Australia’s secretive drug approval system gives what some believe is an unfair advantage to rival drug companies.
As far as innovator companies are concerned, as well as the public, Australia’s process for approving generic and biosimilar agents is too secretive. There are no strict requirements that drug makers looking to bring a rival product to market need to inform the innovator companies until very late in the process, once marketing approval has been given and the product is about to appear on the Australian register of drugs.
For innovator companies, this provides very little time, sometimes less than 2 months, to bring a legal action to halt the commercialization, and in the event the company loses its patent defense, it can be held liable for lost revenues suffered by the generic or biosimilar company. For the public, this late notification system prevents individuals from knowing whether a more affordable product is coming to market until quite late.
However, there are signs that Australian authorities are working to remedy the problem. The Therapeutic Goods Administration is currently seeking feedback on prescription medicines transparency measures that would make it harder for pharmaceutical companies to delay notification of intent to launch a rival product.
Under current Australian law, once competitor therapeutic products have received marketing approval and been placed on the Australian Register of Therapeutic Goods, the brief interval of time before commercialization may be all innovator companies have before the product retails and starts to erode the base price for the reference product.
There are rules for earlier disclosure if a competitor’s product is likely to infringe an innovator’s patent, but these are considered too weak. For example, a company is not required to disclose to the innovator that it is bringing a rival product to market if it believes that its product will not violate 1 or more of the innovator’s “valid” patent claims. However, the opinion of the competitor company may not be unbiased.
“This has meant, in practice, that sponsors seeking marketing approval for a generic or biosimilar medicine in Australia generally do not notify the innovator of their application, and the innovator only becomes aware of the generic or biosimilar product when it is approved,” according to an analysis of the current law and proposed changes by patent law attorneys at Shelston Intellectual Property of Sydney, Australia.
The patent law attorneys offered FDA policy as an example of a significantly more effective model. “Australia's current regime for belatedly and somewhat passively notifying innovators of generic and biosimilar product approvals contrasts with the rigid and transparent processes of the US Food and Drug Administration,” they wrote.
In the United States, the FDA does not provide information about pending drug applications unless they have been publicly disclosed. Even so, this information generally becomes available long before an approval. A recent study of 249 Biologic License Applications and New Drug Applications found that 89.2% were disclosed in ≥1 public medium, and 78.7% of those were announced with a press release.
Further, under the US Biologics Price Competition and Innovation Act, biosimilar applicants must provide notice to the reference product sponsor no later than 180 days before the date of the first commercial marketing of the biological product. In practice, a review of potential patent infringements begins sooner than the start of that period.
Australian regulators are fielding 2 possible solutions to the notification problem they have identified. One would require that applicants provide earlier notice to the innovator company whether or not they believe that infringement may result from marketing of the rival product, or at least make a declaration to authorities that they have “a reasonable belief” that no patent entanglement would result. This still leaves considerable power over notification in the hands of the applicant.
The second option would require applicants to provide innovators with early notification for all generic and biosimilar applications whether or not they think patent infringement is likely to result. Copies of that notification also would have to be sent to Australian regulators, in this case the Therapeutic Goods Administration. This earlier notification would be required after an application for registration passes preliminary assessment.
Authorities hope to provide more time for patent disputes to be resolved before marketing authorization is provided. Rival companies are not the only ones that can hold innovator companies liable for lost revenues.
In a case that was just settled, the Australian government sued Sanofi and Bristol Myers Squibb (BMS), contending that litigation surrounding patents for their blockbuster anti—drug clotting drug clopidogrel (Plavix, Iscover) prevented a rival generic from coming to market. The availability of a rival drug on the country’s Pharmaceutical Benefits Scheme would have triggered an immediate 12.5% price reduction. The government sought $325 million in relief, contending that, except for the patent litigation, the generic product would have become available in 2008 and generated considerable savings for the Australian health system.
However, Sanofi and BMS successfully counterargued that, among other things, it was doubtful the rival companies would have brought their drugs to market by the date on which the presumed damages would have begun to accrue.
Although Sanofi and BMS defeated this suit, their claims of patent infringement were settled out of court in a clopidogrel suit against rival drug company Apotex Australia. Apotex had sought $138 million in damages.
As a footnote to their analysis, attorneys from Shelston IP noted that there may be wider implications to the Australian notification system as it stands now. “It is open to debate as to whether Australia's current arrangements are consistent with its obligations under the Australia-United States Free Trade Agreement,” they wrote.
Chahal HS, Szeto D, Chaudhry AH, Sigelman DW, Kim S, Lurie PG. Public disclosure of the filing of new drug and therapeutic biologics applications with the US Food and Drug Administration [published online June 3, 2019]. JAMA Intern Med. doi: 10.1001/jamainternmed.2019.1213.