5mg modified release capsule blister pack under number 160296.
99.SC Pharma Pty Ltd is the sponsor of each of the SC Pharma Products.
100.The ARTG records that the following products (Pfizer Products) were entered on the Register on 10 December 2010 (see public summaries of ARTG entries in Attachment 25):
100.3Venlafaxine Wyeth venlafaxine (as hydrochloride) 150mg modified release capsule blister pack under number 171551;
100.4Venlafaxine Wyeth venlafaxine (as hydrochloride) 75mg modified release capsule blister pack under number 171550;
100.5Venlafaxine Wyeth venlafaxine (as hydrochloride) 37.5mg modified release capsule blister pack under number 171549;
100.6Altven venlafaxine (as hydrochloride) 150mg modified release capsule blister pack under number 171537;
100.7Altven venlafaxine (as hydrochloride) 75mg modified release capsule blister pack under number 171536; and
100.8Altven venlafaxine (as hydrochloride) 37.5mg modified release capsule blister pack under number 171535.
101.Pfizer Australia Pty Ltd is the sponsor of each of the Pfizer Products.
102.As at 11 November 2011, there were nine sponsors of generic modified release venlafaxine hydrochloride products registered on the ARTG, the registration details of which are summarised in Attachment 26.
103.On 1 April 2012, the following generic versions of Efexor-XR were listed on the PBS:
103.3Apotex 75mg and 150mg products under brand names:
103.3.1"Apo-Venlafaxine XR";
103.3.2"Chemmart Venlafaxine XR";
103.3.3"Terry White Chemists Venlafaxine XR";
103.4Generic Health 75mg and 150mg products under brand name Venlafaxine GENERICHEALTH XR;
103.5Alphapharm 75mg and 150mg products under brand name Enlafax-XR;
103.6Spirit Pharmaceuticals Pty Limited 37.5mg, 75mg and 150mg products under brand name Elaxine SR;
103.7Sandoz Pty Limited 75mg and 150mg products under brand name Venlafaxine Sandoz XR;
103.8Ascent Pharma Pty Ltd 75mg and 150mg products under brand name Venlexor XR;
103.9Ranbaxy Australia Pty Ltd 37.5mg, 75mg and 150mg products under brand name Venla RBX.
Australian pharmaceutical market
104.Data Modelling Section Pharmaceutical Policy and Analysis Branch of the Pharmaceutical Benefits Scheme published a report on Expenditure and Prescription for each of the years ending 30 June 2008, 2009, 2010 and 2011 (PBS Expenditure Reports).
105.Extracts of the PBS Expenditure Reports recording PBS expenditure on venlafaxine hydrochloride for the years ending 30 June 2008, 2009, 2010 and 2011 are attached as Attachment 27.
106.The extracts of the PBS Expenditure Reports at Attachment 27 record PBS expenditure on venlafaxine hydrochloride for the years ending 30 June 2008, 2009, 2010 and 2011.
SCHEDULE 3
SECOND STATEMENT OF AGREED FACTS
Statement of Agreed Facts
The following facts are agreed for the purposes of the Proceedings only, subject to any further date restrictions specified below.
Further, these facts are agreed between Wyeth, Wyeth Australia Pty Ltd and the parties listed in the schedule to this statement only.
IMS Health
1.Until in or about 3 October 2016, IMS Health (IMS) was a global group of companies that collated information relating to the pharmaceutical industry in Australia and overseas and then provided this information to subscribers of its services.
2.IMS had operations in over 100 countries, including Australia.
3.Prior to being privatised in February 2010, IMS was a public company listed on the New York Stock Exchange.
4.IMS was independent of pharmaceutical companies (whether innovators or generics), independent of governments and independent of industry pressure or lobby groups.
5.IMS collected information such as products sold, volume of sales and product prices.
Transaction
6.On or about 3 October 2016, IMS Health Holdings, Inc. (IMS Inc), the global parent of IMS, entered into a merger agreement pursuant to which IMS Inc. merged with Quintiles Transnational Holdings Inc., the global parent of the Quintiles group of companies, thus combining IMS and the Quintiles group of companies (Quintiles Group).
7.After 3 October 2016 and until 15 December 2016, the IMS Quintiles Group, including IMS Australia Pty Ltd, continued to collate and provide data in the same way as that data was collated and provided prior to 3 October 2016.
