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Federal Court issues prohibition Order despite finding allegation of obviousness justified »

Supreme Court of Canada news »

Patented Medicine Prices Review Board news »

Recent Court decisions »

Ex turpi causa defence applies to limit Apotex's recovery of lovastatin section 8 damages »

Court of Appeal affirms that Teva is not entitled to recover losses incurred beyond section 8 liability period »

Court of Appeal determines that Teva is not precluded from pursuing ratiopharm's section 8 claim regarding venlafaxine »

Court of Appeal affirms refusal of joinder regarding LEVAQUIN »

Takeda granted leave to add foreign parties to action regarding PREVACID »

New Court proceedings »

Federal Court issues prohibition Order despite finding allegation of obviousness justified

On June 18, 2012, the Federal Court issued an Order prohibiting the Minister of Health from issuing a notice of compliance ("NOC") to Apotex for its proposed ophthalmic drug containing brimonidine and timolol, which was compared to Allergan Inc.'s COMBIGAN (Allergan Inc v Minister (Health) and Apotex Inc, 2012 FC 767). Justice Hughes of the Federal Court allowed the application for reasons of comity, despite finding that Apotex's allegation of obviousness was justified.

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Supreme Court of Canada news

Merck denied leave to appeal decision finding Merck liable under 1998 version of section 8 regarding lovastatin. On June 14, 2012, the Supreme Court denied Merck leave to appeal from the Court of Appeal decision (reported in the January 2012 issue of Rx IP Update) finding that Apotex is entitled to claim the loss it suffered as a result of the Minister's delay in issuing the NOC regarding lovastatin (Merck's MEVACOR).

Merck & Co Inc v Apotex Inc, June 14, 2012 (SCC Case No. 34681).
Federal Court of Appeal decision — 2011 FCA 364.
Federal Court decision — 2010 FC 1264.

Teva seeks leave to appeal decision upholding Teva's disentitlement to recover losses incurred beyond section 8 liability period. As reported in this issue of Rx IP Update, the Court of Appeal upheld an order of the Federal Court striking out portions of Teva's Statement of Claim relating to losses, damages and harm incurred outside the section 8 liability period, including damages for permanent loss of market share, in respect of pantoprazole (Nycomed's PANTOLOC). Teva has sought leave to appeal.

Teva Canada v Nycomed Canada, June 15, 2012 (SCC Case No. 34873).
Federal Court of Appeal decision — 2012 FCA 129.

 

Patented Medicine Prices Review Board news

Updated Compendium of Policies, Guidelines and Procedures. In June 2012, the Board released the updated 2012 Compendium of Policies, Guidelines and Procedures. This version incorporates all clarifications made to the Guidelines over the past year, including the proposed changes reported in the May 2012 issue of Rx IP Update. Any further clarifications will be reflected in future updated versions, which will be released annually each June.

Updated Compendium.

PMPRB tables 2011 Annual Report. On June 20, 2012, the Minister of Health tabled the PMPRB's 2011 Annual Report before Parliament. The report contains compliance and enforcement statistics, including that 1,282 patented drug products for human use were under the PMPRB's jurisdiction in 2011 and that the Board approved 15 Voluntary Compliance Undertakings (to the end of May 2012) and completed three price hearings. The Board also reports that the sales of patented drug products in Canada increased from $12.9 billion in 2010 to $13.1 billion and that the R&D expenditures reported by patentees were $991.7 million in 2011, a decline of 15.8% over 2010.

The Board has also published a summary of key information this year in the Annual Report 2011: In Brief.

Communiqué.
Annual Report 2011.
Annual Report 2011: In Brief.

PMPRB reconsiders QUADRACEL and PENTACEL rulings. As reported in the August 2011 issue of Rx IP Update, on December 21, 2009, the Board found that sanofi pasteur ("sanofi")'s QUADRACEL and PENTACEL medicines were priced excessively, and on March 16, 2010, the Board ordered sanofi to repay the excess revenues. Sanofi sought judicial review of the remedy part of the Board's decision, and on July 8, 2011, the Federal Court set aside the Board's decision, ordered the matter remitted to the Board for reconsideration and ordered the return of sanofi's payment of $2.5 million, with interest.

