[The IPKat] Australian High Court hears high-stakes matter of PTE eligibility of formulation patents
Claire Gregg
Australian High Court hears high-stakes matter of PTE eligibility of formulation patents
Dr Claire Gregg Wednesday, June 17, 2026 - #patents, Australia, Claire Gregg, formulation patents, OzKat, patent term extension
In 16–17 June 2026, the High Court of Australia heard an appeal from a decision of the Full Federal Court to deny patent term extension (PTE) eligibility for formulation patents in Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161. While the much-anticipated decision of the five-judge bench (Gageler CJ, Steward, Gordon, Edelman and Jagot JJ) is likely to take around three months to issue, the hearing highlighted the competing textual and policy considerations that will shape the future of formulation patent PTEs in Australia.
PTEs in Australia
Under the Patents Act 1990 (Cth) (Act), patents may be extended by up to five years where the patent claims and discloses a "pharmaceutical substance", being either a pharmaceutical substance per se or a pharmaceutical substance when produced using recombinant DNA technology. Relevantly, the definition of "pharmaceutical substance" provided in the Act includes:
… a substance (including a mixture or compound of substances) for therapeutic use whose application (or one of whose applications) involves ... a chemical interaction, or physico‑chemical interaction, with a human physiological system.
A PTE may be available where goods containing, or consisting of, the claimed pharmaceutical substance are first included in the Australian Register of Therapeutic Goods (ARTG) greater than five years after the effective filing date of the patent.
Historically, Australia adopted a relatively broad interpretation of "pharmaceutical substance", with both the courts and the Australian Patent Office accepting that formulation patents – being patents claiming products comprising both active pharmaceutical ingredients (APIs) and excipients – were eligible for PTE. This approach was supported by earlier decisions, including Cipla Australia Pty Ltd v Novo Nordisk A/S [2024] FCA 1414, and by longstanding Patent Office practice since the current PTE provisions came into effect in 1998.
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High Court Kats |
Full Federal Court decision in Otsuka
The Full Federal Court’s decision in Otsuka marked a significant departure from this established position. The Court adopted a narrow construction of the term "pharmaceutical substance", which it determined refers only to APIs, and not to formulations comprising APIs combined with excipients. Accordingly, the PTE granted for the patent at issue, based on claims directed to controlled-release aripiprazole formulations comprising the API, a vehicle and water for injection (the Injectable Claims), and claims directed to a freeze-dried formulation comprising the API and the vehicle (the Freeze-Dried Claims) – collectively, the PTE Claims – was found to be invalid.
The Otsuka decision represented one of the most significant recent developments in Australian patent law and, if allowed to stand, would have far-reaching consequences, including:
· existing PTEs granted for formulation patents (estimated to be more than 700 patents) may now be vulnerable to challenge or revocation;
· originator companies may face earlier loss of market exclusivity;
· generic and biosimilar entrants may have new opportunities to enter the market sooner; and
· both originators and generics face uncertainty as to the breadth of the PTE provisions.
Otsuka’s appeal to the High Court
Following the Full Court’s decision, Otsuka was granted special leave to appeal to the High Court. In relation to the eligibility of formulation patents for PTE (the Formulation Issue), Otsuka's position is that the claim integers as a whole must involve a chemical or physico-chemical interaction in a human to meet the Act’s definition of "pharmaceutical substance" and therefore be eligible for a PTE. In contrast, Sun Pharma's position is that every element of the claim must have the requisite interaction to be eligible for a PTE.
As is often the case when discussing PTEs, both parties invoked policy considerations to support their arguments. Otsuka's focused on the primary policy objective for PTEs, which is to compensate patentees for reduced effective patent life as a result of regulatory approval delays, which are comparable for new APIs and new formulations of existing APIs. Sun Pharma, by contrast, focused on preventing extension of so-called "blocking" patents to allow generics to enter the market once the original API patent expires.
Sun Pharma's policy arguments sit somewhat uneasily with the fact that formulation patents can only be obtained for legitimately new and inventive formulations. The Act includes inbuilt safeguards to prevent unjustified PTEs and limit the effective patent life to a maximum of 15 years for legitimate inventions that have their patent life eroded due to regulatory approval delays. Otsuka also made the point that generics are free to develop their own non-infringing formulations once the API patent expires. Generics would also be entitled to patent protection for those formulations, and possibly a PTE, if their formulations are novel and inventive. Indeed, Sun Pharma itself has at least two extended formulation patents in Australia.
Submissions were put forward by Sun Pharma, and the intervenor Generic and Biosimilars Medicines Association, that a claim to a container comprising an API (which is ineligible for PTE) is indistinct from a capsule comprising an API, or a formulation comprising an API, for the purposes of PTE because they are each defined with respect to their "delivery systems". However, there is a clear distinction: a capsule and a formulation are substances that can be "applied" to a human.
Secondary issues
In addition to the Formulation Issue, the High Court has been asked to consider the following issues (the Subsidiary Issues):
· whether the Freeze-Dried Claims can form the basis for PTE because it is the reconstituted formulation that is applied to a human;
· whether the PTE Claims include a process limitation (i.e., "which upon injection releases aripiprazole over a period of at least one week") that would render them ineligible for PTE; and
· whether the relevant goods (ABILIFY MAINTENA), being a kit comprising a vial of freeze-dried powder (aripiprazole and vehicle) and another vial containing a solvent for injection, contain the substance claimed in the Injectable Claims.
Sun Pharma submitted that the High Court need not address the Subsidiary Issues if it is successful on the Formulation Issue (except to the extent that it is relevant for costs).
Sun Pharma also sought to cross-appeal on the basis that the Full Court erred in reversing the Primary Judge's finding that the PTE Claims were invalid for failing to define the invention and lacking clarity because they include a result that is not an inherent feature of the claimed product. This, Sun Pharma contended, was a matter of significant public importance warranting consideration by the Court regardless of the outcome of Otsuka's appeal.
Final thoughts
If the High Court upholds the Full Court's decision on the Formulation Issue, the consequences will be substantial. That would not only invalidate hundreds of PTEs, but it could also have consequences for certain patents directed to first generation pharmaceuticals that meet the policy objectives set out by both parties, such as antibody-drug conjugates and gene therapies. By contrast, overturning the Full Court's decision on the Formulation Issue would involve less interpretive strain and would restore the status quo.
The PTE provisions can be challenging to comprehend, particularly for those less familiar with their operation, often resulting in conflation of concepts such as the claimed pharmaceutical substance and the goods included on the ARTG. The High Court therefore has its work cut out for it in reaching its decision on the Formulation Issue. Stay tuned for the outcome of this must-watch case for pharmaceutical companies.
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