Use of IMS Data
8.IMS collected data from a broad range of sources, including doctors, pharmacists, pharmaceutical wholesalers and hospitals and compiled it into a number of datasets. These datasets were stored in a database maintained by IMS, of which extracts were made available to customers of IMS.
9.IMS was a leading global provider of market and sales data in the pharmaceutical industry. IMS was considered to be the “industry standard market data provider” in Australia for the provision of the API and AMI data discussed below.
10.IMS data was used by academics, government and pharmaceutical companies in Australia, including, at various times prior to on or about 3 October 2016, both Alphapharm and Sigma.
11.IMS subscribers included pharmaceutical companies, (including, at various times prior to on or about 3 October 2016, Wyeth Australia Pty Ltd, and also Sigma/Alphapharm), hospitals, academics, allied health companies, manufacturers of over-the-counter products sold in pharmacies, and others.
12.These various groups and individuals used IMS data, amongst other data, and in combination with other data, for, among other things, research and development, marketing and marketing research, developing business strategy, and reporting to government organizations (such as the Pharmaceutical Benefits Pricing Authority).
13.During the period it was a subscriber to IMS, Wyeth Australia had access to a number of IMS datasets including the Australian Pharmaceutical Index (API), the Australian Hospital Index (AHI) and the Australian Medical Index (AMI). Wyeth Australia used data from these datasets, amongst other data, and in combination with other data, to assess the performance of its products relative to its own expectations and to relevant competitors, and to make decisions on questions such as sales force deployment, marketing and product development. Other pharmaceutical companies used IMS data in a similar way.
14.IMS data, amongst other data, and in combination with other data, was used by Wyeth Australia, and by other pharmaceutical companies, during the period that they subscribed as necessary to any such data sources, in order to prepare forecasts or projections for use in internal business planning and in dealings with external bodies such as the Pharmaceutical Benefits Advisory Committee.
15.The AHI and API datasets discussed below are materially accurate.
Compilation of IMS data
16.IMS databases contained information about many different pharmaceutical products.
17.The systems and procedures pursuant to which IMS data was gathered and made available were apt to ensure that, so far as is practicable, the data in the AHI and API datasets discussed below was reasonably accurate and useful.
18.IMS grouped products together according to their classification under a system commonly known as the ATC, developed by the European Pharmaceutical Market Research Association (EphMRA). This is distinct from the similarly named, and similar classification system developed by the WHO.
19.The EphMRA classification groups drugs together based on therapeutic ingredients and indication. This is a convenient way of arranging the data for the purpose of enabling ready comparison of the market performance of drugs used for treating similar conditions, although it is possible – provided the customer subscribes for the relevant data – to access relevant information relating to drugs which IMS has classified in different categories.
20.IMS created the following datasets which it maintained as part of its database:
20.1the Australian Pharmaceutical Index (API), which recorded sales of prescription products to Australian retail pharmacies;
20.2the Australian Hospital Index (AHI), which recorded sales of prescription products to Australian hospital pharmacies; and
20.3the Australian Medical Index (AMI), which contained information regarding the prescribing of pharmaceutical products in Australia.
The Australian Pharmaceutical Index (API)
21.The API was a dataset that contained details of sales of pharmaceutical products to retail pharmacies in Australia. The API did not contain details of actual sales by retail pharmacies to patients.
22.In Australia, there are two channels through which pharmaceutical products are sold to pharmacies. The first channel is sales by wholesalers to pharmacies. (In Australia, there are three major wholesalers Symbion, Sigma and Australian Pharmaceutical Industries, and approximately eleven smaller wholesalers. The number of wholesalers has varied over time.). The second channel is sales direct from manufacturers to pharmacies.
23.The principal source of information utilised in order to create the API was actual sales data received directly from wholesalers and manufacturers regarding the number and value of sales to pharmacies. IMS estimated that such sales data received from wholesalers and manufacturers accounted for more than 90% of total sales of all pharmaceutical products sold to pharmacies. This estimate was made by comparing the results of their data collections from this method with their cross-check data collected in the manner described in paragraph 26 below, and by other means.
24.IMS entered into contracts with these wholesalers and manufacturers for the provision by them of details of their sales to pharmacies. The wholesalers or manufacturers provided information from their business records as to the number of sales of each relevant product. This information, which included invoice dates and numbers, account number and type, product number, quantity supplied, net sales value (after discount, before tax) and transaction type (invoice/credit) was treated as confidential to each supplier of information, but enabled IMS to aggregate the information of all such information suppliers into its databases.
