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July 2011 In this issue: EpiCept data protection appeal dismissed as moot » Supreme Court of Canada news » Patented Medicine Prices Review Board news » Ontario Government meets commitment to save $500 million per year by reducing generic drug prices » |
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EpiCept data protection appeal dismissed as moot The May 2011 edition of Rx IP Update provided a case-law update on data protection. Further updates on two of the cases reported are as follows. First, we had previously reported that the Court of Appeal would soon be considering the meaning of "innovative drug" in the context of prior "approvals" based on applications for a Drug Identification Number and under the Natural Health Products Regulations in connection with EpiCept's appeal of Justice Near's decision in Epicept Corporation v. Canada (Health), 2010 FC 956. However, on June 22, 2011, the Court of Appeal dismissed EpiCept's appeal as moot: Epicept Corporation v. Canada (Health), 2011 FCA 209. |
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Supreme Court of Canada news Scope of section 8 damages (leave sought). As reported in the June 2011 edition of Rx IP Update, the Federal Court of Appeal upheld the Federal Court's decision to strike portions of Teva's claim seeking recovery for permanent loss of market share relating to ramipril (sanofi-aventis's ALTACE). On June 14, 2011, Teva filed for leave to appeal to the Supreme Court. Teva Canada Limited v. Sanofi-Aventis Canada Inc., et al. (SCC Case No. 34325). |
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Patented Medicine Prices Review Board news Board issues ruling regarding ratio-Salbutamol HFA. On May 27, 2011, the PMPRB issued a decision in the matter of ratiopharm and the medicine ratio-Salbutamol HFA ("ratio HFA"), an authorized generic version of GlaxoSmithKline's ("GSK") Ventolin HFA. The Panel ruled on several issues, including (1) whether the legislation establishing the Board and granting it powers with respect to excessive pricing of patented medicines is constitutional; (2) whether ratiopharm is a "patentee" under the relevant sections of the Patent Act ("Act") with respect to the sale of ratio HFA; (3) whether ratiopharm, to the extent that it is a patentee, is selling or has sold ratio HFA in Canada at an excessive price; and (4) whether, in determining the price at which ratiopharm sells ratio HFA, the Panel can take into account any rebates or discounts given by ratiopharm. With regard to the first issue, the Panel ruled against ratiopharm's constitutional attack, finding that the Board's mandate and purpose are consistent with section 91(22) of the Constitution Act (which grants jurisdiction to the Federal Government over patents of invention and discovery). Regarding the second issue, the Panel ruled that ratiopharm is a "patentee" under the relevant provisions of the Act with respect to the sale of ratio HFA, and ratiopharm therefore has sole responsibility for ensuring that the price of ratio HFA is not excessive. Pursuant to certain agreements between GSK and ratiopharm, ratiopharm took title to ratio HFA from GSK for resale in Canada at a price agreed to by the parties. The Board found that the agreements between GSK and ratiopharm granted to ratiopharm an exclusive licence to promote, market and sell ratio HFA in Canada. Ratiopharm argued that it was not a patentee as it has never held any patent for ratio HFA and did not receive any licence in any such patents. The Panel disagreed, citing both the definition of "patentee" in section 79(1) of the Act, which includes "any other person ... entitled to exercise any rights in relation to that patent" and previous decisions in which both the Board and the Federal Court have taken a purposive approach to interpreting the meaning of "patentee," including finding that the term is not restricted to those holding relevant patents. The PMPRB held that the agreements between GSK and ratiopharm gave the exclusive right to set the price of and to sell ratio HFA and to obtain the necessary regulatory approvals to do so. Absent the licence granted, these acts would have violated rights held exclusively by GSK and the Board therefore found ratiopharm's rights are "in relation to" the patent held by GSK. The Board held that to accept ratiopharm's position would severely undermine the Board's jurisdiction by allowing the simple insertion of a commercial entity in the distribution chain in a manner that would cause the Board to lose the ability to review the pricing of the medicine. The Panel then considered the evidence regarding pricing and concluded that it was appropriate to apply the tests set out in the PMPRB's Guidelines in this case, specifically, applying the Consumer Price Index ("CPI") methodology following the establishment of a maximum non-excessive ("MNE") price for ratio HFA at the time of its introduction to the market in 2002. The Board was satisfied that even when using the various pricing tests in the Guidelines independently of CPI adjustments, there was compelling evidence that the price was excessive within the terms of section 85(1) of the Act. The Board ruled that the Board Staff should not take into account deductions from rebates, discounts, refunds or other discounts claimed by ratiopharm when considering the price of ratio HFA, as it could not conclude from the evidence that the deductions were incurred specifically relating to ratio HFA. The Board noted that ratiopharm had a number of opportunities to submit the relevant evidence, but failed to do so. The Board nevertheless considered whether, had it found the evidence of rebates sufficient, it could take these into account having regard to the