Since 2005, the first inclusion of a generic medicine in the Pharmaceutical Benefits Scheme (PBS) has resulted in an automatic 12.5% price reduction in the government subsidy of all medicines of that type, including the original listing. This factor has become increasingly significant in applications for interlocutory injunctions in pharmaceutical patent litigation, as illustrated by the decision of Jessup J in Interpharma Pty Ltd v Commissioner of Patents  FCA 1498.
In considering this price reduction on the question of the adequacy of damages should an injunction not be granted, his honour considered that if a 12.5% reduction in the price paid to the patentee would be the only impact of the entry of the generic product into the market “it would be difficult to conclude that the cross-claimants’ losses could not ultimately be calculated, and compensated in damages”. However, according to Jessup J:
the real problem is whether it would ever be possible to restore the cross-claimants to the position they now occupy, should they succeed at trial but not secure the interlocutory restraints they seek.
This problem was considered, at least in part, to be due to the apparent absence of any mechanism for restoring the price to its original level should a patentee ultimately obtain final injunctive relief.
In assessing the balance of convenience in granting or refusing the injunction, his Honour found persuasive the argument of the patentee that the alleged infringer, “has undertaken all its commercial preparations in the knowledge of one or both of the patents, or at least had been less than assiduous in its inquiries as to whether the marketing by it [of the allegedly infringing product] might have constituted an infringement”. On this issue, Jessup J concluded that:
I am not disposed to allow it to rely on its own ignorance as leading to a situation in which it would now be commercially inconvenienced were it to be subject to an interlocutory restraint of the kind that the cross-claimants seek.
Ultimately, an interlocutory injunction was granted in respect of one of the two patents said to be infringed.