Formulations not entitled to Australian patent term extensions

What you need to know

• A unanimous Full Court held that only patents which claim active ingredients alone are eligible for patent term extension.
• This significant decision is expected to result in a change to Australian Patent Office practice. It also creates a number of "zombie PTEs", being previously granted patent term extensions which are now vulnerable to challenge.
• The patentee, Otsuka, may apply for special leave to appeal this decision to the High Court of Australia. Ashurst acted for Sun Pharma in these proceedings.

What you need to do

• Companies should carefully review this decision and consider the impact on their own patent portfolio, and/or the patents preventing generic entry.
• In particular, follow-on patents that have been extended may be vulnerable to challenge. This may lead to proactive challenges by generic companies seeking to "clear the way", or launches at risk based on the vulnerability of any PTE.
• Originators should also seek to identify where this vulnerability may arise.
• It remains to be seen whether the Australian Patent Office will decide to proactively review and revoke PTEs that are no longer valid, as it has the power to do so on its own motion.

Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161

In Australia, the standard patent term is 20 years. There is one exception – a potential 5 year patent term extension (PTE) for eligible pharmaceutical patents. In several earlier first-instance Federal Court of Australia decisions, parties had successfully argued that this PTE regime could be used to extend the term of formulation patents (i.e., patents claiming new compositions of active ingredient plus excipients, rather than claiming a new active ingredient itself). Generic pharmaceutical companies have long argued that this is incorrect, and that extensions of term should only be available for patents for new active ingredients. Ashurst acted for Sun Pharma ANZ Pty Ltd in successfully bringing the first Full Federal Court challenge on this issue.

Aripiprazole

Aripiprazole is an atypical antipsychotic drug, commonly used in the treatment of schizophrenia. The compound aripiprazole was first patented by Otsuka Pharmaceuticals Co Ltd in 1991. Aripiprazole was initially released as an immediate release tablet, and subsequently developed as a longer acting injectable depot formulation. In 2004, Otsuka filed Australian patent 2004285448 "Controlled release sterile injectable aripiprazole formulation and method" (the Patent) which disclosed and claimed depot formulations in two broad forms: (1) a freeze-dried form (which enables longer shelf-life), and (2) the injectable liquid form.

In both the original oral and subsequent longer acting form, the only therapeutically active ingredient is aripiprazole, which has therapeutic effect primarily through partial agonism of dopamine receptors in the brain.

The original term of the Patent expired on 18 October 2024. However, in early 2015, Otsuka successfully obtained a patent term extension, extending the term of the Patent until 25 July 2029, based on the delays in achieving regulatory approval for the one monthly depot formulation (brand name ABILIFY MAINTENA). The product is commercially significant, the 2024/25 financial year PBS reimbursements exceeded A$56 million.

Sun Pharma challenges the PTE

In February 2024, Sun Pharma commenced proceedings to clear the way for the launch of its own generic monthly aripiprazole depot product (ARIPENA). Sun Pharma argued that the PTE was invalid, and the claims of the Patent relied on for the PTE were invalid based on lack of clarity and lack of definition. Otsuka cross-claimed alleging threatened patent infringement and threatened contravention of the Australian Consumer Law (ACL). Sun Pharma did not contest patent infringement, expressly without prejudice to its other arguments and for the purpose of achieving an expedited decision.

At first instance, Justice Downes found in favour of Sun Pharma on the basis that the relevant claims did not adequately define the invention and therefore were invalid. However, on PTE, her Honour followed the first instance decision in Cipla Australia Pty Ltd v Novo Nordisk A/S (2024) 185 IPR 299 (which was delivered after Sun Pharma had commenced its proceeding) and held that formulation patents could be the subject of a separate PTE : see Sun Pharma ANZ Pty Ltd v Otsuka Pharmaceutical Co Ltd [2025] FCA 44. Sun Pharma did not ask the primary judge to find that Cipla was plainly wrong, but instead reserved its right to challenge the correctness of Cipla on appeal.

Appeal

Otsuka appealed the invalidity finding, and Sun Pharma filed a notice of contention raising four arguments as to why the PTE was invalid.

On 1 December 2025, the Full Court found in favour of Sun Pharma based on the arguments against the PTE. The decision was initially embargoed due to confidentiality, and was subsequently published as Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161.

Patent term extension regime

By way of background, in Australia, a patent may be extended if it satisfies the following criteria (among others):

1. (Eligible patent) there is a patent which in substance discloses and in substance claims one or more pharmaceutical substances per se (or one or more pharmaceutical substances produced by a process involving the use of recombinant DNA);
2. (Corresponding ARTG goods) for a pharmaceutical substance which satisfies (1), there are goods registered on the Australian Register of Therapeutic Goods (ARTG) which contain or consist of that pharmaceutical substance; and
3. (Delay in regulatory approval) there was a period of at least five years between the date of the eligible patent (see s 65 of the Patents Act 1990 (Cth)), and the first regulatory approval date for any corresponding ARTG goods.

The key question was whether "pharmaceutical substance" refers only to active ingredients (as Sun Pharma argued), or also included formulations of active ingredients plus excipients (as Otsuka argued, and Justice Downes found at first instance, following Cipla).

Previously, there had been a handful of first instance Federal Court decisions which held that each formulation of an active ingredient was a different "pharmaceutical substance" and so was eligible for separate PTE. This enabled originators to obtain a PTE for a compound patent, and then obtain additional PTEs for later-filed formulation patents that relate to the same compound (e.g., a controlled release or injectable form of the same API). For example, in Spirit Pharmaceuticals Pty Ltd v Mundipharma Pty Ltd (2013) 216 FCR 344, a PTE was allowed for a patent to a controlled-release formulation of oxycodone (brand name OxyContin) in 2000, notwithstanding that oxycodone itself was first patented in 1916, and had been registered in Australia since 9 September 1991 (brand name Endone).