decision in Pfizer Canada Inc. v. Canada (Attorney General), 2009 FC 719 ("Pfizer"), in which the Court held that the PMPRB did not have jurisdiction to require patentees to report payments made to a province on the ground that such payments are made to third parties. The Board, while indicating it need not finally assess the scope of Pfizer at this time, held that the business reality of the pharmaceutical industry is one that operates by providing rebates and other payments throughout a chain of distribution and that such business realities must be taken into consideration by the Board if it is to review the true price at which patented medicines are provided to Canadians. Thus, the Board held that had the evidence been sufficient in this case, ratiopharm could have deducted rebates. The Panel therefore ordered the Board Staff to determine the amount to be paid to the Crown for excessive revenues generated by the sales of ratio HFA sold from September 2002 to January 2010 based on ratio HFA's MNE at introduction, as adjusted for CPI in accordance with the Board's Guidelines, without taking into account any reduction for rebates. PMPRB decision – PMPRB-08-D3-ratio-Salbutamol HFA. PMPRB tables 2010 Annual Report. On June 16, 2011, the Minister of Health tabled the PMPRB's 2010 Annual Report before Parliament. The report contains compliance and enforcement statistics, including that 1,196 patented drug products for human use were under the PMPRB's jurisdiction in 2010 and that the Board approved 16 Voluntary Compliance Undertakings (to the end of May 2011), completed five hearings and issued one Notice of Hearing. The Board also reports that the sales of patented drug products in Canada decreased by 3.4% to $12.9 billion in 2010 and that the R&D expenditures reported by patentees were $1.18 billion in 2010, a decline of 7.4% over 2009. (Communiqué. 2010 Annual Report.) |
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Ontario Government meets commitment to save $500 million per year by reducing generic drug prices As reported in the July 2010 edition of Rx IP Update, the Ontario Ministry of Health and Long-Term Care implemented reforms to drug pricing in Ontario. The amendments, which started to take effect on July 1, 2010, and will be fully implemented by April 1, 2013, include lowering the price of most generic drugs to 25% of the corresponding innovator's drug (from the previous 50%) and eliminating "professional allowances." On June 7, 2011, the Ministry announced that by the one-year anniversary of the reforms, the Government successfully met its commitment to save $500 million per year by reducing generic drug prices. Further, the province has taken additional steps to audit more pharmacies, wholesalers and generic drug manufacturers to ensure that they are complying with the elimination of professional allowances. (Press release.) |
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Recent Court decisions Eli Lilly's amendment asserting infringement of three additional patents by Hospira allowed to stand. In an infringement action relating to a patent claiming the process for synthesis of gemcitabine hydrochloride (Eli Lilly's GEMZAR), a Prothonotary granted Eli Lilly leave to amend its pleadings to assert that Hospira was infringing three additional patents covering alternative processes. The Federal Court dismissed Hospira's appeal, finding that adding the new cause of action is not a radical departure from the pleadings because the process used to make Hospira's product was always at issue, the amendments do not constitute an abuse of process, and Hospira has failed to show any prejudice not compensable in costs. Hospira has appealed the decision. Eli Lilly Canada Inc. v. Hospira Healthcare Corporation, May 27, 2011. Interlocutory injunction for esomeprazole denied. In a patent infringement action relating to esomeprazole (AstraZeneca's NEXIUM), AstraZeneca brought a motion for an interlocutory injunction to stop Apotex from selling esomeprazole, pending trial. The Judge considered the three-part test for an interlocutory injunction: (1) whether there is a serious issue to be tried; (2) whether the applicant is likely to suffer irreparable harm if the injunction is not granted; and (3) whether the balance of convenience favours the granting of the injunction. The Judge dismissed the motion, finding that although there was a serious issue to be tried, AstraZeneca had not established that it was likely to suffer irreparable harm and had not demonstrated that the balance of convenience lies in its favour. The Court of Appeal upheld this decision. AstraZeneca Canada Inc. v. Apotex Inc., May 24, 2011. |
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New Court proceedings Patented Medicines (Notice of Compliance) Regulations
To check the status of Federal Court cases, please click here. |
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Our pharmaceutical practice group Smart & Biggar/Fetherstonhaugh's pharmaceutical practice group calls upon decades of extensive and in-depth experience to keep your pharmaceutical IP rights where they belong — in your hands. For more information on our group and a full list of its members, please click here. Disclaimer The preceding is intended as a timely update on Canadian intellectual property and regulatory law of interest to the pharmaceutical industry. The contents of this newsletter are informational only and do not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly. To join the Rx IP Update mailing list, be removed from the mailing list or make changes to contact information, please send an e-mail to rxip.update@smart-biggar.ca. smart-biggar.ca | Ottawa | Toronto | Montreal | Vancouver |
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