20 July, 2012

 

Merck Sharp & Dohme Corp. [2012] APO 25

 

In brief

 

  • In Merck Sharp & Dohme Corp. [2012] APO 25 a Delegate of the Commissioner of Patents refused to grant and extension of time under section 223 of the Patents Act 1990 (Cth) of 124 months (10 years 4 months) so that Merck could file an application for an extension of term for Australian Patent No 670300 entitled "Benzoxazinones as inhibitors of HIV reverse transcriptase" (the "Patent").
  • The Delegate refused the section 223 extension application as it reflected Merck's shifting commercial interests and would be inconsistent with the purpose of section 223 and the intended operation of the extension of term scheme.
  • The Delegate distinguished the facts of this case from that of Alphapharm Pty Ltd & Ors v H.Lundbeck A/S [2011] APO 36 in which the Delegate recently allowed a section 223 extension of 121 months (10 years 1 month) because H.Lundbeck A/S had "apparently acted at all material times with the intent of obtaining an extension of term".

 

Merck's extension applications

 

The Patent, filed on 6 August 1993, relates to compounds useful for the inhibition of HIV reverse transcription to treat or prevent HIV infection or AIDS. A compound disclosed and claimed in the Patent is 6-chloro-4-cyclopropylethynyl-4-trifluoromethyl-1,4-dihydro-2H-3,1-benzoxazin-2-one ("Efavirenz"). Efavirenz is the active ingredient in the product STOCRIN. The first inclusion of STOCRIN in the Australian Register of Therapeutic Goods ("ARTG") is 9 April 1999.

 

In this case, the potential term extension is 5 years, 8 months and 3 days. Accordingly, reduced to 5 years, the expiry date for the patent would become 9 April 2014.

 

However, Merck did not file the application within 6 months of the date of the first inclusion in the ARTG of STOCRIN, but on 3 February 2010. The application was also based on the ARTG entry of ATRIPLA (a combination of active ingredients Efavirenz, Emtricitabine and Tenofovir Disoproxil Fumarate) rather than STOCRIN.

 

The application was rejected as being out of time and based on the wrong ARTG inclusion. Merck filed a section 223 application for an extension of time of 124 months (9 October 1999 to 9 February 2010) to file and correct the extension of term.

 

Relevant sections of the Act

 

Section 223(2) of the Act allows an extension of time to do a "relevant act" where:

 

(a) the relevant act is required to be done within a certain time and is not or cannot be done within the time specified; and

(b) the failure or inability to do that act is because of an error or omission by the person concerned or by his or her agent or attorney, or because of circumstances beyond the control of the person concerned.

 

A "relevant act" is defined in section 223(11), which among other things provides the Commissioner with a discretionary power to extend the time to do any action in relation to a patent other than something that is a "prescribed action".

 

Regulation 22.11(4) of the Patents Regulations 1991 (Cth) prescribes which actions are not extendible. Relevantly, subclause 22.11(4)(b) excludes the action of "filing, during the term of a standard patent as required by subsection 71 (2) of the Act, an application under subsection 70(1) of the Act for an extension of the term of the patent".

 

Did an error occur?

 

Merck adduced evidence that its patent attorney in the UK (Mr Ian Hiscock), who was responsible for obtaining extensions of terms in Australia, sought information on the filing of an application for an extension of term in Australia in relation to the product STOCRIN on 12 July 1999. He advised Merck’s Australian subsidiary on 28 July 1999 that “the extension of the corresponding Australia patent therefore needs to be filed by 9 October 1999”. However, he did not send instructions to do so and an extension of time was not applied for.

 

On 17 November 1999 Mr Hiscock queried whether the extension application had been filed and Merck’s Australian subsidiary advised that it had not, stating “In view of the short potential extension of this patent (8 months) weighed against the extended springboarding opportunity (14 years), we were not unduly concerned when we did not receive instructions to extend the patent”. However it advised that the application could be made together with a section 223 extension of time application.

 

On 29 November 1999 Mr Hiscock advised Merck's head office that Merck’s Australian subsidiary had decided not to apply for an extension of term.

 

The Delegate accepted that Merck, through its employee Mr Hiscock, had an intention in July 1999 to file an application for an extension of term based on the listing of STOCRIN. This intention only changed after advice provided by Merck's Australian subsidiary caused him to come to the view that an extension should not be sought. The Delegate held that the evidence was consistent with an error occurring that prevented the filing of the application rather than a deliberate decision not to apply. The Delegate therefore held that error existed which supports an extension of time.

 

Discretionary grounds

 

In weighing the competing interests of those affected by allowing or refusing the extension the delegate considered the following points:

 

  • Merck's interests lay strongly with the granting of an extension of time such that it can seek to obtain an extension of term. Efavirenz was of significant commercial value to Merck and at the expiry of the Patent Merck faced potential competition from generic pharmaceutical companies and a reduction of pricing under the Pharmaceutical Benefits Scheme. Any delay in the entry of competitors, even for as short a period as 8 months, would provide a significant advantage to Merck. Merck submitted that it is entitled to this advantage under the operation of the term extension scheme.
  • The interests of generic pharmaceutical companies lay strongly with the extension of term not being granted. Because the application was not made in time, generic companies may be in the process of seeking ARTG listing and preparing for production and/or marketing of drugs (on expiry of the patent). They have done so on the expectation that no term extension would be obtained (particularly after 10 years delay). The potential detriment to third parties from the granting of the extension of time is significant, especially as no compensation mechanism applies in these circumstances.
  • The Delegate found that the public interest lies in the "efficient and orderly operation of the patent system which is generally met by adherence to statutory timeframes and in balancing the incentives for innovation in medical research, inherent in the period of market exclusivity provided by the patent system, with reasonable access to and affordability of new drugs". The timing provisions of the extension of term scheme are intended to provide certainty surrounding the maximum term of a pharmaceutical patent. At the same time section 223 extensions apply to that scheme and are to be applied so that rights provided to a party under the Act are not lost inadvertently.

 

The Delegate held that an error occurred that prevented the filing of an extension of term application by 9 October 1999. On 17 December 1999 a decision was made not to obtain an extension of term. Merck has not provided evidence as to why no action was taken until 10 years later. The Delegate therefore concluded that Merck was pursuing an extension of term at this stage simply because it has changed its mind about where its commercial interests lie. Merck made a conscious decision immediately after the due date not to proceed with an extension of term application, and was now seeking to change that position over 10 years later. Merck’s current position is "clearly of its own making" and in that regard was a very different situation to that considered in Alphapharm Pty Ltd v H.Lundbeck A/S where the Delegate had held that the patentee had "acted at all material times with the intent of obtaining an extension of term". Therefore, the Delegate was satisfied that the Commissioner’s discretion should not be exercised in favour of Merck and refused the section 223 extension. 

 

 

For further information, please contact:
 
Grant Fisher, Partner, Ashurst 
grant.fisher@ashurst.com
 
Claire Roberts, Ashurst 
claire.roberts@ashurst.com
 
Georgia Marshall, Ashurst 
georgia.marshall@ashurst.com
 

 

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