PTE is only available for active ingredients

In a lengthy appeal judgment, the Full Court completed a detailed review of the history and judicial treatment of "pharmaceutical substance", and concluded that Sun Pharma's position was correct and the term refers only to active ingredients. The key aspects of the decision were as follows:

• The Full Court held that the first Australian legislation which introduced the defined term, the Patents Amendment Bill 1989 (Cth), was limited to patents for active ingredients only. While the 1989 bill adopted a term "therapeutic substance" from a set of 1956 customs regulations, and that concept included formulations, the 1989 bill then expressly limited the concept to only such substances whose application involved "a chemical interaction, or physico-chemical interaction, with a human physiological system" or action on an infectious agent, toxin or other poison. The Court concluded that this was a limitation to active ingredients.
• The Full Court held that, when the same (current) definition of "pharmaceutical substance" is read in the context of the present PTE regime introduced by the Intellectual Property Laws Amendment Act 1998 (Cth), the same meaning applies, and this conclusion is supported by broader extrinsic materials.
• The Full Court observed that this interpretation was consistent with the purpose of the PTE regime, being a special extended monopoly for pharmaceutical patents which was justified by the significant time and cost required to achieve regulatory approval of new active ingredients. The Full Court noted that it was less time consuming, and less costly, to develop new formulations of existing active ingredients.
• The Full Court considered, and explained how, the earlier appellate authorities which touched on this issue were consistent with the Full Court's interpretation, being Boehringer Ingelheim International GmbH v Commissioner of Patents (2001) 112 FCR 595, and three Alphapharm v Lundbeck decisions regarding citalopram and its enantiomers.
• The Full Court held that the earlier first instance Federal Court decisions which concluded that a formulation could be a "pharmaceutical substance" were incorrect, being Pharmacia Italia SpA v Mayne Pharma Pty Ltd (2006) 69 IPR 1, Spirit, and Cipla.

As a result, the PTE for the Patent was revoked because it was based on the formulations claimed in the Patent. As the Full Court summarised: "The relevant pharmaceutical substance is aripiprazole. That substance was first listed on the ARTG in May 2003. The Patent claims an improved delivery of aripiprazole (the controlled release Formulations), a substance already listed on the ARTG".

Further PTE grounds

While not strictly necessary to decide (and therefore obiter dicta), the Full Court also considered and upheld each of Sun Pharma's other arguments on the PTE. In short, these were that:

1. (Ground 1) contrary to the first "Eligible patent" criteria above, the claimed freeze-dried formulations could not be a pharmaceutical substance, because the freeze-dried formulation is never administered to a patient in the claimed form (instead it first must be reconstituted into a liquid at which point the "freeze-dried" integer is no longer present);
2. (Ground 2) contrary to the second "corresponding ARTG goods" criteria above, the relevant ARTG goods did not contain or consist of the claimed controlled release formulation (i.e., the reconstituted liquid form), because they were a kit of a vial of freeze-dried powder, and a separate vial of water, and neither contained nor consisted of a controlled release injectable liquid formulation; and
3. (Ground 5) further contrary to the first "Eligible patent" criteria above, none of the formulations (freeze-dried or reconstituted liquid) are to a pharmaceutical substance per se, because the claims each included process integers (including the injection of the claimed formulation), and therefore are not claims to a pharmaceutical substance in and of itself.

Invalidity

The Full Court found for Otsuka on the lack of definition invalidity argument. However, as the Patent (without the benefit of a PTE) expired before Sun Pharma's launch, this finding did not affect the outcome.

Implications and next steps

The Full Court's decision has significant implications for the timeline for launch of a number of pharmaceutical products. Companies should closely review their own patent portfolios, and/or any patent portfolios that may be an obstacle to generic entry, and consider whether any relevant PTEs are vulnerable to challenge.

Changes to APO practice

Prior to this decision, the practice of the Australian Patent Office (APO) was to allow PTEs based on pharmaceutical substances that are "novel and inventive formulations of known drugs" (Patent Examiner's Manual, s 7.12.1.1). In light of the Full Court's decision, that practice appears likely to change. Novel and inventive formulations of known drugs will, of course, still be eligible for patent protection, but will only receive the standard 20 year term.

Zombie PTEs

PTEs already granted for new formulations will now be vulnerable to challenge. There are two ways such "zombie PTEs" may be removed from the Register:

1. the Commissioner of Patents has the power to proactively remove PTEs under s 191A of the Patents Act 1990 (Cth), without application from any third party; and
2. third parties could apply to the Commissioner, or to the Federal Court of Australia, to remove such zombie PTEs under sections 191A or 192 of the Act, although there is a standing requirement for the latter.

It remains to be seen whether the APO will proactively seek to cancel such "zombie PTEs", or instead leave it to third parties to identify and raise for consideration any relevant extended patents.

Potential for appeal

Otsuka may apply for special leave to appeal the Full Court's decision to the High Court of Australia. The deadline for doing so is early January 2026.

If the High Court grants special leave there would then be one final appellate comment on these issues. However, special leave was refused to the originator parties in two of the most recent pharmaceutical patent cases decided by the Full Federal Court: Sandoz v Bayer (rivaroxaban) and Pharmacor v Novartis (sacubitril / valsartan), the second of which included a challenge to a PTE. Ashurst acted for Sandoz, and Pharmacor, respectively in those matters.

Want to know more? 

• Routine risks: Full Court invalidates two follow-on pharmaceutical patents, 25 October 2024

Authors: Nina Fitzgerald, Partner; Tim Rankin, Senior Associate and Giulia Falvo, Lawyer.