25.In addition, IMS’s practice was to require any organisation that subscribed for a particular IMS service to provide IMS with its sales data in respect of that service. Accordingly, if a pharmaceutical manufacturer which subscribed for the API sold directly to pharmacies, IMS would require as a condition of that subscription that the manufacturer provide its sales data to IMS. Together with the information obtained from wholesalers, this resulted in IMS obtaining the great bulk of the information relevant to its datasets such as the API and AHI.
26.In some cases IMS was unable to obtain actual sales information (which occured, for instance, when a manufacturer sold directly to pharmacies and had not subscribed for an IMS product and therefore contracted to provide its own sales information to IMS, or where a pharmaceutical manufacturer prevented a wholesaler from disclosing sales data regarding its products). In such cases, IMS estimated such sales on the basis of data received from a stratified, randomized panel of approximately 100 pharmacies. Those 100 pharmacies were selected so that, in so far as is practicable, the pharmacies were representative of all Australian pharmacies, including in terms of the State or Territory in which the pharmacy was located, the size of the pharmacy and a number of other characteristics. Pharmacies in the sample provided their sales records to IMS, which were then utilised by IMS to project total sales for all Australian pharmacies. This information was used to cross-check and augment the actual sales data to produce the API.
27.Where IMS relied on a statistical sample as opposed to actual records, IMS determined the composition and size of the sample on the basis of recommendations from IMS's Global Statistical Services Office. The Global Statistical Services Office was a specialist division based in Germany with extensive statistical expertise.
28.The API dataset was stored in a database maintained by IMS for the purpose of its business. The dataset was regularly updated with additional information from the sources described above. IMS made copies and extracts of the database and made these available to relevant subscribers by providing the subscribers to the API with a set of disks, once a month, which contained the updated API data. Each disk contained data which included history of between 2 and 5 years, depending upon the deliverable. If a subscriber specifically requested additional data on an ad hoc basis (eg because the customer had not retained a disk, or because the information related to a period or database prior to or different from that for which the customer had subscribed), this specific, ad hoc, information could be provided - in the most appropriate form based on the subscriber’s use, for example, an Excel file.
29.Subscribers were provided either with IMS proprietary software, and/or were equipped with appropriate security (password) mechanisms which allowed them – and only them – to access the information which was provided to them on the disks provided by IMS. IMS aimed to limit access of the information provided, to those who had subscribed to it, because if this information were to become freely available to unsubscribing users, the value of IMS’s product – ie its ability to protect its intellectual property, and the correct billing for information services – would be undermined. It would also expose the company to potential breaches of its contractual obligations with other stakeholders, hence posing a risk to its data assets.
30.The API also showed volumes of drug sales expressed in dollar terms. These dollar values were calculated by IMS multiplying the number of pack sales by the “average wholesale price” as determined by IMS for the relevant packs.
The Australian Hospitals Index (AHI)
31.The AHI was similar to the API. The difference was that the AHI contained details of sales of pharmaceutical products to hospital pharmacies (as opposed to retail pharmacies). The AHI did not contain details of sales by hospital pharmacies to patients.
32.As was the case with the API, the principal source of information utilised in order to create the AHI was actual sales data received directly from wholesalers and manufacturers regarding the number and value of sales. IMS estimated (in the same way) that sales data received from wholesalers and manufacturers who sold directly to hospital pharmacies accounted for more than 90% of all sales of pharmaceutical products to hospital pharmacies.
33.As was the case with the API, where IMS was unable to obtain actual sales information, IMS estimated such sales on the basis of data received from a stratified, randomized panel of hospitals. The stratification of the panel ensured that, so far as was practicable, the hospitals were representative of all Australian hospitals, including in terms of the State or Territory in which the hospital was located, and the bed-size of the hospital (bed-size being the best indicator of turnover of pharmaceutical products). Hospitals in the sample provided their sales records to IMS, which were then utilised by IMS to project total sales for all Australian hospitals as a cross-check and to augment the actual data from wholesalers or direct-supplying manufacturers.
34.The AHI dataset was stored in a database maintained by IMS for the purpose of its business. The dataset was regularly updated with additional information from the sources described above. IMS made copies and extracts of the database and made these available to relevant subscribers by providing the subscribers to the AHI with a set of disks, once a month, which contained the updated AHI data. Each disk contained data which included history of between 2 and 5 years, depending upon the deliverable.
