Background

Pfizer is the patentee of three process patents (the Pfizer Patents), which it alleges include claims to the process used to manufacture the etanercept in ERELZI.

In November 2017, Sandoz obtained registration on the Australian Register of Therapeutic Goods (ARTG) of three ERELZI products, namely a 50mg solution for auto-injector, a 50mg solution for pre-filled syringe and a 25mg solution for pre-filled syringe.

In about December 2017, Sandoz sought listing on the Pharmaceutical Benefits Scheme (the PBS) of its 50mg ERELZI products (the ERELZI Products). On 29 March 2018, the Pharmaceutical Board Advisory Committee recommended the ERELZI Products be listed.

On 26 April 2018, Sandoz informed the Department of Health that it had decided not to proceed to the next step to achieve listing on the PBS ‘at this point in time’, which is to disclose Sandoz’s proposed approved ex-manufacturer price. Since then, Sandoz has not taken any of the steps necessary to progress the listing of the ERELZI Products and has no commercial stock of the ERELZI Products in Australia.

The parties corresponded from February 2018 to June 2018. Sandoz declined Pfizer’s request for production of documents, indicating that it had not finalised plans to launch the ERELZI Products in Australia. Sandoz also provided an undertaking to Pfizer that included a 60 days’ notice period if its plan to launch the ERELZI Products changed, which it subsequently increased to at least 150 days (Sandoz Undertaking). Pfizer rejected the Sandoz Undertaking on the basis that 150 days was insufficient notice and pressed for the production of documents. The final form of the Sandoz Undertaking (Final Sandoz Undertakings) were provided to Pfizer on 13 August 2020, the terms of which are confidential.

On 1 November 2019, Pfizer commenced proceedings against Sandoz, seeking orders pursuant to r7.23 of the Federal Court Rules 2011 (Cth) (FCR) for preliminary discovery of documents held by, or on behalf of, Sandoz concerning the ARTG registered ERELZI Products. The orders for preliminary discovery sought by Pfizer are confidential, but it is apparent from the judgment that these include the Final Sandoz Undertaking and an order that Sandoz produce the documents sought within seven days of the day when Sandoz provides Pfizer with the notice set out in the Final Sandoz Undertaking (Notice Date).

Issues

Three issues arose for consideration:

• whether Pfizer is able to satisfy the requirements for preliminary discovery, that is whether Pfizer reasonably believes that it may have a right to relief from Sandoz (FCR 7.23(1)(a)) and, if so, whether in the present circumstances it is appropriate for the Court to exercise its discretion to do so (FCR 7.23(2))
• the scope of any discovery that may be ordered
• the terms of a confidentiality regime, in particular whether the highly confidential process documents to be produced by Sandoz should be made available for inspection by two of Pfizer’s in-house lawyers.

Arguments

Pfizer argued that the requirements of FCR 7.23(1)(a) are met because there is no dispute over Pfizer’s reasonable belief that it may have the right to obtain an interlocutory injunction to obtain relief from Sandoz for threatened infringement of any one or more claims of the Pfizer Patents if Sandoz decides to launch an ERELZI product in Australia.

Pfizer did not challenge evidence given by Sandoz, that Sandoz has yet to decide whether to launch the ERELZI Products in Australia, including whether it would launch in Australia at all. Rather, Pfizer argued that Sandoz’s indecisiveness is a basis for orders that anticipate the reception of notice on the Notice Date, and provision should be made for the production of documents on preliminary discovery to enable Pfizer to prepare its interlocutory application.

Decision

Justice Burley considered Pfizer’s preliminary discovery application to be misconceived, dismissing the application. Pfizer had failed to meet the requirements of FCR 7.23(1)(a) in that its ‘reasonable belief’ was based on circumstances yet to exist at the time of its preliminary discovery application, circumstances which are dependent upon Sandoz changing its present intention in respect of launching the ERELZI Products in Australia.

Justice Burley held that the language of FCR 7.23(1)(a) and sub-rules (1)(c) and (1)(b) make plain that the prospective applicant’s ‘reasonable belief’ must be current and does not encompass a hypothetical scenario that may or may not arise in the future.

In the alternative, Burley J stated that in the event his finding on FCR 7.23(1)(a) is incorrect and Pfizer has established the requisite belief, Burley J held that he would, in any event, not exercise his discretion to grant the orders for preliminary discovery sought by Pfizer. Key to his decision was that there appeared to be no imminent threat of a launch by Sandoz of the ERELZI Products. In particular:

• Sandoz had held its ARTG listing for three years and has not progressed its PBS listing application since 2018
• Sandoz has confirmed that it has not made a decision to launch the ERELZI Products in Australia
• the Final Sandoz Undertaking provides a very substantial notice period to Pfizer and also makes provisions for the production of documents, the terms of which are almost entirely agreed between the parties.

Having decided the first issue adversely to Pfizer, Burley J found it unnecessary to determine the remaining issues.

Key lessons

• FCR 7.23(1)(a) requires that the prospective applicant’s reasonable belief must be current as at the date when the preliminary discovery application is being assessed. It does not contemplate a reasonable belief that a prospective applicant may have sometime in the future.
• In deciding whether to exercise its discretion to order preliminary discovery under FCR 7.23(2), the Court will consider:
  • the measure of preliminary discovery to be ordered
  • whether there is an imminent threat (e.g. launch of a prospective respondent’s competing product)
  • whether undertakings have been provided and if so, the terms of the undertaking, including the length of any notice period.

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