The Court found that the decision was not reasonable and stated that it "simply cannot decipher on what basis the Board discarded, in the unique circumstances of this case, sanofi's argument that it had, either totally, if not at least in part, compensated for its excessive revenues" and that it was "simply not in a position to exercise its duty to review the legality of the Board's decision and to determine if it was within the range of possible and acceptable outcomes" as "the decision does not meet the applicable standard."

On June 14, 2012, the Board issued its decision on reconsideration and ordered sanofi to repay a total of over $2.5 million for excess revenue from both PENTACEL and QUADRACEL. In its reasons, the Board agreed with the Court that the question of why it rejected sanofi's argument regarding a reduction in excessive revenues based on subsequent sales below the maximum non-excessive ("MNE") prices was not addressed well in the previous decision. The Board then explained its decision in more detail, stating that once the Board has estimated the quantum of excessive revenues — a relatively straightforward calculation — its order should normally fully offset the excessive revenues by either reducing future prices or payment to the Crown. The Board emphasized that its jurisdiction under section 83 of the Patent Act is not the same as a court's in quantifying damages: once excessive revenues are quantified, the Board's "remedial choices…are choices among the methods of offsetting the revenues, not an exercise of deciding whether there are reasons not to make a remedial order or to adjust the dollar amount in the order."

In this case, the Board cited the following two reasons for why the revenues from sales below the MNE price should not reduce or eliminate excessive revenue. First, the Board stated that the Government of Canada should have the benefit of the MNE before 2007 and the benefit of the lower price it obtained after 2007, as it was exclusively due to a competitive procurement strategy. It could not obtain both benefits if the lower priced sales were used to offset the excessive prices. Second, the Board's Guidelines set out that the reduction of excessive revenue can only take place in sales within a calendar year. Although not binding on the Board, the Board held that the Guidelines provide "certainty and predictability for patentees."

Board decision. Order for repayment.
Board reconsideration of remedy. Order for repayment.
Federal Court decision — sanofi pasteur Limited v Canada (Attorney General), 2011 FC 859.

Proposed PMPRB Rules. On June 16, 2012, proposed Rules of Practice and Procedure for the PMPRB were published in the Canada Gazette, Part 1. The Regulatory Impact Analysis Statement accompanying the proposed Rules states that the objective in adopting these rules is to regulate the practice and procedure of Board hearings, by enhancing transparency of the Board's activities, consistency in the exercise of the Board's formal powers, fairness to all parties appearing before the Board and the timely completion of hearings. The proposed rules include codifying terminology and practices already informally adopted, incorporating practices to improve areas such as expert witness and case management, and the introduction or amendment of timelines for certain steps in a proceeding.

The PMPRB has invited stakeholders to submit comments on the proposed rules by July 16, 2012.

PMPRB announcement.
Canada Gazette.

 

Recent Court decisions

Patented Medicines (Notice of Compliance) Regulations

Ex turpi causa defence applies to limit Apotex's recovery of lovastatin section 8 damages. As reported in the January 2012 issue of Rx IP Update, the Court of Appeal reversed Justice Snider's dismissal of Apotex's section 8 claim relating to lovastatin (Merck's MEVACOR) (Apotex Inc v Merck & Co, Inc et al, 2011 FCA 364, rev'g 2010 FC 1264). The Court of Appeal remanded the matter to Justice Snider on the basis that "the 1998 version of section 8 applies; Merck is liable under subsection 8(1); and an ex turpi causa defence is capable of being raised under subsection 8(5) so as to reduce or eliminate the amount of loss otherwise recoverable." On May 23, 2012, Justice Snider issued her reconsideration decision. Although there is no Ministerial "certification" of May 25, 1996, (i.e. "patent hold" date) as contemplated by subsection 8(1)(a), Justice Snider was satisfied that Apotex would have received its NOC for Apo-lovastatin no later than May 25, 1996. She therefore determined that the relevant period should begin on May 25, 1996, and end on March 26, 1997. On the "unusual facts" of this case where there was never any determination of the merits of Merck's prohibition application and there was a finding of patent infringement in an action (2010 FC 1265, aff'd 2011 FCA 363), Justice Snider applied the doctrine of ex turpi causa and concluded that in the complete absence of the Regulations, Apotex would have been infringing Merck's patent at issue until February 27, 1997 (the date of approval of its non-infringing process), since the NOC approval that Apotex would have received before that date in the "but for" hypothetical world would have related to the infringing process. Justice Snider concluded that Apotex's section 8 losses should be reduced by any amount claimed for the period between May 25, 1996, and February 26, 1997. Apotex has appealed.

