Full Federal Court Restricts Patent Term Extensions to Active Pharmaceutical Ingredients: What the Pharmaceutical Industry Needs to Know

In a landmark decision with immediate implications for pharmaceutical patent strategy in Australia, the Full Federal Court has fundamentally narrowed the scope of patent term extensions (PTEs). 

Historically, PTEs have been granted for patents directed at formulations (assuming all other criteria for a PTE are met). 

However, in a recent decision (which is the subject of a special leave application to Australia’s highest Court), Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161, the Court held that only active pharmaceutical ingredients (APIs) meet the definition of  "pharmaceutical substances" under the Patents Act 1990 (Patents Act).  This means that only patents directed at APIs are eligible for PTEs. 

The decision departs from decades of Australian Patent Office practice as well as almost 20 years of established case law.  It also creates immediate uncertainty for pharmaceutical companies with PTEs granted for formulation patents.

The Decision

Otsuka’s Standard Patent claimed controlled release aripiprazole formulations. The API itself, aripiprazole, was not new; it had been known since the 1990s and immediate-release formulations had been registered on the Australian Register of Therapeutic Goods (ARTG) since May 2003. Otsuka successfully obtained a PTE in 2014 based on its controlled-release product ABILIFY MAINTENA, extending the patent's expiry from October 2024 to July 2029.

Sun Pharma challenged (among other things) the validity of this extension, arguing that the condition in section 70(2)(a) of the Patents Act was not met because the formulations claimed in the patent did not fall within the definition of "pharmaceutical substance". Whilst the primary judge found the PTE invalid on other grounds, the Full Court upheld Sun Pharma's challenge to the PTE on the basis that formulations do not fall within the definition of “pharmaceutical substance”. 

The Court's Reasoning

The Court concluded that the definition of “pharmaceutical substance” in the Patents Act is limited to active substances on the basis that it is APIs which have an interaction with the human physiological system. 

In this case, aripiprazole was the only ingredient in the formulation that could exert the desired therapeutic effect, and the other components in the formulation were mere excipients. The Court held that, by definition, excipients are therapeutically inert. Therefore, only aripiprazole (the API) qualified as the 'pharmaceutical substance', not the formulation as a whole. 

In our view, this does not mean that claims to mixtures or combinations of APIs will be ineligible for an extension, having regard to the definition of “pharmaceutical substance” expressly contemplating “mixture[s] or compound of substances”.  However, the present state of Australian law means that claims directed at formulations where there are modifications to excipients or dosage forms relating to known actives will not be a basis for a PTE on the Court’s reasoning. 

This is consistent with the intention of the extension regime to compensate for regulatory delays in bringing new active substances to market, and not for improvements in delivery or formulation of known substances. 

Immediate Implications

Precedent Overturned

The Court found that at least three earlier first instance decisions were incorrectly decided, each of which had concluded that the formulation in question was a “pharmaceutical substance”, and that the corresponding PTE was valid.

Vulnerability of Existing PTEs

The decision creates immediate risk for existing PTEs granted in respect of formulation patents and patentees should urgently identify vulnerable PTEs. 

PTEs granted in respect of formulation patents now face potential challenges, for example:

1. Proceedings may be initiated by competitors, and/or generic/biosimilar manufacturers, to challenge the validity of the PTE and “clear the way” to market, either in the Patent Office or in the Courts
2. Generic/biosimilar manufacturers may choose to launch at risk during the PTE if they consider that the PTE is invalid. 

What Happens Next?

Otsuka has applied for special leave to appeal to the High Court of Australia. Unless and until the High Court considers this case, the Full Federal Court's decision represents binding precedent in Australia. 

We are monitoring Otsuka’s application closely. 

Written by Rebecca Currey, Tom Johnston and Hannah Barnett.