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Federal Court of Appeal dismisses appeal challenging amended basket of comparator countries in PMPRB Regulations

Authored byNancy Pei, Daphne Lainson, Urszula Wojtyra

On December 5, 2022, the Federal Court of Appeal (FCA) dismissed Innovative Medicines Canada (IMC) and sixteen innovative pharmaceutical companies’ appeal regarding the validity of the amended basket of comparator countries in the Patented Medicines Regulations: Innovative Medicines Canada v Canada (Attorney General), 2022 FCA 210 (Appeal Decision).

Background

The Patented Medicines Regulations set out reporting requirements for patentees to the Patented Medicine Prices Review Board (PMPRB). Proposed amendments were first published on August 21, 2019 which, broadly, would have introduced:

  1. New price regulatory factors based on pharmacoeconomic value, market size and GDP/GDP per capita in Canada, and related reporting obligations (pharmacoeconomic factors);
  2. Expanded reporting of price and revenue information to include confidential third-party rebates (rebate reporting);
  3. An amended basket of foreign reference countries for reporting purposes (amended basket); and
  4. Reduced reporting obligations for patented veterinary, over-the-counter (apart from non-prescription schedule D drugs such as vaccines and insulin) and generic medicines.

Court challenges to the validity of amendments (1)-(3) quickly followed.

The Federal Court held amendments to rebate reporting (2) were invalid, but amendments for pharmacoeconomic factors (1) and the amended basket (3) were valid. The Appeal Decision is discussed below.

The Quebec Court of Appeal held amendments for both pharmacoeconomic factors (1) and rebate reporting (2) were invalid, but the amended basket (3) was valid.

Ultimately, the Governor in Council proceeded with amendments (3) and (4) only, and the amendments came into force on July 1, 2022. Draft amended Guidelines are currently under consideration. (Update: The Guidelines will not be implemented on January 1, 2023 as previously planned.)

Amendment at issue

For context, s. 85(1) of the Patent Act sets out five factors for the Board to consider in assessing whether pricing is excessive, and includes:

“(c) the prices at which the medicine and other medicines in the same therapeutic class have been sold in countries other than Canada”. 

Subsection 101(1)(a) of the Patent Act gives the Governor in Council the power to make regulations:

“(a) specifying the information and documents that shall be provided to the Board …”

The Patented Medicines Regulations require patentees to report relevant pricing information regarding the medicine sold in a basket of countries other than Canada. Before the amendment, the basket of seven countries was: France, Germany, Italy, Sweden, Switzerland, the United Kingdom and the United States. The amended basket of eleven countries is: Australia, Belgium, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden and the United Kingdom (bolded countries are the same in both baskets). The United States and Switzerland are no longer included.

Appeal Decision

The FCA only addressed IMC’s appeal on the amended basket (3), and decided that the decision to enact the amendment changing the list of comparator countries was based on a reasonable interpretation of the regulation-making power in subsection 101(1) of the Patent Act. The FCA did not accept the submission that the amendments were made for an improper purpose, namely, “the reduction of the price of medicines generally in order to deliver health care savings and to pave the way for national pharmacare.”

The FCA agreed with the Federal Court that the amendment merely related to a change in collection of information, the filing of which is “benign.” The purpose for which the Board uses the filed information however may be the subject of subsequent challenge: “[i]f the Board later uses that comparative information to set or control prices - rather than police excessive pricing - an aggrieved party can establish on judicial review that the Board has exceeded its jurisdiction.”

Any further appeal would require leave from the Supreme Court of Canada.

Should you have any questions, please do not hesitate to contact a member of the Pharmaceutical Litigation Group.

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.