The Australian Medical Index (AMI)
35.The AMI contained information on, among other things, the number of prescriptions of pharmaceutical products by general practitioners to patients. The AMI constituted a projection based on information received from a sample of general practitioners. As outlined immediately below, the sample on which the AMI was based was collected in two ways.
36.First, IMS received, via the General Practice Research Network – Health Communication Network (a national network of Australian general practitioners), prescription information extracted electronically. Participating general practitioners had software which extracted anonymised prescription information.
37.Secondly, IMS received information from a sample of general practitioners who supplied paper information of prescription data. The set of doctors that provided information in this way as well as via the electronic method described in paragraph 36 above constituted a stratified random sample of the national universe of general practitioners. Approximately 25% of the panel was rotated annually.
38.The AMI dataset was stored in a database maintained by IMS for the purpose of its business. The dataset was regularly updated with additional information from the sources described above. IMS made copies and extracts of the database and made these available to relevant subscribers at various times prior to on or about 3 October 2016 by providing the subscribers to the AMI with a set of disks, once a month, which contained the updated AMI data.
SCHEDULE 4
PEOPLE INVOLVED
SIGMA
Elmo de Alwis: the CEO of Sigma Pharmaceutical Limited and the managing director of its wholly owned subsidiaries, Sigma Company Limited and Sigma during the relevant period. Also a member of Sigma Pharmaceutical Limited’s board, which had the same members as Sigma’s board.
Robert Ellis: General Manager – Business Development at Sigma from April 2007 to March 2012.
Susan Morgan: Sigma Pharmaceutical Limited’s general counsel and company secretary during the relevant period.
Andrew Heine: National Sales Manager (Generics) at from January 2006 to August 2009.
Trevor Ziman: during the relevant period, a member of the team at Aspen Asia Pacific Pty Ltd which acquired Sigma and its generics pharmaceuticals business from Sigma Company Limited.
Paul Meulblok: Sigma Company Limited’s Group Commercial Manager (Finance Division) from October 2007 to October 2009.
Nicole Burrowes: Group Financial Controller at Aspen Pharmacare Pty Ltd, employed in that role since 2014.
Nathan Caldwell: Group Financial Controller at Sigma Company Limited.
ALPHAPHARM
Mark Hurley: from 2006 until July 2010, Executive Director of Alphapharm, whose parent company in 2007 became Mylan Inc.
Jalal Chami: pharmacist and pharmacy manager who, from August 2009 to October 2013, was employed by Alphapharm in a number of business positions.
John Montgomery: the CEO of Alphapharm from November 1999 to March 2010.
Max Joscelyne: Commercial Finance Manager at Alphapharm, working in a range of financial roles at Alphapharm during the relevant period.
John Hannon: Global Supply Chain Controller at Mylan Ireland Limited during the relevant period.
Lynette Adams: Senior Purchasing Officer, Supply Chain, at Alphapharm.
Elena Facchinetti: Senior Sales Finance Analyst and then Financial Controller at Alphapharm.
Kim O’Connell: a partner of King & Wood Mallesons, Alphapharm’s lawyers.
Maria Mollica: Business Unit Head – Prescription at Alphapharm.
Steven Flynn: Global General Counsel, Intellectual Property at Mylan Inc, Alphapharm’s parent company.
GENERIC HEALTH
Gavin Upiter: founder, CEO and managing director of Generic Health from 2004 to 2012.
Sudarshan Menon: Chief Financial Officer of Generic Health.
ALEMBIC
Amit Ghosal: Assistant General Manager of Business Development at Alembic from April 2015.
PHARMATHEN
Gareth Williams: since April 2017, Vice President Global Business Development of Pharmathen.
Anastasios Spyropoulos: Head of the Business Unit at Pharmathen’s Pallini plant since 2011.
Diomedes Vassiliou: since April 2016 Chief Financial Officer of Pharmathen.
THE COMMONWEALTH
Felicity McNeill: joined the Department of Health in January 2010, as the Assistant Secretary, Pharmaceutical Evaluation Branch, Pharmaceutical Benefits Division, a role she held until September 2010.
Phillipa Horner: Principal Legal Advisor to the TGA at the Commonwealth Department of Health from 2 February 2010 to 16 November 2016.
David Pearson: Director in the Pharmaceutical Policy Branch (PPB), a branch in the Pharmaceutical Benefits Division (PBD) of the Department of Health
Dr Mariana Gebara-Coghlan: Director in the Pharmaceutical Chemistry Section of the Scientific Evaluation Branch of the TGA. Employed at the TGA since September 2002, and during the relevant period held the position of Principal Evaluator.
