In a recent decision, Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161, the Full Federal Court of Australia has found that Patent Term Extensions (PTEs) are only available for active ingredients, and not for formulations that include an excipient.
Update: Otsuka has been granted special leave to appeal the decision to the High Court.
Key points:
- The decision overturns existing case law and impacts on IP Australia’s longstanding practice of granting PTEs for formulations.
- Any granted PTEs relating to formulations are now invalid and IP Australia will not grant any new or pending PTE requests relating to formulations.
- Otsuka has been granted special leave to appeal the decision to the High Court.
- IP Australia has indicated that they will temporarily suspend processing applications which may be impacted by the Otsuka decision.
Background
Otsuka Pharmaceutical Co Ltd (Otsuka) is the patentee of Australian patent 2004285448, which relates to various controlled-release formulations of aripiprazole, an antipsychotic agent.
In 2014, Otsuka sought, and was granted, a PTE for the patent, based on its ABILIFY MAINTENA product. The PTE was applied for based on two types of claims in the patent — claims to ready-to-use controlled release injectable formulations, and claims to freeze-dried controlled release formulations.
Under section 70(2)(a) of the Patents Act 1990 (the Act), to be eligible for PTE, one or more pharmaceutical substances per se must in substance be disclosed in the complete specification of the patent and in substance fall within the scope of the claim or claims of that specification.
The term “pharmaceutical substance” is defined in Schedule 1 of the Act as:
“a substance (including a mixture or compound of substances) for therapeutic use whose application (or one of whose applications) involves:
(a) a chemical interaction, or physico‑chemical interaction, with a human physiological system; or
(b) action on an infectious agent, or on a toxin or other poison, in a human body;
but does not include a substance that is solely for use in in vitro diagnosis or in vitro testing.”
First instance decision
Sun Pharma ANZ Pty Ltd (Sun Pharma) challenged the validity of the PTE on a number of grounds, including that the definition of “pharmaceutical substance”, when properly construed, is confined to active ingredients only, and does not include formulations such as an extended-release formulation.
Sun Pharma’s written submissions contented that previous decisions of the Federal Court that found formulations to be within the definition of “pharmaceutical substance” were plainly wrong. However, Sun Pharma withdrew these submissions and instead reserved this position for appeal.
The primary judge ultimately found that the PTE was invalid because:
- several of the pharmaceutical substances relied on by Otsuka did not in substance fall within the scope of the claims
- the PTE claims do not comply with ss 40(2)(b) and 40(3) of the Patents Act.
The present case is an appeal of that decision.
Contentions on appeal
Otsuka contended that the primary judge erred and the PTE is valid.
Sun Pharma contended that the PTE was invalid for various additional grounds not relied on by the primary judge.
One of these grounds was that formulations are not “pharmaceutical substances” within the meaning of s 70(2)(a) of the Act, and that only active ingredients fall within the meaning of that term.
The decision
The Full Federal Court unanimously found in favour of Sun Pharma, agreeing that only active ingredients, and not formulations, fall within the meaning of “pharmaceutical substance”.
In coming to this conclusion, the Court reviewed the legislative history of the PTE provisions. The definition of “pharmaceutical substance” was introduced in a 1989 amendment with an explanatory memorandum saying that the PTE regime would be available for “therapeutic substances” in terms of the Customs (Prohibited Imports) Regulations with the added limitation that: “only substances whose use involves a chemical or physico-chemical interaction with a human physiological system, or involves action on an infectious agent, or on a toxin or other poison, within a human body, are included (devices such as surgical ligatures are not included)”.
The Full Court found that, while the term “therapeutic substances” used in the Customs Regulations does include formulations, the above limitation described in the explanatory memorandum means that “pharmaceutical substance” as defined in the Act is limited to active ingredients alone. At stated at paragraph [170] of the decision:
The requirement that the application of a “pharmaceutical substance” must involve an “interaction” or “action” of the specified kinds immediately and naturally puts the focus on the substance which itself produces the therapeutic effect, as distinct from any excipients present in a given formulation with such a substance. Excipients, by definition, are not therapeutically active. They are the non-therapeutic ingredients of dosage forms. It is only the active ingredient that can have a chemical or physico-chemical interaction with a human physiological system, or that can act on an infectious agent, or on a toxin, or other poison, in a human body.
It follows that formulations containing excipients cannot be a “pharmaceutical substance”.
The Court found that this interpretation is consistent with the purpose of the PTE regime.
There were no prior Full Federal Court decisions that directly addressed this issue. Boehringer and the Alphapharm cases include comments that support the above conclusion, but these comments were not part of the reasons for the decision in each case. While sometimes persuasive, such comments are not binding.
There were three first-instance (single-Judge) decisions by the Federal Court that found that “pharmaceutical substance” includes formulations. However, the Full Court found that these decisions are incorrect with respect to their interpretation of the scope “pharmaceutical substance”.
Conclusion
The Full Court decision means that any granted PTEs relating to formulations are now invalid and IP Australia will not grant any new or pending PTE requests relating to formulations.
Patents with granted PTEs that are now invalid are unenforceable in their extended term and could be removed from the patent register.
Unless the decision is successfully appealed by Otsuka, it will stand.
Otsuka has been granted special leave to appeal the decision to the High Court. However, it remains to be seen what the ultimate outcome of this appeal will be.
IP Australia’s Patent Manual of Practice and Procedure has been updated to say that processing of Extension of Term applications that relate to formulations that may be affected by this decision has been temporarily paused.
