Last month, Yates J found that Otsuka’s patent for aripiprazole was invalid.[1] As a consequence, his Honour ordered that the interlocutory injunction preventing Generic Health from listing its product on the PBS and selling it be dissolved. Otsuka has appealed and now Nicholas J has granted a stay to preserve the interlocutory injunction pending the appeal.

While not being prepared to characterise Otsuka’s prospects on the appeal as higher than arguable, Nicholas J considered the balance of convenience favoured continuation of the interlocutory injunction.

Otsuka relied principally on the fact that there would be an automatic reduction of 16% the price payable under the PBS for Abilify[2] once Generic Health’s product was listed. It contended that it would not be possible to recover that price drop if its appeal were successful.

Generic Health countered that it risked losing the benefits of first mover advantage if it were enjoined and other generic producers were not. Generic Health’s evidence was that pharmacists would usually only carry one generic brand of each drug and that was likely to be the first brand “in”. This would exacerbate the difficulties in calculating its losses. Nicholas J did not dismiss that argument, but Otsuka said it would be seeking interlocutory injunctions against any other generics who tried to enter the market pending the appeal. Nicholas J noted further that, if Otsuka failed in an injunction applications against a second or further generic, that would be a strong basis to terminate the stay.

The Commonwealth also sought a specific undertaking to pay damages from Otsuka as the price of the injunction. It argues it will suffer loss, in the form of the higher prices payable under the PBS, if Generic Health continues to be enjoined but the appeal ultimately fails.

Nicholas J noted that a case has been stated to the Full Court on whether the Commonwealth can indeed claim under the “usual undertaking as to damages”. Subject to the outcome of that case, his Honour considered the Commonwealth was sufficiently within the scope of the usual undertaking and so did not need a separate, specific undertaking.

Nicholas J increased the security for costs that Otsuka had to provide to Generic Health in the amount of an additional $8.7 million[3] and, in addition, required a security of $6 million separately to the Commonwealth. His Honour also noted that the Commonwealth could apply to extend that security if the appeal was not decied in the first half of 2016.[4]

Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd [2015] FCA 848


  1. Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd (No 4) [2015] FCA 634. Patentology looked at the ‘swiss claims’ aspects of his Honour’s decision.  ?
  2. The commercial name under which aripiprazole is marketed by Otsuka and its licensee.  ?
  3. Otsuka has already provided $6.5 million pursuant to the orders made by Yates J at first instance.  ?
  4. At [35], Nicholas J recored that the Commonwealth estimated its losses from the continuation of the interlocutory injunction would be $6 million over the next 12 months and $15 million over the next 18 months.  ?