Phillip Spann: Assistant General Manager in the Patents and Plant Breeder’s Rights Group, and is responsible for the Patent Opposition, Hearings and Legislation section at IP Australia.
Andrew Korbel: partner at Corrs Chambers Westgarth, the solicitors for the Commonwealth.
WYETH
Gary Cooper: Commercial Manager – Pharmacy of Pfizer Australia and Business Support Manager of Pfizer New Zealand, Pfizer being the company which acquired Wyeth in October 2010.
Candida Braithwaite: Pharmaceutical Business Director of Wyeth Australia during the relevant period who gave evidence in support of Wyeth’s interlocutory applications in 2009.
David Manspeizer: Vice President – Intellectual Property and Associate General Counsel at Wyeth during the relevant period.
Dr Sally Mannion: Director of Patent and Trade Marks at Wyeth during the relevant period.
Ioakim (Kim) Konnaris: Senior Regulatory Affairs Associate at Wyeth during the relevant period.
Katie Barclay: Human Resources Manager at Wyeth.
ECONOMETRIC EXPERTS
Professor Jerry Hausman: MacDonald Professor of Economics at the Massachusetts Institute of Technology in Cambridge, Massachusetts, engaged by the generics.
Dr Helen Jenkins: Managing Partner of Oxera Consulting LLP, an economics and finance consulting company headquartered, Oxford, UK, BEc (Hons) Science and Economics, from the Australian National University and an MPhil and DPhil in Economics from the University of Oxford.
INDUSTRY EXPERTS
Karen McTavish: has more than 20 years’ experience working in various sales and management roles in the pharmaceutical industry for generics in Australia and Canada, including as the Sales and Marketing Director of Apotex Pty Ltd and Managing Director of Actavis Pty Ltd, engaged by the Commonwealth.
Allan Dick: has more than 30 years’ experience working in various sales and management roles in the pharmaceutical industry for originators in Australia, including as the General Manager of Roussel and Hoechst Marion Roussel New Zealand, Director - Retail (Primary Care) at Sanofi Aventis Australia and the Commercial Director of Takeda Australia.
ACCOUNTANTS
Tony Samuel: accountant, engaged by the generics and Alembic.
Greg Meredith: accountant, engaged by Wyeth.
SCHEDULE 5
ALPHAPHARM AND GENERIC HEALTH CALCULATIONS
Alphapharm
1.Alphapharm’s supply from 1 March 2010 to 8 November 2010 is dependent on two independent anterior circumstances:
(1)whether Sigma would have been supplying its products under the PBS from 1 December 2009 until 8 November 2010; and
(2)whether Alphapharm would have been supplying its products on the private market prior to 1 March 2010.
2. These circumstances (C) can be described as:
(1) C1 = Sigma PBS and Alphapharm PM
(2) C2 = Sigma PM and Alphapharm PM
(3) C3 = Sigma PBS and Alphapharm N
(4) C4 = Sigma PM and Alphapharm N
3.The probabilities of Alphapharm taking a particular course from 1 March 2010 to 8 November 2010 (PM, PBS or N) given each of those four circumstances, as I have found them, are as follows:
Alphapharm 1/3/10 to 8/11/10
C1
C2
C3
C4
PM
10%
90%
0%
0%
PBS
90%
0%
80%
0%
N
0%
10%
20%
100%
4.To calculate the respective probabilities of Alphapharm’s supply from 1 March 2010, the joint probability of the two circumstances occurring together before 1 March 2010 must first be calculated and then multiplied by the probability that Alphapharm would have taken a particular course from 1 March 2010 in each of those circumstances.
5.But for the Sigma interlocutory injunction, the probability of Sigma supplying on the PBS at 1 March 2010 was 20% and on the private market was 80%.
6.The joint probability of Alphapharm being on the private market (90%) and Sigma listing on the PBS (20%) before 1 March 2010 can be calculated as follows:
Alphapharm PM and Sigma PBS = 0.9 x 0.20 = 0.18
7.This process if repeated for all four potential sets of anterior circumstances results in the following:
Before 1/3/10
Alphapharm PM (90%)
Alphapharm N (10%)
Sigma PBS (20%)
18% or 0.18 (C1)
2% or 0.02 (C3)
Sigma PM (80%)
72% or 0.72 (C2)
8% or 0.08 (C4)
8.The probabilities of Alphapharm’s position from 1 March 2010 in each of the four circumstances can be calculated in the same manner.