Apotex Inc v Merck & Co, Inc, May 23, 2012.
Federal Court decision — 2012 FC 620.

Court of Appeal affirms that Teva is not entitled to recover losses incurred beyond section 8 liability period. On April 25, 2012, the Court of Appeal upheld an order of the Federal Court striking out portions of Teva's Statement of Claim relating to losses, damages and harm incurred outside the section 8 liability period, including damages for permanent loss of market share, in respect of pantoprazole (Nycomed's PANTOLOC). The Court followed the settled jurisprudence in Apotex Inc v Merck, 2009 FCA 187 and Teva v sanofi-aventis Canada, 2011 FCA 149 ("Teva") and noted: "Teva's remedy is to apply again for leave to appeal to the Supreme Court of Canada where Justice Sharlow's dissent [in Teva] can be considered again, and not to re-litigate in the Federal Court and in this Court a matter that has already been decided." As reported in this issue of Rx IP Update, Teva has sought leave to appeal to the Supreme Court.

Teva Canada v Nycomed Canada, April 25, 2012.
Federal Court of Appeal decision — 2012 FCA 129.

Court of Appeal determines that Teva is not precluded from pursuing ratiopharm's section 8 claim regarding venlafaxine. As reported in the December 2011 issue of Rx IP Update, Justice Hughes determined that the equitable doctrine of election barred Teva from pursuing a section 8 claim against Wyeth regarding venlafaxine (Wyeth's EFFEXOR XR) initiated by ratiopharm. Consequently, the action was later dismissed by a separate order. The Court of Appeal concluded that the equitable doctrine of election does not apply and allowed Teva's appeals. In particular, the Court determined that both (i) Teva's rights under its licence agreement with Wyeth and (ii) Teva's conduct under the agreement could not possibly have affected the potential future right of ratiopharm (and consequently the post-amalgamation Teva) to claim section 8 damages. The Court also concluded that no off-set would be required to account for gains realized by Teva under the licence agreement with Wyeth. In particular, the Court determined that (i) Teva and ratiopharm's pre-amalgamation profits are a historical fact rather than the profits of the amalgamated Teva and (ii) the terms of the licence agreement that would have permitted Teva to enter the market earlier than it actually did are not proof that Teva actually could have done so.

Teva Canada v Wyeth LLC and Pfizer Canada, May 8, 2012.
Federal Court decisions — 2011 FC 1169 and 2011 FC 1442.
Federal Court of Appeal decision — 2012 FCA 141.

Court of Appeal affirms refusal of joinder regarding LEVAQUIN. On May 3, 2012, the Court of Appeal affirmed the Order of Justice Hughes dismissing Janssen's motion for the joinder of certain related Janssen entities in the quantification phase of an infringement action regarding levofloxacin (Janssen's LEVAQUIN).

Teva Canada v Wyeth LLC and Pfizer Canada, May 8, 2012.
Federal Court of Appeal decision — 2012 FCA 137.
Federal Court decision — 2011 FC 1480.

Takeda granted leave to add foreign parties to action regarding PREVACID. Apotex commenced an action in the Ontario Superior Court claiming damages against Abbott, Takeda America and Takeda Japan for a delay in marketing Apotex's generic version of lansoprazole (Abbott's PREVACID). The defendants counterclaimed, alleging infringement of two patents. Master Short granted Takeda leave to amend its pleading to add two related corporations, Takeda North America and Takeda Pharmaceuticals LLC as "persons claiming under the patentee." Apotex argued that Takeda's proposed amendment was bald and failed to plead the necessary material facts to establish that the foreign parties were "persons claiming under." Master Short disagreed, noting that the pleading alleged that the foreign parties were (i) licensees under the patents, (ii) members of the supply chain and (iii) entitled to a different subset of damages. Further, the Master noted that the technical issues raised by Apotex are matters that can be canvassed on discovery.

Apotex v Abbott, June 13, 2012.
Superior Court decision — 2012 ONSC 2104.

 

New Court proceedings

Patented Medicines (Notice of Compliance) Regulations

 

 

 

 

 

 

 

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