9.For example, the joint probability of Alphapharm listing on the PBS on 1 March 2010 (90%) and Sigma having listed on the PBS before 1 March 2010 and Alphapharm previously supplying on the private market can be calculated as follows:
Alphapharm PBS and C1 = 0.9 x 0.18 = 0.162.
10.Repeating this process yields the following table:
Alphapharm
1/3/10 – 8/11/10
C1
C2
C3
C4
TOTAL
PM
1.8%
64.8%
0%
0%
66.6% or
0.666
PBS
16.2%
0%
1.6%
0%
17.8%
or
0.178
N
0%
7.2%
0.4%
8%
15.6%
or
0.156
TOTAL
18%
72%
2%
8%
100%
or
1
11.The overall probability of Alphapharm’s supply is the sum of all the probabilities in each of the four circumstances. For example, the probability that Alphapharm would supply on the private market from 1 March 2010 to 8 November 2010 can be calculated as follows:
Alphapharm PM = 0.018 + 0.648 + 0 + 0 = 0.666.
12.Repeating this process yields the following probabilities for Alphapharm:
PM = 0.666
PBS = 0.178
N = 0.156.
13.As required, these probabilities add up to 1.
Generic Health
14.The same exercise can be carried out for Generic Health.
15.The probabilities of Generic Health taking a particular course from 1 March 2010 to 8 November 2010 (PM, PBS or N) given each of the four circumstances, as I have found them, are as follows:
GH 1/3/10 to 8/11/10
C1
C2
C3
C4
PM
10%
80%
0%
0%
PBS
90%
0%
80%
0%
N
0%
20%
20%
100%
16.The joint probabilities of Generic Health and Sigma making particular kinds of supply as at 1 March 2010 are:
Before 1/3/10
Generic Health PM (80%)
Generic Health N (20%)
Sigma PBS (20%)
16% or 0.16 (C1)
4% or 0.04 (C3)
Sigma PM (80%)
64% or 0.64 (C2)
16% or 0.16 (C4)
17. The probabilities for Generic Health thus are:
GH
1/3/10 – 8/11/10
C1
C2
C3
C4
TOTAL
PM
1.6%
51.2%
0%
0%
52.8% or
0.528
PBS
14.4%
0%
3.2%
0%
17.6%
or
0.176
N
0%
12.8%
0.8%
16%
29.6%
or
0.296
TOTAL
16%
64%
4%
16%
100%
or
1
18. In other words, for Generic Health:
PM = 0.528
PBS = 0.176
N = 0.296.
19. As required, these probabilities add up to 1.
SCHEDULE OF PARTIES
VID 195 of 2009 Cross-Claimants
Second Cross-Claimant:
WYETH AUSTRALIA PTY LTD (ACN 000 296 211)
Cross-Respondents
Second Cross-Respondent:
ALEMBIC PHARMACEUTICALS LTD
Applicants
Fourth Applicant:
ALPHAPHARM PTY LTD (ACN 002 359 739)
Fifth Applicant:
PHARMATHEN S.A.
SCHEDULE OF PARTIES
NSD 596 of 2009 Cross-Claimants
Second Cross-Claimant:
WYETH AUSTRALIA PTY LTD (ACN 000 296 211)
Cross-Respondents
Second Cross-Respondent:
ALEMBIC PHARMACEUTICALS LTD
SCHEDULE OF PARTIES
NSD 1124 of 2009 Cross-Claimants
Second Cross-Claimant:
WYETH AUSTRALIA PTY LTD (ACN 000 296 211)
- AGLC
- Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2018] FCA 1556
- Case
- [2018] FCA 1556
- Decision Date
CaseChat Overview and Summary
The legal issues before the court involved the enforceability of undertakings as to damages, the standard of proof required to substantiate loss, and the remoteness of damage in relation to the interlocutory injunctions. The court examined the nature of the losses claimed, including both direct losses such as lost sales and indirect losses like the opportunity to supply products under the Pharmaceutical Benefits Scheme (PBS) and on the private market. The court also considered the illegality of hypothetical profits and the principle of abuse of process in assessing these claims.
The court found that the interlocutory injunctions were indeed wrongly granted, as affirmed by the Full Court's subsequent decision that the method patent was invalid. The primary adverse effect of these injunctions was the prevention of the claimants from supplying their products, which had a direct and foreseeable impact on their business operations. The court held that the losses of opportunity to supply were reasonably foreseeable and sufficiently proved on the balance of probabilities. The court further determined that the losses were not too remote and that the claimants were entitled to compensation under the undertakings given by Wyeth.
In conclusion, the court ordered compensation for each claimant, assessing the losses based on the probabilities and possibilities of supply under the PBS and on the private market, if the interlocutory injunctions had not been granted. The court also considered the discretionary factors involved in making these orders, ensuring that the compensation reflected the actual adverse effects of the injunctions on the claimants.
Orders
Orders of the court
1. Until 5.00pm on 26 October 2018, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) and on the ground that it is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a), there be no disclosure (by publication or otherwise) of the reasons for judgment delivered on the date of this order in proceedings VID 195 of 2009, NSD 596 of 2009 and NSD 1124 of 2009 (Proceedings) to any person other than to the external solicitors and counsel for the parties in the Proceedings, including the external solicitors and counsel for the Commonwealth of Australia (despite the discontinuance of its interlocutory application).
2. By 4.00pm on 26 October 2018 any party wishing to claim that any part of the reasons for the judgment should be subject to a further confidentiality order is to notify the Associate to Jagot J and the other parties, as well as the Commonwealth, by email of the claim including:
(a) details of the matter claimed to be confidential;
(b) a short statement of the reasons the matter is said to be confidential; and
(c) a statement identifying whether the claimant consents to the confidentiality claim being determined by Jagot J on the basis of the email or seeks an oral hearing.
3. If no notice by email is received in accordance with order 2, the reasons for judgment will be published forthwith.
4. If notice is received in accordance with order 2, the reasons for judgment will be published forthwith with the claimed confidential matter redacted pending determination of the confidentiality claim.
5. The parties are to confer and, by 4.00pm on 2 November 2018, are to propose in a joint email (including agreed and disagreed matters) to the Associate to Jagot J further directions to enable the matter to be finalised.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
In this section I record only those facts which set the context for the claims.ARTG registration The ARTG registrations of the generics’ products obtained before the interlocutory injunctions were granted are fundamental to my conclusions. Details about ARTG registration are set out in the statement of agreed facts in Schedule 2 on which the following section is based. A product containing the active pharmaceutical ingredient venlafaxine hydrochloride must be registered on the ARTG before it can be imported into, manufactured or supplied in, or exported from, Australia. Section 9A(1) of the Therapeutic Goods Act provides that:The Secretary is to cause to be maintained a register, to be known as the Australian Register of Therapeutic Goods, for the purpose of compiling information in relation to, and providing for evaluation of, therapeutic goods for use in humans. Section 3(1) of the Therapeutic Goods Act contains definitions, including relevantly, of “sponsor” in relation to therapeutic goods. By s 23, a person may make an application to the Secretary for registration or listing of therapeutic goods. By s 25(3), after an evaluation, the Secretary must decide to register or not to register the goods. Division 1 of Pt 3-2 of the Therapeutic Goods Act provides for a range of civil penalties and criminal offences in relation to therapeutic goods. The person or company holding the registration of a pharmaceutical product registered on the ARTG is called the sponsor of the relevant product. A sponsor may offer to supply, and supply, that therapeutic product to pharmacies, pharmaceutical distributors/wholesalers, government authorities and private or public hospitals in Australia when the product has been registered on the ARTG. To register a therapeutic product on the ARTG the sponsor must obtain approval from the TGA. If a pharmaceutical product is approved by the TGA, the brand name and the active ingredient of the product are entered on the ARTG, along with the name of the sponsor, the approved indication(s), the dosage form and the pack sizes for which the product may be supplied. A sponsor wishing to supply a bioequivalent version (generic product) of a pharmaceutical product which is already registered on the ARTG (originator product) may make an application that does not include all the information that was required of the originator to register the originator’s product. A sponsor of a generic product may rely on the safety and efficacy data submitted by the originator in respect of the originator product if the sponsor of the generic product demonstrates that the generic product is “essentially similar” or bioequivalent to the originator product. In order to demonstrate bioequivalence a sponsor of the generic product should normally conduct clinical bioavailability studies comparing the generic product to the originator product. The sponsor of the generic product is required to conduct such a study or studies with the Australian originator product or demonstrate that the comparator used in the studies against which the generic product is compared is identical to the Australian originator product.